Worst is yet to come

In an article titled the end of an illusion, noted economist Prabhat Patnaik talks about the financial crisis that has gripped the US. He says even if the bailout of distressed financial giants manages to prevent a severe economic crisis, it will certainly not be able to prevent a recession which appears to have already set in.

The state of credit will continue to be difficult for sometime to come, which will only worsen the recession. Even the financial crisis will not be over with the current “bail-out” package, he says.

After the Bear Stearns episode earlier this year every one thought that the worst was over, but it wasn’t. The same perhaps is true of the present. The system of course will recover, but the form in which it will do so is unlikely to be the same as before. And this will open up new possibilities of praxis, he claims.