The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, & 3.6 percent next year, the IMF said today, compared with July predictions of 3.5 percent in 2012 & 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent.
“A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow & bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said in its World Economic Outlook report. “The answer depends on whether European & U.S. policy makers deal proactively with their major short-term economic challenges.”
Confidence Fragile * “Confidence in the global financial system remains exceptionally fragile,” the IMF said. “Bank lending has remained sluggish across advanced economies” & increased risk aversion has damped capital flows to emerging markets, it said.
The IMF report called for U.S. policy makers to find an alternative to planned automatic tax increases & spending cuts that would trigger a recession. Europeans must follow on their commitments for a more integrated monetary union, & many emerging markets can afford to cut interest rates or pause tightening to fight off risks to their economies, the IMF said.
“It is a call to action,” Blanchard told Bloomberg Television.
Europe’s Contraction * The 17-country EU economy will contract 0.4% this year, 0.1% worse than forecast in July, & grow 0.2% in 2013, less than the 0.7% predicted three months ago, the IMF said.
The U.S. is seen expanding 2.2% this year, higher than an earlier forecast, & growing 2.1% next year, less than previously predicted. Japan’s estimate was cut to 2.2% this year and to 1.2% in 2013.
Spain’s economy will shrink 1.3 percent next year, 0.7% worse than predicted in July. German growth is seen at 0.9 percent each year, with the 2013 estimate half a percentage point less than previously forecast.
“Spain & Italy must follow through with adjustment plans that re-establish competitiveness & fiscal balance & maintain growth,” Blanchard wrote in a foreword to the report. “To do so, they must be able to recapitalize their banks without adding to their sovereign debt. And they must be able to borrow at reasonable rates.”
Other risks to the global economic outlook in the short term include a renewed increase in oil prices & an inability to raise the U.S. debt ceiling, it said. The IMF forecasts assume oil at $106.18 a barrel this year and $105.10 next year, based on the average prices of U.K. Brent, Dubai and West Texas Intermediate crudes. That compares with estimates of $101.80 and $94.16 in July.]
So the IMF has said their piece about what the nations of the world need to do in their opinion to save the economies of the world. I find it a little suspect that the world hangs on the edge of their seat waiting for the anointed money masters at the IMF to unveil their opinions when most people don’t even understand who the IMF is or what they are? The world understands it as the media spoon feeds it to them of course, the IMF is a benevolent organization that comes in & lends money to those poor nations that can’t seem to get their affairs in order so that they can ensure that poor little countries future. Bwahaaa! The IMF is a financial institution that is funded by the NATO nations of the world (the financial arm of NATO along w/ the World Bank) & is in line with the world bank & NATO itself. They have for decades gone around to resource rich third world nations that are often run by small minded dictators who never quite get their countries a seat at the global table by bringing those resources to bear on the market place. Often these nations are embroiled in civil wars and territorial disputes with other tribes that make them financially incapable of functioning in an effective manner. Enter the IMF who shows up as the benevolent & philanthropic lender of last resort who offers these uneducated dictators billion dollar loans to get their nations a place at the global table, but they come with ridiculously high rates of interest, often times at massively subprime rates usually in the neighborhood of 25-40%! And when these uneducated leaders can’t make the massive interest payments the IMF has no choice but to come and collect the collateral on the loan which happens to be all of the nations resources! Done & done! So how does the 3rd world mob style ‘loan shark’ lender for the NATO allies also double as the definitive financial leader of the 1st world?
Enough about who they really are and on to the actual information they put forward. They insist that the entire European conglomerate must forfeit their sovereignty and end up nothing more than a faceless, banking union without any resemblance of the prior nationalism that once flowed like patriotism. In so doing they will wash away any & all vestiges of the strong European history & identity that has spanned almost all of human history & trade it for a convenient banking union with Germany at the head of the table dictating what once free nations once were able to decide for themselves. This sounds like a banking coup de ta that will consolidate once great nations into a continent of borrowers who have no right to speak for themselves nor dictate their future as a nation. What other reason could there possible be for the demand that they forfeit their sovereignty as a condition of helping these economies get back on their feet?
Interesting is the mention of the ‘inability to raise the debt ceiling’ for the US? It should prove to be wildly dangerous if this ends up being the direction things go but I have previously suggested that we could have a major crisis after the election if the debt ceiling issue morphs into a monster. That may be a telling slip on their part so lets watch this one closely. Lack of bank lending was sighted as an issue but we all know the banks are forbidden from lending to the public as this would bring the inflation tidal wave created by the tens of trillions of newly printed FED dollars since the housing crash directly into the economy on Main Street. Either way, it is time to establish your “Weak Dollar Insurance Policy” in physical gold & silver bullion & begin to participate in the sound money debate. Inflation can accelerate into hyperinflation, recessions can smother a nation into a depression & currency wars often times lead to trade wars which inevitably evolve into real wars. What more reason do you need to prepare for what the future holds? Remember it is a far better strategy to PREPARE your portfolio rather than attempt to REPAIR it once the damage has spread like the plague. Tick, tock.