A reader of Krugman Op-Ed in the New York Times asks whether any leading economists in Europe or Asia have come up with any thoughts on current crisis? There must be someone who understands what is happening in the world besides Nouriel Roubini.
As non-leading economist, I would like to try to answer here with few observations:
Professor Roubini is quite European by background. He graduated in a leading Italian university, which happens to be the same I got my degree from. I assume that he also can have the European perspective.
I believe that this crisis is pretty much made in United States all the excesses originating there and somehow in UK. It is likely that in Europe (where UK is not in the Euro), we would be in a recession anyway, but the financial crisis is obviously compounding its charges. It is not easy to face a recession when your banking system is "broken" or not working properly. I contend that for Europe the financial crisis is a kind of external shock along the lines of previous oil shocks. And here is the point.
How and why Europe got involved in the Ponzi's scheme made in U.S.? I asked the same question here and here in some comments to LaVoce.info 's articles. It is not yet clear what is for instance the involvement of European banks in AIG. Yet two kind of failures can be identified in Europe: a) regulatory failure, as it appears that European banks were investing in derivatives products, made in U.S., also to circumvent specific regulations and capital requirements while authorities were "asleep"; b) risk management failure, to the extent that also European management was not capable to assess properly risks and efficient allocation of resources.
What we have not yet heard in Europe is any clear "mea culpa". But that one it appears difficult also in the United States...