Saturday, April 18, 2009
IMF warns: This is like the Great Depression
The International Monetary Fund has warned of "worrisome parallels" between the current global crisis and the Great Depression, 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.
Link
Headlines Today:
Mexico granted $47bn IMF credit
IMF agrees new loan for Ukraine
Sony Ericsson to cut 2,000 jobs
Toshiba to cut 3,900 more posts
Gem producer Botswana cuts output
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The International Monetary Fund or any other authority claiming this global monetary crisis is contained or regressing is simply incorrect.
ReplyDeleteThe fundamental problem continues to be excessive unsecured debt assumed by citizens and their respective nations. The debt has not been paid down. The debt cannot be paid off. There has been more irresponsible debt accrued than all money in existance. It is literally an impossibility to pay down the debt without grossly inflating the current money supply.
This resolution historically ends in disaster whenever it is employed.
At this time there are two choices. Grossly inflate the currency supply or default on the debt.
Either choice will be a grim reminder to those who survive the outcome.
Great post.
ReplyDelete+1 great post
ReplyDeleteDoesn't the IMF want more money to bail out countries? Should we really trust anything they say? I am not saying that we are not headed for diaster but maybe, just maybe we should also consider that the IMF, Wallstreet, etc are using scare tactics to soak us all for more money to line their pockets.
ReplyDelete"like the great depression" the only difference is governments are being creative to give the world a soft landing with the sames tools that created the problems. All we need Mr. President, prime minister and all is to re-establish confidence. No chance while government is protecting the "old guard"
ReplyDelete