Wednesday, April 29, 2009

IMF warns of still 'deeper recession’ ahead

The global economy is set to decline by 1.3% in 2009, the International Monetary Fund (IMF) says. However, the major economies are predicted to shrink even more. (See chart below) The prospects for the advanced economies are not any brighter in 2010, with an overall forecast of zero growth.

The IMF says this represents "by far the deepest post-World War II recession" with an actual decline in output in countries making up 75% of the world economy. After 60 years as the engine of world growth, the sharp fall in trade is now hitting many of the leading exporting nations, particularly in Asia.

At the heart of the crisis is the continuing overhang of losses in the financial sector, which the IMF now estimates at $4 Trillion, four times higher than it projected just one year ago.

And it warns that the current outlook is "exceptionally uncertain, with risks still weighting on the downside."


Tuesday, April 28, 2009

World Bank and IMF: Human calamity erupting from economic crisis

The IMF and World Bank have warned that the global economic crisis is turning into a "human calamity". The two Bretton Woods institutions told their 185 member countries that the worst global slump in generations had already driven more than 50 million people into extreme poverty.

"The global economy has deteriorated dramatically ... Developing countries face especially serious consequences as the financial and economic crisis turns into a human and development calamity," the International Monetary Fund and World Bank joint development committee said in a statement.

How to help the developing world cope with the worst global slump since the 1930s Great Depression was top of the agenda for the bank's steering committee meeting that wrapped up the sibling institutions' two-day gatherings.

World Bank president Robert Zoellick also told the news conference, "No one knows how long this crisis will last."


Tuesday, April 07, 2009

Fed up with the FED (Federal Reserve)

The one villain that has escaped public outrage over the financial crisis is the Federal Reserve.

"The very people who devised the policies that produced the mess are now posing as the wise public servants who will show us the way out," writes Thomas Woods in "Meltdown."

"The Fed was the greatest single contributor to the crisis that unfolds before us," Woods writes, and "more dollars were created between 2000 and 2007 than in the rest of the republic's history."

Already in its sixth week on the New York Times best-seller list, this eminently readable book traces the Fed's role in every financial crisis since this creature was spawned on Jekyll Island in 1913.

Obama is repeating the failed policies of Hoover and FDR, by refusing to let prices fall. Obama, with his intervention to prop up housing prices and Bernanke with his gushers of money to bail out bankrupt banks and businesses are creating a new bubble that will burst even more spectacularly.

[Patrick J. Buchanan, writing in Human Events]

Saturday, April 04, 2009

The best way to rob a bank is to own one

Ever wonder about the major conflict of interest in that Henry Paulsen had just been CEO of Goldman Sachs before becoming Treasury Secretary, which means it was his job to regulate the banking industry? And later to investigate it.

On April 3rd, PBS broadcast an interview with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black addresses the trillions of dollars that are now being given to the banking industry and answers the question "How do they get away with it?” His response: Fraud!

He ascertains that CEOs of some of these banks and mortgage firms deliberately set out to make bad loans, as a means to increase their own personal income. And this was possible because the Bush Administration essentially got rid of regulation, so nobody was looking. Among the facts he presents:

- Complex instruments were deliberately created so swindlers could exploit them.

- Liars’ Loans were assigned triple-A ratings, which is supposed to mean there is zero credit risk.

- Rating agencies never looked at a single loan file. Fitch, the smallest of the rating agencies, stated "the results [of an investigation] were disconcerting, in that there was the appearance of fraud in nearly every file we examined."

- Secretary of the Treasury Geithner is covering up the fraud, just like Paulsen did before him.