Posted on 10/03/2010 3:14:10 PM PDT by blam
IMF Admits That The West Is Stuck In Near Depression
If you strip away the political correctness, Chapter Three of the IMF's World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time.
By Ambrose Evans-Pritchard
Published: 8:00PM BST 03 Oct 2010
Spain, trapped in EMU at overvalued exchange rates, had a general strike last week
The IMF report – "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation" – implicitly argues that austerity will do more damage than so far admitted.
Normally, tightening of 1pc of GDP in one country leads to a 0.5pc loss of growth after two years. It is another story when half the globe is in trouble and tightening in lockstep. Lost growth would be double if interest rates are already zero, and if everybody cuts spending at once.
Not all countries can reduce the value of their currency and increase net exports at the same time," it said. Nobel economist Joe Stiglitz goes further, warning that damn may break altogether in parts of Europe, setting off a "death spiral".
The Fund said damage also doubles for states that cannot cut rates or devalue – think Spain, Portugal, Ireland, Greece, and Italy, all trapped in EMU at overvalued exchange rates.
"A fall in the value of the currency plays a key role in softening the impact. The result is consistent with standard Mundell-Fleming theory that fiscal multipliers are larger in economies with fixed exchange rate regimes." Exactly.
Let us avoid the crude claim that spending cuts in a slump are wicked or self-defeating. Britain did exactly that after leaving the Gold Standard in 1931, and the ERM in...
[snip]
(Excerpt) Read more at telegraph.co.uk ...
After watching Eddie’s fiasco in D.C. yesterday, I think a lot of people are “stuck on stupid” also. Wow! What a bunch of America haters!
NB that the IMF has finally announced in ‘polite’ company what has been going on for the last year+: Countries are devaluing their currencies to make their exports more attractive.
This deliberate currency devaluation is in direct violation of WTO trade provisions, but no one in elected office has the balls to declare their trade partners “currency manipulators.” Instead, they resort to euphemisms to avoid actually invoking the WTO.
Hence my assertion that the current “free trade” agenda won’t work. Everyone is now in a “beggar thy neighbor and their own citizens” mode of currency manipulation, aside from the small-economy chumps in the EU who gave up their own currencies to adopt the Euro.
End the fed and outlaw fiat money in America.That will really shake the IMF up and rain on their funny money game.These guys have raped the world without lifting a finger and we allow this nonsense.
The question that must eventually be answered:
Are we facing an extreme deflationary downturn (by whatever name you wish to use)?
All I hear is talk about inflation, but that can only happen if there is money to spend.
Deflation seems the most likely outcome from here. Not pretty.
I am in for that idea. We gotta put the Kibosh on this insanity.
Oh, I'm sure a lot worse things than "D-mn" will slip out.
Damn that dam, dammit! And if we had less outsourcing, a major newspaper might even get it verbiage correct.
I thought this thread had to do with the Impossible Missions Force.
Ah. So it's The Great Near-Depression.
AEP bump.
Now, if the IMF would just admit that Free Trade Globalism has been an abject failure....nah, you probably won’t get a Liberal Globalist institution like IMF to admit their agenda is a failure
Of course, the IMF needs to be disbanded, its part of the problem
NB that the IMF has finally announced in ‘polite’ company what has been going on for the last year+: Countries are devaluing their currencies to make their exports more attractive.
This deliberate currency devaluation is in direct violation of WTO trade provisions, but no one in elected office has the balls to declare their trade partners “currency manipulators.” Instead, they resort to euphemisms to avoid actually invoking the WTO.
Hence my assertion that the current “free trade” agenda won’t work. Everyone is now in a “beggar thy neighbor and their own citizens” mode of currency manipulation, aside from the small-economy chumps in the EU who gave up their own currencies to adopt the Euro.
Disbanding the IMF, WTO, NAFTA, and any regional and global economic setup would be the start to rebuilding the economy...both in the USA and around the world
yep—precise use of the English language—wielded like a fine tool
should have been
damn that brake
The fed is powerless to control deflation. The M1 is below 1. Ben can print all the money he wants if the banks don’t lend it goes nowhere. This is why the first QE did nothing and now we are looking for QE2. While the govt is out of new options the elderly, retired and savers are paying a huge price.
It could be, if you're interested, Mr C210N.
Click here.
It is time for Obozo and the Dems to pay a price.
Remember, November is Coming.
(regardless of the outcome it will not fix this, but it sure could help if Dems get destroyed in the Mid-Term elections)
Should I/we believe the 'inflation' numbers presented in this aricle?
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