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Central Bankers Urge Europe To Sort Out Debt Crisis

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http://www.guardian.co.uk/business/feedarticle/9146673

Europe must solve its sovereign debt crisis so as not to endanger the uneven global economic recovery, which is led by China and emerging economies, central bankers said on Sunday.

Central bank officials gathering at the annual meeting of the Bank for International Settlements are confident the world economy is recovering thanks to huge liquidity injected by them through the worst of the financial crisis. [iD:nLDE65F0QD] But now paths have diverged, leading to a multispeed economy. Some central banks -- such as Australia, Israel, Norway and Brazil -- have tightened policy, while rates in the biggest economies are seen on hold at record lows until next year.

Europe is the main underperformer as it suffers from the effect of drastic fiscal spending cuts. Some weakness is also emerging in the U.S. economy, with first-quarter growth coming in slower than originally estimated. [iD:nN25111163]

This is leaving China, which introduced more flexibility to its yuan currency by letting it rise to a five-year high this month, to do much of the heavy lifting.

"The global economy is showing a multi-speed recovery, with emerging markets particularly those in Asia seen to lead this recovery," Amando Tetangco, governor of the Philippine central bank, told Reuters. [iD:nLDE65Q059]

"Theoretically, there is going to be some significant impact (on growth) but that will depend on how leaders of Europe will be able to contain the crisis by putting in some programme that will win the confidence of the market. It's going to be a delicate balancing act."

Ways to support economic growth at a time governments around the world slash fiscal spending are expected to be high on the agenda at the three-day meeting in the Swiss city of Basel.

The meetings, which end on Monday, involve representatives from about 100 central banks and international organisations, including European Central Bank President Jean-Claude Trichet and U.S. Federal Reserve Chairman Ben Bernanke.

Central banks are fretting about a massive run-up in public debt in major economies as governments tried to spend their way out of recession, with debt outweighing economic output in many industrialised nations.

Former ECB policymaker Tommasso Padoa-Schioppa told the meeting the root of the financial crisis lay with governments, which had believed too strongly in the self-regulating power of the markets and focussed too much on their domestic economies, rather than taking a global view.

"The crisis is still with us and, like the HIV virus, it shows a pertinacious capacity to renew its destructive potential through continuous mutation," he said.

Romanian central bank Governor Mugur Isarescu said most of the discussion on Sunday was about regulation and banking supervision, adding that central bankers were not alarmed.

Europe can only solve it's debt crisis, by default, printing money or finding the end of the rainbow.

There are no easy fixes or magic wand.

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Former ECB policymaker Tommasso Padoa-Schioppa told the meeting the root of the financial crisis lay with governments, which had believed too strongly in the self-regulating power of the markets and focussed too much on their domestic economies,

the root of the crisis is the central banks, their price fixing, bankers cartel and forcing most people to accept their paper as currency

they are dead - they will try and keep this game going but will fail - no doubt they will try and start again - look our new paper currency is now backed by tangible assets

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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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