A professor at the Robert H. Smith School of Business at the University of Maryland says that the US is headed into a Depression — yes, the big D word — unless the correct steps are taken to fix certain structural things about the economy: namely, a broken banking and credit system.
You can watch the video interview with him here.
I would point out to readers that it’s only the US banking and credit system which is broken - not all countries around the world have this problem. Canada’s banking system, for example, which I know the most about, has none of the problems that the US banking system has had in terms of sub-prime or problematic ABCP and derivatives. It’s affected, of course, by the overall move towards less confidence that has infected countries around the world, but the actual problems aren’t there. Just something to keep in mind.
March 24, 2009 update: By now it’s been obvious that much of the rest of the world HAS finally been affected by the dirty debt debacle that washed out of the US. In Eastern Europe, particularly, as well as Iceland, Greece and developing nations. The UK has got it bad (which is why they’re pushing for another stimulus “hit”). But aside from a general export slump caused by a mere consumer downturn and fall in oil profits, Canada’s banking system has still held up (since there was nothing wrong with it). And so has Spain’s. These two are models to be followed.
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