IMF Warning: 'No economy in the world is immune to the crisis'

[Windsor]

A return to the Great Depression': IMF boss ramps up pressure on EU with gloomy new recession warning

Last updated at 12:02 AM on 16th December 2011

The world is heading for a new Great Depression, the head of the International Monetary Fund warned yesterday. In an apocalyptic assessment of the debt crisis, Christine La;garde said the disaster in the eurozone was escalating – despite last week’s treaty designed to prop up the currency. Delivering a clear warning that Europe has still not done enough to prevent the collapse of the euro, she insisted every country in the world would need to help boost growth.

Warning: International Monetary Fund chief Christine Lagarde believes firm action by all countries is required to stave off the threat of a global depression

Mrs Lagarde warned that failure to solve the crisis would lead to ‘protectionism, isolation, and other elements reminiscent of the 1930s Depression’. She added: ‘This is exactly the description of what happened in the 30s and what followed is not something we are looking forward to.’

Significantly her attack on ‘isolation’ appeared to be an assault on David Cameron’s refusal to sign an EU treaty last week designed to save the euro. But her criticism was undermined last night when it emerged that Britain will have a seat at the table when details of the eurozone treaty are thrashed out. The revelation also undermines Labour’s criticism of Mr Cameron’s veto that it would leave Britain without a voice at Europe’s top table.

A senior government source said: ‘We will be there to ensure that the single market is protected and that the EU institutions are used in the right way.’ In a speech at the U.S. State Department in Washington, Mrs Lagarde said: ‘The world economic outlook at the moment is not particularly rosy. It is quite gloomy.

'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.
‘It is not a crisis that will be resolved by one group of countries taking action. It is going to be hopefully resolved by all countries.’

Read more: http://www.dailymail.co.uk/news/art...e-EU-new-recession-warning.html#ixzz1gfbXd7cC
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[Windsor]

Armageddon

We all know that no one can be spared if the European crisis develops into a full-blown global depression. Nevertheless, not many people are willing to sacrifice themselves for the world.
Selfishness constitutes the biggest problem in the current crisis.
Greece, Portugal, Spain, Italy, Belgium and other countries in Eastern Europe... if any of them defaults on its loans, a domino effect will ensue.
Theoretically, these countries should all clean up their accounts, tighten their belts and increase tax revenues in order to stabilise the market and restore confidence.
In practice, none of these countries is wiling to do this way, fearing that their near-term economies will be jeopardised, unemployment soaring and governments losing popular support.
The euro big brother Germany and the ECB should make more solid pledges to guarantee the bonds issued by these countries
However, both Germany and the ECB are concerned about their own liabilities if they were to make the pledges. So they shy away from making outright pledges, setting out instead conditions for these countries to follow before they are handing out any aid.
Washington and Beijing, in the meantime, opt to sit on the fence and observe.
Everyone is watching, hopefully someone will compromise or sacrifice, someone like Willis.
And, we do not have too much time to waste!

Extracted from: http://www.mysinchew.com/node/67526

 

[Windsor]

http://www.bbc.co.uk/news/business-16210134

15 December 2011 Last updated at 22:37 GMT

Fitch downgrades six global banks

Fitch has downgraded six of the world's largest banks, citing the challenging financial markets.

The banks include Bank of America and Goldman Sachs in the US, the UK's Barclays and France's BNP Paribas. Germany's Deutsche Bank and Switzerland's Credit Suisse were also cut.

Fitch cut the "issuer default ratings" at the banks, which "reflect the ability of an entity to meet financial commitments on a timely basis".
Banks and credit markets have been squeezed by fear over the eurozone debt crisis, which has seen several nations in the 17-nation single currency bailed out and fears that the euro could collapse.

Banks that hold eurozone soverign debt have taken massive charges on the debt, and it has increased fears about banks lending to each other.
Last week, ratings agency Moody's downgraded France's three big banks due to their difficulty borrowing money.

'Increased challenges'

In a statement, Fitch said that these US and European banks "are particularly sensitive to the increased challenges the financial markets face". The downgrades "reflected challenges faced by the sector as a whole, rather than negative developments in idiosyncratic fundamental creditworthiness," Fitch said.

Fitch also cut the so-called "viability ratings" at the six banks, which represent Fitch's view as to the "intrinsic creditworthiness of an issuer". It also cut the viability ratings at Morgan Stanley of the US and French bank Societe Generale.

On 30 November, Standard & Poor's downgraded the long-term credit grades of a string of major financial firms, include Wall Street titans Bank of America and Goldman Sachs, Barclays, and HSBC.