Alfonso Tuor on how the crisis is undergoing a metamorphosis

Alfonso Tuor describes in the liberal daily Corriere del Ticino a new phase in the international financial and economic crisis. "The economic crisis is experiencing another metamorphosis. At its epicentre now is public debt in Western countries. … But because (the banks') debts have not been paid off, the states are now in danger, with budget deficits that have exploded as a result of the cost of financing bank rescue packages and stimulus programmes and above all owing to plunging tax revenues in the wake of the recession. ... This raises the question of whether the growing public debt in Washington and London will lead to a reduction in the exchange rate of the dollar and the pound, and consequently to inflation. … Since the US economy is currently in a phase of deflation and there is an enormous amount of unused production capacity on hand, inflation can only be created by a marked devaluation of the dollar. This would be tantamount to passing on even more of the cost of the crisis to other countries and entails not only the great risk of protectionism but also that of growing international tensions."

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