|FLOYD NORRIS, Floyd Norris comments on finance and the economy at nytimes.com/economix.|
Less than four years ago, with the world's financial system in danger of collapsing, major countries managed to come together on a coordinated course that averted a global depression.
Central banks pumped vast amounts of cash into economies, and banks were bailed out, with vows that they would be subject to stronger regulation.
By early 2009, financial markets had bottomed out and begun strong recoveries. Economies were slower to follow; by last year, slow growth seemed to be the global pattern, spurring hope that the crisis had passed.
But within the last few weeks, much of that hope seems to have faded.
Moreover, there seems to be little willingness — or perhaps lit-tle ability — for the major countries to act together again. Squabbles have grown, some countries are in fiscal distress, and others face daunting domestic problems. The European situation is the most pressing. Banks are under pressure in many countries, for a combination of reasons. They did not raise as much capital as they might have when markets were more buoyant last year. In some cases, they appear to have been slow to recognize their real estate loan losses.
But the most important factor may be that national governments are weak — in every way possible. There is no doubt that some countries could not afford to bail out their banks again; some, in fact, now rely on those same banks for loans to keep the governments functioning at a time when private investors are unsure about their creditworthiness. The president of the
Nearly every major government in
The most worrying electoral situation is in
For governments that need to borrow money, this is either the best or the worst time ever. It is hard to believe just how low rates are for
But other countries have difficulty borrowing money at all, and pay far higher interest rates to get what money they can. It is not that anyone thinks the yields available on German and
If throwing cash at the problem was the solution to the last crisis, now many deem that the cause of the current problems.
Moreover, the consensus that financial regulation should be strengthened and standardized has evaporated. In
The widespread pessimism could dissipate as rapidly as it accumulated. Some surprisingly good economic news in
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