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IMF Chief Lagarde Sees Gloomy Global Outlook

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The United States and Europe need to speed key political decisions to help keep the weakening global economy from sinking under high debt and unemployment, International Monetary Fund Managing Director Christine Lagarde said, according to The Washington Post.

The ongoing crisis in Europe, U.S. fiscal problems and a developing slowdown in Asia are threatening even deeper problems, Lagarde said, and have triggered new worries about waning momentum for action still needed to address some of the issues behind the 2008 financial crisis.

Christine Lagarde
Christine Lagarde

“We need a sustained rebound, not a bounce,” in global growth, Lagarde said in an address at the Peterson Institute for International Economics in advance of IMF meetings in Japan next month.

Data released September 24 added to the sense of slowdown. A closely watched index of German business optimism slid for the fifth straight month — a poor showing among entrepreneurs and investors in the euro region’s largest economy.

Lagarde’s remarks focused on the political risks for the economic recovery — the seemingly stalled debate over fiscal policy in the United States and the protracted efforts by European policymakers to prove they can keep the euro currency union intact. Weak growth in the developed world is adding to the slump in important developing countries, and the problems in Europe are widely regarded as the major threat to the world economy. In each case, Lagarde said, political bickering and delays in decision making have made matters worse.

Over the summer, the IMF cut its world growth forecast to 3.5 percent for 2012, and it is likely to trim it again during the Tokyo meetings. Lagarde said the downward trend has been evident for a year.

The problems around the world threaten to reinforce each other: The crisis in Europe, for example, means fewer exports for China; slowing growth in that country, the world’s second-largest economy, means fewer import orders from the United States. The approaching U.S. “fiscal cliff,” and its threat of dramatic government spending cuts, could have global ripple effects, too.

Central-bank policy has been a main prop for developed countries, with the U.S. Federal Reserve and the Bank of Japan announcing rounds of “quantitative easing” to pump money into those economies and the European Central Bank approving plans to ensure that governments can finance their operations.

But that may prove only a temporary salve, Lagarde suggested, without more steps to reignite growth in Europe and address fiscal problems in the United States.

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PanARMENIAN

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2 thoughts on “IMF Chief Lagarde Sees Gloomy Global Outlook

  • September 26, 2012 at 2:52 pm
    Permalink

    I use the term “fictitious capital” to describe what the Big Bankers, public and private, are attempting to inflict on the ordinary 99% people who through their entrepreneur led labour create ALL REAL value, capital included.
    In the middle of the 19th century Karl Marx coined this term to describe the notes and loans that governments and gentry used to finance wars, luxuries, estates and otherwise living beyond their REAL means.
    At that time such paper would accrue during “Boom” times as the economy expanded and would usually max out at around 10-12% of a countries GDP. As long as the good times rolled on it was not a problem, but came a crisis of over production (of all the wrong things) there would be the day of reckoning. Ergo, the bill collectors came and cash not paper promises was the order of the day. This resulted in a variety of ways to settle, some were paid in part or in full but more often bankruptcies and swindles resulted. Then the stage was set for the next cycle – boom bust.
    Today though the situation with ‘fictitious’ or ‘counterfeit capital is vastly different.
    100 years of pumped up growth for growths sake first based on the now discredited ideas of John Maynard Keynes has produced a situation where some 20 times the worlds gross product exists as ficticious capital, a counterfeit collection of deficits, bills, bonds, exchanges, derivatives, swaps and the latest fraud, “quantitive easing”. (Le Monde Diplomatique puts it at 50 times)
    Every day we read of new Central and Private bank meetings, “Increasing capital base” is their current fad.
    OFF THE WALL! There is not a farthing of REAL capital in all of this ratbag of lies, swindles and manipulations.
    REAL capital is ONLY accumulated labour dedicated to enhancing future production. Ergo entrepreneur led LABOUR (of the 99%) is the only source that can augment existing capital or create new.
    The banksters, led by the IMF, USA FED, and British “financial services” are well aware of this fact but that will not stop them from attempting to download this fraud onto the REAL product of Labour in the form of “bailouts” of “sovereign” debts, to be serviced by taxes on the REAL producers.
    The 99% will be robbed of (much prepaid) social services and benefits to service “debts”. “Austerity” it is called when those who had NO hand in running up this fraud are required to pay interest that will amount to 40-60% of the future product of their labour. Gone will be pensions, good schools, decent medical care, infrastructure (e.g. utilities that work reliably); even adequate diets will be history.
    “Let them eat cake!” exclaimed La Royale Marie Antoinette.
    Let them eat garbage, implies La Grande Dame Christine LaGarde, of the International Monetary Fascists(IMF)
    So Greece, you are the front line today, Italy and Spain may be next, but do not think that any country, including the relatively well off Germany or the resource rich Canada and Australia will be forever exempt. Ms Merkel, beware!
    The “poor little ones” are but appetisers who will whet the appetites of these financial service vultures and jackals. For certain if they succeed at the start the taste of financial carrion will make them hunger for more, and they will finish only when the 99% of humanity is subject as debtors to enslavement by 1%.

    But his does not have to be! Greece you can repudiate the fraud! Lead the way! DEFAULT is the way to go!
    99% be inclusive! Support Greece today, Italy Spain, &c. tomorrow and…?? the world in future.
    Hold on to your souls!
    You have a WORLD to WIN!!

    Reply
  • October 7, 2012 at 7:55 pm
    Permalink

    This should all be about investing in two things: emerging economies with high-demand products. Here’s one example of such an intersection: Azerbaijan and oil/gas. IMF should recognize that local players that emerging onto the international scene have a lot of potential. Look at the International Bank of Azerbaijan, which has won a half dozen international awards for excellence. Led by Dr. Jahangir Hajiyev, the IBA is a model, stable, reform investor. The U.S., Europe, and Asian investors simply need to know where to look. The IBA and Hajiyev is a great start.

    Reply

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