The global economy is at the point of maximum danger

uscitizen

uscitizen

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The global economy is at the point of maximum danger

By Ambrose Evans- Pritchard
Last Updated: 6:53am BST 21/07/2008


It feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.

The International Monetary Fund has abdicated into schizophrenia. It has upgraded its 2008 world forecast from 3.7pc to 4.1pc growth, whilst warning of a "chance of a global recession". Plainly, the IMF cannot or will not offer any useful insights.

Its "mean-reversion" model misses the entire point of this crisis, which is that central banks have pushed debt to fatal levels by holding interest too low for a generation, and now the chickens have come home to roost. True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy.
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The risk is that these same central banks will commit a fresh error, this time overreacting to the oil spike. The European Central Bank has raised rates, warning of a 1970s wage-price spiral. Fixated on the rear-view mirror, it is not looking through the windscreen.


The eurozone is falling into recession before the US itself. Its level of credit stress is worse, if measured by Euribor or the iTraxx bond indexes. Core inflation has fallen over the last year from 1.9pc to 1.8pc.

The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest. US bank credit has contracted for three months. Real US wages fell at almost 10pc (annualised) over May and June. This is a ferocious squeeze for an economy already in the grip of the property and debt crunch.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/21/ccview121.xml
 
Wow what a suprise. I saw that usc posted and that Top was the only reply. So I click on it and find that they are not in agreement. Color me shocked.
 
no he doesn't because I never said it.
I SAID WE WEREN'T IN RECESSION.
And we still aren't you GED baffoon.
 
You said everything was going fine because the shopping center parking lots were full Toppy.

The only reason we are not technically in a recession is the high cost of oil and govt spending.
Both ensure a coming recession though.
 
I said 30% chance of recession
freak was saying 70%
Chappy I think was around 50%
Wussies like you and GED just thought a depression was coming.
 
For the record, what is your chance of recession now toppy ?
Everyone on here knows you so no need to look up your posts from last summer on how great things were going and no recession coming.
 
I was saying thigns were good when GDP was at 6% 2 yrs ago
I'd raise my guess to 50% in the next year
But I'm not the type to run and scream the sky is falling during a recession.
They are needed about every decade to clear out the excesses and we have had unusually large excesses in the housing market.
 
The root of the problem is that they followed the US way of economics.

Once this is realized it will not be good for the USA.
 
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