West's Financial Fallout

You still do not believe they're in crisis? Give it a second look, if it's so. Of course, they're shaken, but not blasted away yet. Yes, I am talking of financial crisis. I cannot go into deeper details that of causes and effects, the consequences, etc. They need profound insights for a general outlook. I only wish here to quote Roger C. Altman's ('he is Chair and CEO of Evercore Partners, was U.S. Deputy Treasury Secretary in 1993-94') article The Great Crash, 2008: A Geopolitical Setback for the West. He says:

"The financial and economic crash of 2008, the worst in over 75 years, is a major geopolitical setback for the United States and Europe. Over the medium term, Washington and European governments will have neither the resources nor the economic credibility to play the role in global affairs that they otherwise would have played. These weaknesses will eventually be repaired, but in the interim, they will accelerate trends that are shifting the world's center of gravity away from the United States."

The article appeared in Foreign Affairs,

Jan/Feb, 2009, Vol 88, No. 1.

Sir Sharukh Got it Wrong

In explaining U.S. or West's financial fallout, even though he went to great lengths, talked of consequences and root causes as per his wisdom. But, as per Roger C. Altman he is not correct. Roger Altman was U.S. Deputy Treasury Secretary in 1993-94.

Sir Sharukh Irfan (Forman C. C. Univ.'s accounting professor) is of the view that this meltdown of U.S. markets was due to the collapse of subprime mortgage market in the United States and consequently housing prices collapsed and thus emerged the crisis at the surface. The same reason has been attributed by Altman, in his article in the latest Foreign Affairs magazine, as 'conventional wisdom'. And, as per Sir, that at the bottom the preceding reason lied, and naturally, it had various consequences.

While, on the other hand, Roger says:

"This is not correct [that crisis is due to collapse of subprime mortgage market and housing prices]; these were themselves the consequence of another problem. The crisis' underlying cause was the combination of very low interest rates and unprecedented levels of liquidity."*

Roger sounds more reasonable to me and especially the lethal combination he mentioned. What is your opinion on this issue? Please do share with us.

* Quoted from, The Great Crash 2008: A Geopolitical Setback for the West, Foreign Affairs, Jan/Feb, 2009, Vol 88, No. 1.