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Global Crisis Seems Near Final Stage - Israel's Fischer

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http://uk.reuters.com/article/idUKTRE65C0ZN20100613

The global financial crisis appears to be in its final stages, although some countries are still experiencing a recession, Bank of Israel Stanley Fischer said at an International Monetary Fund-World Bank meeting on Sunday.

"There is still much uncertainty about future developments in the global economy," Fischer said in an e-mailed statement after he spoke at the meeting that was not open to media.

"Hence, every negative piece of information that reaches the markets has a pronounced effect on assessments regarding the continued exit from the recession in various countries around the world," he added.

The Bank of Israel is hosting the IMF-World Bank's Constituency Meeting, which is being attended by IMF Managing Director Dominique Strauss-Kahn and central bank and finance ministry officials from a number of European countries.

He noted that the rescue plan by European institutions and the IMF helped to stabilise markets and the global economy "and the global economy will learn important lessons about how it was formulated and how it will be implemented."

Fischer said that since Asian countries suffered less of an impact from the crisis, the "centre of gravity of the world economy is moving gradually towards the rapidly growing emerging markets."

Fischer also rejected the notion that the crisis has ended capitalism, but stressed the attention of economic policymakers around the world must focus on financial system reforms.

Another key focus should be on the extent of fiscal expansion polices adopted by many countries "and the implications of that expansion for those countries' economic future and for their ability to service their sovereign debt," Fischer said.

"The main lesson to be learned from the crisis is that monetary policy can be effective even when the interest rate is reduced to very low levels, as the central bank can inject liquidity into the market against various types of financial instruments, and can act not only as lender of last resort, but also as market maker of last resort," he said.

Strauss-Kahn was quoted by Israel's Finance Ministry as telling the forum that "the global economic crisis is still not behind us."

He praised Israel's move to adopt dual-year state budgets.

"It's a very original idea that leads to stability and long-term planning," Strauss-Kahn said. "Since moving to a dual-year budget tends to aid the continuation of managing countries' economic policies we will recommend to IMF members to adopt it."

The happy clappy pills are working wonders.

Central banks can now be the market maker of last resort. You just can't get much better than that.

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Global Crisis Seems Near Final Stage

For some reason I took that the wrong way.

I must stop reading the uber-bear reality blogs & sites; they might be wrong :rolleyes:

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Two of the things he said are contradictory.

"Fischer also rejected the notion that the crisis has ended capitalism"

"the central bank can act as market maker of last resort,"

Seems that if the second is true, then you have a form of socialism, or at the very least, socialised capitalism.

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For some reason I took that the wrong way.

I must stop reading the uber-bear reality blogs & sites; they might be wrong :rolleyes:

True. Final stage / over tend to mean different things here.

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Central banks can now be the market maker of last resort. You just can't get much better than that.

I can't immediately see what is wrong with that concept in practice, leaving ideological issues aside. Assuming no-one wants to make a market then I guess people will take the CB up on its offer.

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I can't immediately see what is wrong with that concept in practice, leaving ideological issues aside. Assuming no-one wants to make a market then I guess people will take the CB up on its offer.

How about the fact that the CB uses force to create it's product and therefore can't be a part of the market at any time?

No price signals, you see.

Edited by Injin

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Fischer is talking about the world economy pulling out of recession and reverting back to growth.

This isn't much of a statement since clearly world growth is positive and has been throughout 2007-2010 so the global economy never went into recession. Many countries' economies did but (GDP weighted) global real growth did not go negative for two quarters.

Note Stanley Fischer was Ben Bernanke's PhD thesis adviser so some people think his view is relevant because of this (other than being the current Governor of the BoI and before that First Deputy Managing Director of the IMF). Notably Israel was the first central bank to raise interest rate last year (August) so he's no dove. Inflation fighting is his primary aim (given Israel's prior history of high-inflation).

Edited by david m

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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