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Earlier this morning the BBC reported that International Monetary Fund chief Strauss-Kahn says the IMF has lowered its global growth forecast, and will likely lower it further in January. We should be concerned not only about "social unrest" but because "all the whole society is going to suffer," he says in the story excerpted below.
In a way there's nothing new in what he says. This has seemed to me a reasonable forecast since at least a year ago, and I've been writing about it here for months. But there's something about the assessment coming from a guy who's in contact with the financial ministers of the world's nations, and who has some responsibility for helping them out of the cataclysmic mess our "deregulate the markets" ideologues have made for the world's 6.7 billion people, that should get our attention.
While our governments -- from international, to national, to local -- are picking winners (investment bankers and auto executives) and losers (all the rest of us) I hope that someone is addressing the what-if economic scenarios. We have plans, nationally and locally, for dealing as best we can with chemical or biological terrorist attacks, tornadoes and floods, food or medical shortages, and so forth.
President-elect Obama is now being told by his economic advisers that unemployment may reach 9% next year, instead of 7% or 8%, and that his proposal for 2 million new jobs may need to be expanded if it's to benefit what may turn out to be an additional 3.5 million without jobs.
("President-elect Barack Obama has expanded his goals for a massive federal stimulus package to keep pace with the increasingly grim economic outlook, aiming to create or preserve at least 3 million jobs over the next two years.
The more aggressive target, up from 2.5 million jobs set a month ago, comes after a four-hour meeting last week in which Obama's top economic advisers told him the economy is now expected to lose as many as 3.5 million jobs over the next year. Obama was told that could drive unemployment, currently at 6.7 percent, above 9 percent, a figure not seen since the recession of the early 1980s." Lori Montgomery, "Obama Expands Stimulus Goals; As Economic Outlook Grows More Dire, Early Target for Job Growth Is Bolstered," Washington Post, December 21, 2008, p. A1.)
What we're now going through is the beginning of the beginning, not the beginning of the end. Nothing the government has done so far -- including the trillion-dollar-plus generosity of Paulson and Bernanke for their banker friends -- has done any good. Virtually all the estimates of downturn and future economic projections have turned out to be wrong -- on the optimistic side. It would appear to the casual observer that none of the geniuses currently in place know what the hell they're doing.
What if it ends up being twice, or four times, as bad as is now being projected? What if unemployment goes from 10% to 20%, or even 40%? What if it takes us not one or two years, but 10 or 20 years, to recover from the ravages of greed by the wealthy and profliget "credit card" spending by everyone from nations to consumers?
Are such scenarios likely? I don't think so. I'm certainly not advocating fear and gloom for their own sake.
It's not likely that an airplane is going to crash in my neighborhood either (although one once did) just because we live under a flight path, or that railroad freight cars are going to fall off the tracks near the neighborhood (although that once happened, too). But it's still worthwhile for local officials, and residents, to give a little thought to how we might respond if those things or others did happen. Indeed, we have mock exercises in Iowa City regarding possible local disasters that test the plans our emergency workers, local hospitals and communications systems have for dealing with them.
That's all I'm suggesting. That someone in Iowa City, and in Des Moines (for Iowa), and Washington (for the entire country) should be thinking through the worst case economic scenarios to see if there are things we should be doing, now, that would help, at least to some degree, should things turn even worse than the "experts" are today predicting. Pain is pain, whether medical or economic, and we're all going to suffer in one way or another. But there are clearly some ways of dealing with it that make more sense than others. It's not too early to start figuring out what they are.
From the BBC:
Dominique Strauss-Kahn said . . . the IMF has already cut its forecast for global growth next year, and he said the next projection, due in January, would be even worse.
Mr Strauss-Kahn spoke of "2009 as really being a bad year".
"I'm specially concerned by the fact that our forecast, already very dark... will be even darker if not enough fiscal stimulus is implemented," he said in an interview with BBC Radio 4.
He said it would take a spending stimulus equivalent to about 2% of global Gross Domestic Product, or about $1.2 trillion, to make a real difference. . . .
"The question of having social unrest has been highlighted by journalists and I can understand that, but it's only part of the problem," he said.
"The problem is that all the whole society is going to suffer."
In November, the IMF lowered its global economic growth forecast to 2.2% from 3%. . . .
"IMF urges spending to spur growth; More spending by governments will be needed to stimulate worldwide economic growth, the head of the International Monetary Fund (IMF) has told the BBC," BBC World Service, December 21, 2008.
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
1 comment:
You are not exactly being fully truthful here.
Those funds to Wall Street did bail out some bad investments for sure. However, everyone with a 401K, IRA or similar account would have suffered. So, to say that "the rest of us" were not bailed out is a falsehood.
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