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The risks to the outlook are still tilted to the downside, although tail risks have diminished noticeably. In the advanced economies, rising unemployment and a loss of confidence in the stability of the financial sector (possibly resulting from a larger-than-anticipated wave of corporate bankruptcies) could put renewed downward pressure on asset prices and potentially trigger a deflationary episode. Moreover, rising questions about public debt sustainability in some countries could add to upward pressure on bond yields, with negative effects on the recovery of housing markets. Falling house prices are another important risk that could undermine confidence in bank capital bases. At the same time, a number of emerging economies remain quite vulnerable to intensified financial stress, with potential feedback effects on advanced economies. More generally, if higher unemployment and social discontent were to prompt governments to introduce trade and financial restrictions and roll back reforms to other sectors, there would be confidence and productivity would suffer. However, there are also some upside risks, including a larger-then-expected drop in risk aversion and stronger internal demand dynamics in some major emerging economies.
Rebalancing global demand
Looking beyond the next year, the crisis is likely, on the supply side, to have reduced the global economy’s sustainable output. Falling investment and widespread bankruptcies are lowering the level and perhaps also the rate of growth of potential output. Moreover, rising cyclical unemployment may translate into higher structural unemployment as workers lose market attachment.
It amazes me how quickly all these blow hards, the IMF being just one of them, have gotten so smart. They never saw any problems coming but now can see years if not decades in advance.
I'm not saying things are good, just that these guys, and all other economist, have no clue at all and their predictions rarely if ever come to pass. Just something to think about when reading their drivel.
It amazes me how quickly all these blow hards, the IMF being just one of them, have gotten so smart. They never saw any problems coming but now can see years if not decades in advance.
I'm not saying things are good, just that these guys, and all other economist, have no clue at all and their predictions rarely if ever come to pass. Just something to think about when reading their drivel.
the problem for us is that their "drivel" influences policy. why do you think we are throwing taxpayer money at the IMF?
Does anyone else find Dr. Roemer's incredibly fake "jolliness" to be a HUGE worry? I mean she is so obviously shaking in her shoes that the country will eventually figure out that their numbers are completely made up with her BS about "things would have been worse" I half expect her smiles to break into sobs at the every breath. "Oh god, things are not working they way we planned. There is no way we can pull off the health care take over. We don't have any sort of consensus on regulation. We have no idea how we agreed to bankroll the UAW's take over of GM. There is no way we can keep this chared spinning long enough not to look like fools for the 2010 elections...."
GULP!
i like these two pieces of information back to back:
July 27 – Market News International (Denny Gulino): “The Federal Reserve agrees with Treasury’s ‘strong dollar’ policy and the way to get there is to have a strong economy, Fed Chairman Ben Bernanke said in a PBS network special… The Sunday night videotaping showed a contained and unflustered Bernanke enthusiastically answering questions... ‘As far as the Fed and the dollar is concerned, the Fed supports the Treasury’s strong-dollar policy. We think the dollar should be strong. And the best way we think to get a strong dollar is to get a strong economy. When the economy’s strong then there’s a lot of good investment opportunities, foreigners want to invest here, and that causes the dollar to rise.’”
The dollar index declined 0.6% this week to a 2009 low 78.31.
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