Poverty rates, which had declined significantly during the period of rapid growth, are likely to double or triple in the next few years, and could reach two-thirds of the population, according to some estimates. The Russian economy is experiencing almost a complete breakdown. Many workers have not been paid in months, and in some cases even years. More and more of the transactions are barter trades. Half of the food consumed is grown in small backyard plots, and most of the rest is imported on credit.
Brazil is the center of attention right now.
The spreading global crisis is already starting to change both government macroeconomic policies around the world and macroeconomic theory. Macro policies are changing from more restrictive policies to more expansionary policies and from laissez-faire to more government intervention. The US Federal Reserve Board lowered interest rates a notch last week, which will probably be followed by similar interest rate cuts by the European governments, in a coordinated shift toward expansionary monetary policy. And the IMF is also considering some selective capital controls. In the present circumstances, governments can no longer afford to depend on free markets by themselves to solve the crisis.