Andrew Bailey Usa Britain France COST UPS Cooper Andrew Bailey Usa Britain France

Fading global cooperation will make this crisis worse than the recession of 2008

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Fifteen years ago this week the French bank BNP Paribas announced it was closing three of its hedge funds heavily exposed to the US sub-prime mortgage market.On the day little heed was paid to the news, but it quickly became apparent that not just BNP Paribas but just about every big financial institution was up to its neck in securities linked to underperforming American home loans.

In early August 2007, BNP was simply the pebble that marked the coming avalanche.Another August, another crisis. Memories of 2007 were rekindled by Andrew Bailey last week when the governor of the Bank of England announced that interest rates were being raised just as the UK economy is expected to hit the wall.Leaving the pandemic-induced collapse in activity apart, the last “proper” global recession was the global financial crisis of 2007-09, a period when only massive government bailouts prevented the banking system from collapsing.The Bank of England thinks the recession it is expecting will last as long – five quarters – as the downturn of 2008-09 but be less severe.

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