The Economic Times: Will global markets survive US recession?

The Economic Times"Will global markets survive US recession?

Is the fear of another 1930-model depression justified?

The reality is it is too early to say whether the current slowdown will translate into global depression. In his writings Milton Friedman has blamed central bank policies for causing the Great Depression of 1930.

According to Friedman the Federal Reserve failed to pump enough reserves into the banking system to prevent a collapse in the money stock. But the situation has changed dramatically now. Most economists are adamant that modern central banks know how to counter the menace of a severe recession.

The predictions of a worst-case scenario, as predicted by several doomsday commentators like economist & fund manager Marc Faber, economist Mark Watson etc, is that the world economy will slide into depression in next 6 months to one year with the crash of commodity prices triggered by the end of the boom in Chinese demand."