Some economists see some rays of light amid the economic gloom.
"We're Headin' for Armageddon," said one press release headline earlier this month as the United States stock market plunged to depths not seen since 2002.
With the credit freeze in the US, similar financial turmoil around much of the world, and the coordinated bank rescue action, talk of a "new economic era" has won some credibility. So what are the consequences of the financial crisis in the months and years ahead? Let's examine three areas:
The stock market
"A teddy bear has quickly turned into a grizzly bear," notes Robert Froehlich, chief investment strategist for DWS Investments, the American wing of Deutsche Bank's global asset management division. On Friday, Oct. 10, the Dow Jones Industrial Average experienced its most price-volatile single day since this index of major corporate stocks was created in 1896.
Fear turned to panic, Dr. Froehlich observes. There was a massive 3 percent liquidation of the entire money-market industry in one day. It was a run on the banks like in the Great Depression but with no lines around banks because orders were placed online or by telephone. "Just because you didn't see it, doesn't mean it didn't happen."
Yet Froehlich regards stocks as priced for a "50 percent off fire sale."
Page 1 of 4