IMF: We Screwed Up

1 Comment

FT Alphaville reporting:

Christine Lagarde has urged countries to put a brake on austerity measures amid signs that the IMF is becoming increasingly concerned about the impact of government cutbacks on growth. Ms Lagarde, IMF managing director, cautioned against countries front-loading spending cuts and tax increases. “It’s sometimes better to have a bit more time,” she said at the annual meetings of the IMF and the World Bank on Thursday.

The fund warned earlier this week that governments around the world had systematically underestimated the damage done to growth by austerity.

More

Where Did All The Money Go?

Leave a comment

Friends and colleagues often ask me “Where did all the money go? someone somewhere must have it!”. I too used to wonder – until I read this dinner speech by Benoît Cœuré, Member of the Executive Board of the ECB, which was delivered to the BIS-ECB Workshop on global liquidity a few days ago. This is well worth reading, as it is written clearly, it is a short piece (recall, it’s a dinner speech!) and it explains to a large part what happened to the global economy over the last 15 years.

More

Sir Mervyn King: Most Serious Financial Crisis At Least Since The 1930s, If Not Ever

Leave a comment

Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession. Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster.

“This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.”

More

Münchau: Plan D Stands For Default and Death of Euro

Leave a comment

From Wolfgang Münchau’s regular column in the Financial Times, Plan D stands for default and death of euro:

The biggest single danger in the eurozone crisis now is that events are moving too fast for Europe’s complacent political leadership. Last week, the crisis reached Italy. And the European Union looked the other way.

Indeed. And with Italy firmly in the category of countries that are “too big to bail”, events from here on can only move even faster, leaving Europe’s political “leadership” hopelessly behind the curve and unable to respond.

More

Eurozone Imploding as Prime Minister of Greece Writes Open Letter to Head of Eurogroup

1 Comment

Italian bond yields have exploded upwards past the critical sustainability zone, Berlusconi has fired tried to fire his finance minister who had held the entire show together and the share prices of Italian banks – particularly Unicredito – are collapsing.

As respected bloggers are starting to wonder whether Europe’s leaders are fiddling while Rome starts to burn, it increasingly looks like the end of the road is very close for the European can-kicking exercise that started with the collapse of Lehman Brothers and which had continued unabated since.

From the UK Independent, Euro is Plunged Into Crisis as Contagion Hits Italy:

European finance ministers were struggling last night to persuade nervous markets that Italy will not be the next domino to fall in the eurozone’s apparently endless succession of sovereign debt crises.

But this time is different, as the saying goes: unlike Greece, Portugal and Ireland, the sheer size of Italy’s economy and the scale of her debts are way beyond the resources of the current EU/IMF rescue funds, and probably any conceivable new arrangements.

More

Robert Reich: Heading Back Toward a Double-Dip

Leave a comment

Robert Reich – professor, book author and servant of three U.S. administrations, most recently as Secretary of Labor under President Clinton – is calling out Washington and Wall Street on the “truth”, as he puts it, that they will not admit: that the U.S. economy is heading back towards a double-dip:

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip – but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.

Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.

The Reuters/University of Michigan survey shows a 10 point decline in March – the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.

Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.

More

Is The Great Recession As Bad As The Great Depression?

Leave a comment

This thorough report on Washington’s Blog compares the Great Recession which began about three years ago to the Great Depression of the 1930’s. With the euphoria in stock markets a casual observer might think that the end is in sight, that we will soon be out of the woods. Is that possible? More

Older Entries