IMF warns that world risks sliding into a 1930s-style slump

[Newsjock]

Source: The Guardian

The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe's deepening debt crisis, the head of the International Monetary Fund has warned.

On a day that saw an escalation in the tit-for-tat trade battle between China and the United States and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of "retraction, rising protectionism, isolation".

She added: "This is exactly the description of what happened in the '30s and what followed is not something we are looking forward to."

... Speaking at the State Department in Washington, Lagarde said: "There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating."

Read more: http://www.guardian.co.uk/business/2011/dec/15/imf-world-risks-1930s-style-slump

[xchrom]

1. The only solution they have is to kick the can some more.

Until they figure out this is A) the post Growth world and B) somebody or several somebodies will have to Eat It --
There is no solution.

[Vincardog]

2. It could not have anything to do with the fact that the rich are looting

as much as they were in the 1920's either

[Ghost Dog]

6. No, no.

That's the solution that we're offered.

[Kaleko]

11. Lol.

The 99% solution. Pay up, suckers! Take your austerity medicine NOW.

[Mimosa]

14. ^ Wish I could rec your post, Vincardog ^

BTW, IMF policies and schemes have long been part of the problem.

[Vincardog]

15. No Shit. The IMF has been a long time enabler of the exact criminal corrupting policies that

are the cause of economic disparity injustice and environmental destruction.
They are to put it delicately SATANS hand servants.

[magical thyme]

16. did you mean Satan's?

or are you confusing Satins with Muslins? ;P

[Vincardog]

17. Mah accent is showing

[DCKit]

23. No kidding.

The IMF's janitorial staff must be working overtime to mop up all the drool.

They hope for and/or see pending economic disaster, everyone at the IMF pops a woody... even the women.

[now_zad]

3. High labor cost countries are now "service economies"

High labor cost countries are now "service economies, cheap labor countries are manufacturing everything. Two choices; convince the cheap labor countries that they need to decimate their economies by raising the cost of labor 30 times or more or convince the high labor cost countries labor costs and benefits need to come down drastically or it is all over for them.

There are 6 billion people in the world. 90% of them only want to put food on the table for their kids.

[PSPS]

10. Simply bringing back tariffs would do a lot to remedy this.

The reason the US has nothing except "service" jobs is because our system of tariffs has been dismantled over the last 30 years. That's why manufacturers have gone overseas. Besides paying slave wages, Chinese and other offshore factories have no environmental or safety regulations. That difference in cost can and should be recovered via tariffs.

[Charlemagne]

18. You said it

"Besides paying slave wages, Chinese and other offshore factories have no environmental or safety regulations."

This is exactly right in so many ways. I am just concerned about the international and domestic fallout that will ensue. China stops loaning to us and retail stores may see fewer buyers (people like cheap crap). Yeah the jobs may comeback and mom-n-pop stores will open again....but this wont be overnight. Likely to big an economic shift for any politician that wants reelection.

[Newest Reality]

4. Slump?

I noticed they avoided referring to it as a Great Depression. Would using that term be a verbal jinx or too alarming for some?

That would be like referring to somebody who is dying as potentially becoming permanently static. Death is death, no matter what pleasant euphemisms you choose to use.

Oh, it's not a Great Depression, it's just a variable constriction of consumption, or an economic intermission.

[Ghost Dog]

7. The Economist's D-word index:

This is the latest (in fact one and only) on this I can find (they really don't like to mention it, you see...).

Signs of a pending depression? The Economist's D-word index - Oct 2nd 2008
http://www.economist.com/node/12332693?story_id=12332693&source=features_box_main

MANY comparisons may be made between the devastation being wrought on America's financial system today and the Wall Street crash of 1929. One similarity that the world is desperate to avoid is a repeat of the depression of the 1930s. Hopes are pinned on the American bail-out plan that the House of Representatives is set to reconsider on Friday October 3rd. If the fear of depression is anything to go by, the future looks bleak. A survey of newspaper articles over the past two decades shows a sharp spike in mentions of the dreaded D-word, as commentators have started to think the worst. The prognostications may possibly turn out to be true, or perhaps the only thing we have to fear are the fears of journalists themselves...



But also... D-word index - Jul 3rd 2003 | from the print edition
http://enchanted.economist.com/node/1900274

Deflation is rampant. The Economist's D-word index (which counts the stories in the Financial Times and the Wall Street Journal that include the word deflation) surged in the second quarter to its highest level since the 1930s.

[tawadi]

8. My thought too. Slump?

Not how I would personally describe the Great Depression.

[Yo_Mama]

9. "Slump" was commonly used in England and Europe

"Depression" was the US word.

[tawadi]

12. Did not know this. thanks. eom

[bloomington-lib]

5. I don't think the IMF should be warning us of something they helped create.

[midnight]

13. I wonder when the 1 percent will hand over the money they need to let go of...

This sure is a test between greed and sharing....

[The2ndWheel]

19. Always interesting to see the reaction of we humans to limits

Or you could even call them regulations imposed on us by the environment, so as to keep us in check, and promote competition, keep monopolies from forming, etc. We don't much like those regulations, do we? We try to rewrite them. We try to find the various loopholes. We're pretty greedy.

When you think about it, we seem to act as a corporation does in relation to the government. Hell, you could say we're sort of like the 1% that everyone's been talking about lately. Kill off competition. Monopolize resources. Take, take, take. We don't pay our fair share. Take, take, take.

Unfortunately for us, the economy exists within physical reality. That's where the debt crisis is. Once again though, our response is very similar to what the bankers have done with the financial world. Coming up with all sorts of tricks to keep everything moving.

[KamaAina]

20. And remember what pulled us out of the "1930s-style slump"

World War II.

[katty]

21. who/what is the target of this 'warning'...the 1%? they don't care-this slippery slope is news?

we KNOW this...that is WHY there are ongoing protests...add that fact to your 'warning'.