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Capital flights, deficits and protectionism

Posted by Adrian on January 28, 2009

As discussed in World Crisis scenarios for the 21st century – Worldwide economic depression – (update 16), Financial Times online have published an article entitled “Capital flows to developing world at risk”.

This is a fear that is creeping in, whether from high risk countries with massive liabilities, or deficits enlarging creating vulnerability or protectionism causing a retraction of trade and funds. Although not spelt out in the article, it is clear that a worrying sign that a recession could become more of a depressed slump is now being reported.

The financial crisis is so bad even at this point, as the taxpayer is literally holding up the whole global economic system. So the person in the street eventually is going to question governments and their fiscal policy of propping up banks and ‘bad’ businesses.

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