Jumat, 06 Juli 2012

IMF sounds alarm over global economy with worries in Europe and America

IMF sounds alarm over global economy with worries in Europe and America

By Hugo Duncan

PUBLISHED: 15:58 EST, 6 July 2012 | UPDATED: 16:03 EST, 6 July 2012


The International Monetary Fund yesterday sounded the alarm over the global economy amid fresh worries about the outlook in Europe and America.

Christine Lagarde, managing director of the IMF, told an audience in Tokyo that growth around the world will be weaker than expected just three months ago.

She said the situation has deteriorated in crucial emerging markets such as China, India and Brazil as well as in Europe and America. Borrowing costs in Spain and Italy soared as Lagarde declared that ‘more needs to be done’ to save the crumbling single currency.

The US jobs market has continued to dampen President Barack Obama's re-election hopes

Dismal: The US jobs market has continued to dampen President Barack Obama's re-election hopes

On the other side of the Atlantic, official figures showed US employment rose by just 80,000 in June â€" not enough to cut unemployment of 12.7m or 8.2 per cent of the American workforce.

The disappointing news rounded off a dismal quarter in the US jobs market in a blow to President Barack Obama’s hopes of re-election in November.

Mitt Romney, the Republican challenger in the race to the White House, is focusing on the high levels of unemployment that have dogged Obama’s presidency.

‘There’s just not a lot of momentum in the economy,’ said Sam Bullard, an economist at US bank Wells Fargo. ‘Firms are saying: “Is there really a reason to ramp up hiring right now?”’

Weak job creation in the US fuelled fears that the debt crisis in Europe is taking its toll on the rest of the world.

Lagarde said the IMF will cut its 2012 global growth forecast of 3.5 per cent later this month as the crisis crippling the eurozone spreads.

‘Over the past few months, the outlook has, regrettably, become more worrisome,’ she said. ‘Many indicators of economic activity â€" investment, employment, manufacturing â€" have deteriorated. And not just in Europe or the United States. Also in key emerging markets: Brazil, China, India.

‘For make no mistake: this is a global crisis. This crisis does not recognise borders. This crisis is knocking at all our doors. No one is immune.’

The 10-year bond yield in Spain â€" the amount the government pays to borrow â€" rose back above 7 per cent into the danger zone that triggered full-blown bailouts in Greece, Ireland and Portugal. Italian bond yields were back above 6 per cent.

The collapse of confidence in the eurozone came just a week after leaders unveiled their latest plan to shore up the single currency bloc at yet another crisis summit â€" including support for troubled banks and debt-riddled governments.

The darkening outlook this week triggered fresh action to boost growth from the Bank of England, European Central Bank and People’s Bank of China â€"although it is feared it will have limited success.


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Of course the problem is that lenders require a higher interest on their loans than the borrowers can afford to pay back.Restrict all interest on deposits to 2% worldwide and all interest payable on loans to 3% and the problem is solved. - Gordon, Goldthorpe, 06/7/2012 23:22-------------------What absolute rubbish! The problem is not due to lenders requiring higher interest on their loans, it is borrowers taking on TOO MUCH DEBT. Do you think lenders are going to accept a long term interest rate of 2% and see the purchasing power of their wealth destroyed when inflation is being allowed to run much higher? What borrowers don't seem to grasp is that lenders (savers/investors) DO NOT have to continue lending. Financial Repression like this just encourages people to move their capital out of the country or into other things like Gold.

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Where does money come from ? From assets, added value and resources that people are prepared to (and can afford to) pay for. Philosophically we've 'progressed' beyond this and have prioritised other agendas such as global warming, wealth distribution and risk avoidance. It's a choice, to some extent, we've all made and now we're surprised that capitalism has run out of steam. Noble causes are easier to support when there's some surplus to indulge them with. At a time of global crisis we've surely got to recognise that either our priorities need to change or we evolve a model other than capitalism. The former is probably easier, if somewhat short-term, but hungry people are easily uprisen and fighting wars are expensive. Just what options do the G20 and other summit groups think they actually have ? Looking away and hoping for the best perhaps.

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Of course the problem is that lenders require a higher interest on their loans than the borrowers can afford to pay back.Restrict all interest on deposits to 2% worldwide and all interest payable on loans to 3% and the problem is solved. ----- Gordon, Goldthorpe ----You cannot just keep borrowing more and more money. There will always come a point where even at 0% interest you cannot afford to borrow any more. Rather than learning from Japan’s experience of the 90s it seems we are just repeating the mistakes. Only an idiot does the same thing over and over again and expects a different result.

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great , this now means we are officially out of the mire.. never trust anything these people say, they did not have a clue before and the do not have one now.. its like when the water board said we are heading for a drought... we should all now be celebrating, the world is on a boom - give it 6 months yeye

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The entire continent has used cheap debt to ramp up the unproductive government sector to wallpaper over falling output in the productive sector. Just like the ninja loans in the USA eventually it all collapses when you run out of lenders. The alternative to the desperate stimulus plans being used now is to slash civil services to sustainable levels and actually balancing budgets. No politician wants the depression this will bring, however markets will do it for you all anyway. This is GFC mk 2. 20 years of unsustainable prosperity is over.

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Trying to save the Euro is like interfering in nature when someone saves the weak fawn from the lions - they're just postponing the inevitable.

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Just goes to show, kicking the can down the road using bailouts, QE etc, doesn't really work. Flogging a dead horse springs to mind. Its not just the bankers, it's the whole system that is rotten to the core.

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Strong words from a woman who doesn't exactly pay much tax on her large salary. There ain't going to be much growth when everyone has been on a borrowing binge and isn't prepared to face up to the fact that money borrowed has to one day be paid back and you have to stop borrowing and live within your means. The only /alternatives are default or print and debase. I wonder which of those the invertebrates known as politicians will choose.

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I am SICK of IMF!!!!!!!!!!!! They cause more trouble redistributing wealth. We should ALL sound the alarm on IMF!!!!! Let the countries handle themselves. SOMEDAY, SOMEHOW EVERYONE will come to realize that BAILOUTS aren't the answer. RESPONSIBLE SPENDING is the answer. CUTS. LIVING WITHIN YOUR MEANS. FIRST be your OWN keeper. HOW can you help someone else when YOUR ship is about to sink???? NO MORE IMF!!!!!!!!!!!!!

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It times like this, its best to go on holiday, so I've just booked a cruise. The mess we are in will still be here when I get back. But at least it gives me a break from this bad banking news all the time :-)

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