EXTRACT: No wonder alarm bells are ringing - something has to be
done. In particular, more voices are being raised doubting the wisdom of
pushing ahead with all the various austerity programmes, which look
more and more like an act of collective economic suicide. Hence the
president of the World Bank, Robert Zoellick, warned that the drive to
cut national deficits across Europe could “sink” the region’s economic
recovery - as the hope that perhaps we can somehow “muddle through” by a
magical emergence of “financing and liquidity” rapidly fades away. More
stridently still, Christine Lagarde, the IMF’s managing director,
starkly declared that the global economy faced a “threatening downward
spiral” if it did not abandon fiscal austerity and instead switch to
“growth-intensive measures”. More concretely, Lagarde said it was
essential to recapitalise banks so as to “avert contagion” and
“withstand the risks linked to the debt crisis and weak growth”. In
other words, do an about-turn before it is too late.
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