Posted on 04/16/2009 6:20:50 PM PDT by bruinbirdman
Despite the unprecedented steps already taken by central banks and governments worldwide.
This recession is likely to be "unusually long and severe, and the recovery sluggish," said the Fund, releasing two advance chapters from its World Economic Outlook. However, it warned there is a risk that it could spiral down into a full-blown slump unless further action is taken to stop "feedback effects" gathering force.
Dominique Strauss-Kahn, head of the IMF, said millions of people risk being pushed back into poverty as the economic storm ravages the most vulnerable countries. "The human consequences could be absolutely devastating. This is a truly global crisis, and nobody is escaping," he said.
"The free-fall in the global economy may be starting to abate, with a recovery emerging in 2010, but this depends crucially on the right policies being adopted today."
Mr Strauss-Kahn called for a urgent action to "cleanse banks" of toxic assets and for further fiscal stimulus beyond the 2pc of global GDP already agreed. The snag is that high-debt countries may have hit the limits already.
"The impact becomes negative for debt levels that exceed 60pc of GDP," said the Fund.
While no countries were named, this would raise questions about Japan, Germany, France, Italy and ultimately Britain and the US after their bank rescues.
The IMF said the US is at the epicentre of this crisis just as it was in the Depression, setting the two episodes apart from normal downturns. However, the risks are greater this time. "While the credit boom in the 1920s was largely specific to the US, the boom during 2004-2007 was global, with increased leverage and risk-taking in advanced economies and many emerging economies. Levels of integration are now much higher than during the inter-war period, so US financial shocks have a larger impact," it
(Excerpt) Read more at telegraph.co.uk ...
"Mr Strauss-Kahn called for a urgent action to "cleanse banks" of toxic assets and for further fiscal stimulus beyond the 2pc of global GDP already agreed. The snag is that high-debt countries may have hit the limits already."
"The impact becomes negative for debt levels that exceed 60pc of GDP," said the Fund."
“millions of people risk being pushed back into poverty?” And, WHO brought them OUT of THAT poverty.....ingrates.
We are part of those millions too.......
Stock-Markets / Credit Crisis 2009
Apr 16, 2009 - 02:22 PM
By: Jim_Willie_CB
One must give a tip of the hat to the Wall Street conmen for engineering a reasonably robust stock rally. The Dow and S&P were led by financials. The Financial Times out of London claims ‘no real money’ was behind the stock rally of over 20%. They must mean huge short covering, enhanced by pressure tactics from Wall Street brokerages themselves. They must mean Working Group For Financial Markets putting to work some of their ‘Black Bag’ money. They must mean influenced arbitrage games from preferred versus common shares, which harmed the public but enriched the insiders. Amazing how a better financial journal on US topics comes from outside the United States.
[snip]
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“...this depends crucially on the right policies being adopted today.”
You mean like laissez faire?
When a nation’s debt exceeds such a high percentage of its GDP, you can simply not produce enough to climb out of the recession. It becomes a spiral downward. Debt climbs faster than any revenue to be fleeced by means of of taxes on goods produced or traded for. Stimulus must increase productivity soon or the debt will not be reducible through taxing bodies, bu will have to be paid with funny money or bonds bought by reluctant parties.
I studied economics for years, but this quote from the IMF dazzles me with its arcane technical jargon.
Thanks. This must be the dreaded ‘deflation trap’ mentioned in other articles.
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