IMF warns high public debt "tremendous" challenge

Reuters via Fidelity.com ^ | April 10, 2010 | Natsuko Waki

[mlocher]

CAMBRIDGE, England (Reuters) - IMF chief Dominique Strauss-Kahn said on Saturday that public debt in the advanced economies is set to increase significantly and reversing the rise would be a "tremendous" challenge.

Strauss-Kahn, managing director of the International Monetary Fund, also said that global economic recovery is still sluggish and uneven and needs continued policy support in many advanced economies.

Growing concerns about the ability of governments to finance the high level of public debt after the financial crisis, particularly in the case of Greece, have been making investors jittery in the past few months.

Strauss-Kahn said public debt in the advanced economies is forecast to rise by about 35 percentage points on average, to about 110 percent of gross domestic product in 2014.

"Reversing this increase will be a tremendous challenge -- let alone reducing debt below pre-crisis levels, which may be needed to leave enough fiscal space to tackle future crises," he told an economic conference at Cambridge University.

[mlocher]

The IMF head said that in Europe, as well as at a global level, policy coordination was important to secure economic growth.

Obama will follow any European Policy.

[givemELL]

There is no policy or action that can solve the unwinding of impossibly vast debt instruments except to unwind and dispose of them as quickly as possible. Such an action, unfortunately, will be like a heart patient diving thru the ice into Lake Michigan in the dead of winter for a fatally shocking experience.

The Fed has been attempting to slow the effects the unwinding in the US and Europe, to no avail now. The Fed is out of tools and the ice-water bath is imminent.

[preacher]

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig von Mises (1881 – 1973)

[G-Man 1]

Buy silver dollars. They are easer to trade.