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Light at the end of the tunnel?
19 December 2008
The global financial crisis, sparked by sub-prime lending and the use of high-risk, poorly understood financial instruments, has set off a worldwide downturn unlike any seen in a generation. Falling commodity prices, and the spread of recession, hundreds of billions in government bailouts – and with all this, dare we contemplate the idea of trade – and trade finance – coming out of the tunnel? The realities are harsh, and their full implications are not yet known; is there room for tactful, cautious optimism? Alexander R. Malaket takes a forward-looking view on some aspects of the questions that are on the minds of leading trade finance specialists across the globe.
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trade finance recession depression credit crunch liquidity squeeze down turn trading financing
Trade finance in crisis
There is no denying that the world has been dealt a serious shock, as close to the Great Depression as we have come since those dark days, by some accounts more serious than the oil shocks of the early seventies, the meltdown of the mid-eighties and the various regional and local crises we have worked through since then.
Market analysts have noted that further implosions – likely more severe than that triggered by the sub-prime debacle – will follow, and that the full impact of those follow-on crises is even more opaque and unpredictable than the mortgage-related crisis. In reality, this is no longer a financial downturn, but one which encompasses whole industries, and has no particular respect for geographic borders or locally-focused remedies.
We are witnessing hundreds of billions in government bailouts, public-sector engagement at the highest levels, even from staunch free-market advocates; a complex balancing act...
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