Merrill Lynch CEO: Global Slowdown Harks Back To 1929

Posted In: Decoupling, Depression, Economy, Emerging Markets, Financial Markets, Global Economy, Global Equities, Recession

You know things are looking grim when the head of Merrill Lynch talks about the global economy and makes comparisons to the era of the Great Depression. Greg Farrell of the Financial Times (UK) wrote today:

The global economy is entering a slowdown of epic proportions comparable with the period after the 1929 crash, John Thain, chairman and chief executive of Merrill Lynch, warned on Tuesday.

Speaking at the company’s annual banking and financial services conference, Mr Thain said while he was cautiously optimistic about the future of the financial services industry, he lacked optimism about the near-term prospects of the US economy and global markets.

“Right now, the US economy is contracting very rapidly. We are looking at a period of global slowdown,” he told investors. “This is not like 1987 or 1998 or 2001. The contraction going on is bigger than that. We will in fact look back to the 1929 period to see the kind of slowdown we’re seeing now.”

“History often rhymes”

Farrell also noted that Thain, who previously worked at Goldman Sachs and the New York Stock Exchange, scoffed at the idea of decoupling. From the piece:

Mr Thain also said the economic problems afflicting the US, where housing prices and other asset values were falling, would wreak havoc across the world.

“There is no such thing as decoupling,” he said, referring to the popular theory that emerging markets could sustain reasonable growth even while the world’s leading economies suffered recessions. “All equity markets are linked. Each individual economy will be more or less affected, depending on reliance on global trade and commerce.”

Source:

“Merrill chief sees severe global slowdown”
Greg Farrell
Financial Times (UK), November 11, 2008

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