Freakonomics Author: Fears of Doomsday Overblown

By: EW News Desk Team   Date: 6 December 2011

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EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

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06 December 2011

The fears of a major economic crisis are exaggerated, according to “rogue economist” and author of the bestselling books Freakonomics and SuperFreakonomics.

Despite fears and extensive media coverage of the widening financial crisis, there is no doomsday in the horizon, said Steven Levitt, professor of economics at the University of Chicago and 2003 John Bates Clark medallist.

Speaking at a conference in India, Levitt who famously refers to himself as a “rogue economist,” dismissed claims that the current crisis is comparable with the Great Depression.

It doesn’t feel like “The End.” The US economy is even growing a little. In fact, economists around the world have grown so much since World War II that, unless there’s something horrific on the horizon which I haven’t seen, people will look back on these days as nothing more than a blip.

Levitt’s optimistic outlook for the world economy stands in stark contrast with what other leading thinkers and economists have projected. Last month, German Chancellor Angela Merkel lamented that Europe was in its worst crisis since the World War 2.

Related: Merkel: Europe in worst crisis since WW2

Related: Europe faces recession risk

Related: US faces 50% chance of recession in 2012

Within Europe and in particular the eurozone economic region, fears of a fast-spreading contagion are not unfounded. Credit rating agencies have in recent weeks warned of an unprecedented downgrade of the 17 eurozone nations – despite the IMF stepping in and reluctantly fulfilling the role of lender of last resort. How the government sovereign debt crisis will pan out will be largely determined by the ECB interest rate decision and EU Summit in Brussels this Thursday.

Related: IMF steps in with new liquidity for Europe

Related Story: Why the IMF must stay out of Europe’s crisis: Mario Blejer & Eduardo Levy Yeyati

However, Levitt is not completely wrong in his outlook for the US economy. In the last two months, the United States reported positive and encouraging economic data, such as lower unemployment claims and a higher manufacturing index score – a key measure of economic activity, signalling a slow and mild recovery.

Top American CEOs have reportedly said the United States will not fall back recession. In fact, Goldman Sachs’ chief executive Lloyd Blankfein believes recovery “may have already started.”

Related: EconomyWatch real-time consumer confidence index


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