The amount of money thrown at rescuing the world economy since the beginning of the current crisis is truly staggering — probably more than $14 trillion — and the financial spigots are still open.
Over the weekend, industrialized and emerging countries pledged an additional $430 billion to bolster the International Monetary Fund’s reserves for loans, doubling the size of the organization’s war chest in the event of a worsening European debt crisis to almost $1 trillion. Three weeks earlier, E.U. leaders had set aside $1 trillion for a European bailout fund seeking to prevent the euro zone’s sovereign debt problems from spreading.
Meanwhile, the world’s major central banks have not finished pumping money into the global financial system. The U.S. Federal Reserve is scheduled to meet Tuesday and Wednesday, and the Bank of Japan on Friday, and their bias toward monetary easing through bond purchases will most likely remain firmly in place.
The I.M.F. has recommended more action from the European Central Bank, and the People’s Bank of China is expected to cut its bank reserve requirements this year to underpin growth. Read more.......