As expected, the worldwide market crash made news and views. The Economist and Newsweek led with the subject, their focus somewhat different. The Economist’s ‘It’s Rough Out There’, says that during the first three weeks of January, “more than $5 trillion has disappeared from the value of public companies”. The Federal Reserve announced a rate cut of three-quarters of a percentage point and there’s a multi-billion-dollar rescue mission of bond insurers on the way. The Economist questions the sagacity of these moves. “Reacting to market panic with panicky rate cuts is likely to make things worse rather than better. The Fed should always be the calm centre of a financial storm.”

Newsweek predicts: “The US Economy Faces the Guillotine”. “The Great Global Market Freak-Out of 2008 has everyone asking whether the United States—already on the road to recession—is entering into a protracted period of economic trouble.” No, it’s not the Depression, Nouriel Roubini, professor of economics at New York University’s Stern School of Business tells Newsweek, “But in terms of systemic risk and the risks of a financial meltdown, you almost have to go back that far to find a good analogy.”

Newsweek describes the malaise in psychological terms: “Judging by the recent mood swings, the global economy can be diagnosed as manic-depressive”. Still, there is hope for others, all because of what economists call “decoupling.” Decoupling? “Even as the globe’s economic engine, the US, has stalled, optimists believe the train cars it has been pulling for the last several decades, especially emerging markets like India and China may finally be able to chug.”

... contd.