What should the U.S. Federal Reserve Board and the European Central Bank be doing today?
The central banks have to come to the rescue. Basically, they should create something similar to the Resolution Trust Corp., which was established to deal with the savings and loan crisis in America [in the 1980s]. Today’s problem is bigger. If they structure it nicely, then the recession in America isn’t going to be that bad. So the U.S. economy is headed for a recession. At the moment it is highly likely, but how deep the recession will be one never knows. Next year is an election year, so the recession won’t likely be felt until after the election because so much money will be spent to prop up the economy. I reckon there will be hard times after the election. How would an American slowdown affect Asian growth? The American economy still affects Asia a great deal. The two economies can’t be decoupled from each other. If would help if the consumer market in China takes off, but today China is still so dependent on the U.S. and European markets that a recession in America would have an
