by Martin Wolf

It is now almost a year since the US subprime crisis went global. Many then hoped that the repricing of risk would be no more than a brief interruption in the progress of the US and world economies. Such hopes have been disappointed. The woes of Fannie Mae and Freddie Mac, the tumbling stock markets and the climbing oil prices make clear how far the turmoil is from its end. It has, in all likelihood, not even passed the end of its beginning.

So where is the world economy now? And where might it go? Here are some preliminary answers to these questions.

The answer to the first comes in two main parts: continued financial distress and commodity price rises.

The performance of banking stocks tells one most of what one needs to know about the financial crisis. In the US, the epicentre of the distress, banks had lost half of their market value between a year ago and the end of last week, relative to the S&P composite index.

The remainder of this column can be read here. Debate from our panel of economists appears below.

July 16, 2008 5:59am in Uncategorized | Comment