Hazardous Prediction

Because at the speed things are currently moving, all predictions are hazardous. It was less than two weeks ago when the "crisis" was still primarily a U.S. crisis, not just because U.S. financial institutions were in trouble and the U.S. government could not get a rescue plan passed, but also because presumably the Americans had some uniquely American flaws (greed, for example). The implication was that in other parts of the world (virtuous Europe) stuff like that could not happen. Turns out, things are a little more complicated than that (even though U.S. financial and economic stability remains extremely precarious). Turns out, we're in the first true financial crisis of the current era of globalization, where everything is connected. Uncharted territory, just like the Great Depression of the 1920s and 1930s was new. Back then, national approaches (as opposed to joint, international responses) made things worse before they could get better. One way they first began to get better was because individual governments passed systemic reforms to counter market unpredictability, imbalances, and volatilty (in the U.S.: FDIC, SEC, Social Security, etc). After World War II, the beginnings of this for the world as a whole were also introduced (IMF, World Bank, Bretton Woods system). It appears we need a new round of reform, but we're not there yet by any means (think of how for example Germany refuses to go along with a joint EU response, where it should be leading such an effort). But back then leadership also made a difference--think FDR in the U.S. and Adolf Hitler in Germany. As you can hear everywhere, a big part of the current problem is a crisis of confidence--who is in charge, who has the vision to turn things around, who can give the impression s/he can lead? This we don't have right now, and we won't have it at least until the U.S. presidential election. So here's the hazardous prediction: to great cheer all over the world, Obama will win the election, next month, and thanks also to the fact that the collapse of the global financial system and stock markets everywhere will have had time to reach rock bottom (only four more weeks of this!), his victory address will mark the beginning of a turn-around. His inaugural address next January will add a little steam, as will the first 100 days of his administration (which will hit the ground running). It will be an entirely new situation (or so it will seem), except, of course, that all eyes will continue to be on the U.S. Toward the end of Obama's first term the world may be on its way to some kind of recovery. In other words: in our lifetime!