The Global Economic Meltdown

friendly version Posted 25/11/2008 Email this article to a friend


The Global Economic Meltdown
From Jan Lamprecht – African Crisis November 24, 2008

He says it will take at least one more year. It mentions too the massive withdrawals from emerging countries, which is no doubt like what I have mentioned with regard to South Africa. Its pretty freaky. Even Obama says millions of jobs are at stake. I listened to Obama's speech about what he will do. When he mentioned all the "Green" solutions, I laughed. The Green, eco-friendly solutions are normally quite costly. I want to see what Obama pulls off - IF he pulls anything off that is! Talk is cheap. Jan]

The IMF's chief economist has warned that the global financial crisis is set to worsen and that the situation will not improve until 2010, a report said Saturday.

Olivier Blanchard also warned that the institution does not have the funds to solve every economic problem.

"The worst is yet to come," Blanchard said in an interview with the Finanz und Wirtschaft newspaper, adding that "a lot of time is needed before the situation becomes normal."

He said economic growth would not kick in until 2010 and it will take another year before the global financial situation became normal again.

The International Monetary Fund on Friday promised to help Latvia deal with its economic crisis after it assisted Iceland, Hungary, Ukraine, Serbia and Pakistan.

But Blanchard said the IMF was not able to solve all financial issues, in particular problems of liquidity.

Withdrawals of capital leading to problems of liquidity "can be so significant that the IMF alone cannot counter them," he said, adding that massive withdrawals of investments from emerging countries could represent "hundreds of billions of dollars.

"We do not have this money. We never had it," he said.

The IMF had spent a fifth of its 250 billion dollar (200 billion euro) fund in the last two weeks, Blanchard added.

He also urged central banks around the world to cut interest rates, after the Swiss National Bank made a surprise one percentage point rate cut Thursday.

The central banks "should lower interest rates to as close to zero as possible," he said.