The financial crisis that began with bad US home loans is now moving from the banking sector into wide swaths of the global economy, costing millions of jobs, forcing working families to cut back and driving once-mighty companies into bankruptcy.
The US government said on Friday the country’s unemployment rate shot to 6.5%, its highest level in 14 years. Jobless rates are rising elsewhere too: The UN labor agency said last month that world unemployment will hit 210 million people by the end of next year, its highest rate in the past decade.
How deeply the global downturn will cut remains uncertain, participants at a regional meeting of the World Economic Forum in Dubai said on Saturday. While they called for calm, they also acknowledged there is cause for concern.
“We will be telling our children and our grandchildren about this crisis,” said Mohamed El-Erian, co-chief executive of Pacific Investment Management Co., the Newport Beach, Calif.-based investment firm better known as PIMCO. “You cannot turn off the fuel of this crisis easily.”
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