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Abstract
A year ago this time, in early October of 2008, the world was on the edge of a financial and economic abyss. Those very close to the events in the financial sector were terrified. The world at large had not yet fully comprehended the magnitude of the disaster. The October 2008 World Economic Outlook had predicted that global GDP growth would have attained 2.7 percent in 2008 and would be 1.9 percent in 2009. Compare that to the 2.1 percent realized in 2008 and the most recent projection of -2.3 percent for 2009. Projections have been revised upward over the last few weeks, but the loss of output in 2009 will still be much greater than what was projected a year ago. The real point, however, is that it could have been much worse. What happened on Wall Street in September of 2008 was the financial equivalent of the Cuban missile crisis of 1962. We came very close to a complete meltdown … as the world had come very close to nuclear war in 1962. But the meltdown did not take place—a very vigorous policy response in the major economies and concerted action by the major central banks forestalled a much worse disaster.1
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