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* Business * Imf Imf Warns Of The 'human Cost' Of Public Spending Cuts

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http://www.guardian.co.uk/business/2010/sep/13/imf-public-sector-cuts

International Monetary Fund joins OECD in condemning planned budget cuts, warning the 'livelihood, security and dignity of millions' is under threat

The International Monetary Fund undermined the main thrust of the UK coalition's economic strategy today after it warned western governments that they risked holding back the recovery and creating a massive pool of disaffected labour if they pursued draconian cuts in spending.

IMF director general, Dominique Strauss-Kahn, told a conference in Oslo that governments needed to identify ways to generate employment to prevent a generation of workers losing their skills and joining the long-term unemployed. He said cuts in public spending had a "human cost" and could result in "tragedy" for millions of young people.

His speech will add to pressure on the chancellor, George Osborne, after the Organisation for Economic Co-operation and Development (OECD), the rich nations' thinktank, said last week that cutting budget deficits this year risked derailing economic recovery.

Analysis by the IMF and the OECD is expected to feature in campaigns by trade unions and rivals for the Labour leadership at the TUC conference this week.

Ed Balls, the Labour leadership candidate, said the government needed to scrap much of its programme of cuts in favour of projects that create jobs and generate growth. The shadow chancellor, Alistair Darling, said the reports from the OECD and IMF showed the prevailing economic analysis was firmly allied to Labour's argument for cuts to be delayed until the economic recovery was secure and unemployment falling.

Strauss-Kahn said: "The labour market is in dire straits. The Great Recession has left behind a wasteland of unemployment, and this devastation threatens the livelihood, security and dignity of millions of people across the world."

He said the severity of the recession was in part to blame, but also how the fallout from the recession affected particular sectors.

Got to love consistency from the top, one minute calling to get deficits under the control the next that govts will risk the recovery if they cut.

Pushmepullyou politics at it's finest.

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http://www.ft.com/cms/s/0/aaa8ffc2-7e2b-11df-94a8-00144feabdc0.html

June 22 2010 23:54

It is a club of which few countries are comfortable being members: the ruthless deficit busters. After a decade of good times, policymakers across the world have woken up to the realisation that painful spending cuts and tax rises are necessary to restore order to public finances battered by a combination of years of overspending and the effects of the global economic crisis.

Advanced economies entered the financial crisis in 2007 with an average budget deficit of 1.1 per cent of national income. By this year the figure had risen to 8.4 per cent as tax revenues plummeted and humbled banks were bailed out. General government gross debt is set to rise from close to 73 per cent of national income in advanced economies in 2007 to more than 110 per cent by 2015, according to the International Monetary Fund.

Dominique Strauss-Kahn, IMF managing director, says this global rise in public debt requires countries to aim at rapidly reducing borrowing so debt ratios can begin to fall – something he warns will require a sizeable and “sometimes unprecedented” effort. There is little alternative, he adds, as “failing to do so would ultimately weaken the world’s long-term growth prospects”.

From just a few short months ago.

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http://www.spiegel.de/international/europe/0,1518,693317,00.html

Living Beyond Their Means

The whole world lives on the principle of hope: hope that it will be possible to repay the debt that has accumulated in past years, that governments will manage to clean up their ailing budgets, thereby averting the worst, and that life will go on, just as life has always gone on, somehow, after earlier crises.

All of the major industrialized countries have lived beyond their means for decades. Even in good times, government budget deficits continued to expand. The United States, in particular, paid for its prosperity on credit. The poor example set by the state was contagious -- US citizens began buying cars and houses they couldn't really afford, and banks speculated with borrowed money.

Things couldn't possibly go well forever and, indeed, the financial crisis put an end to the days of unfettered spending. To avert a collapse, governments came to the rescue with vast sums of money, guaranteed their citizens' savings and jump-started the economy with massive stimulus programs -- all with borrowed money, of course.

A Huge Bubble

The world was saved, temporarily at least, but since then it has accumulated more debt than ever before in peacetime. The national deficits of the 30 members of the Organization for Economic Cooperation and Development (OECD) have grown almost sevenfold since 2007, to about $3.4 trillion today. Their total debt burden has also grown dramatically, to a record-setting $43 trillion. In the euro zone, national deficits have even grown 12-fold in the same time period, with the euro-zone countries accumulating $7.7 trillion in debt.

The current government debt bubble is the last of all possible bubbles. Either governments manage to slowly let out the air, or the bubble will burst. If that happens, the world will truly be on the brink of disaster.

When Greece faces a possible bankruptcy, the euro-zone countries and the IMF come to its aid. But what happens if the entire euro group bites off more than it can chew? What if the United States can no longer service its debt because, say, China is no longer willing to buy American treasury bonds? And what if Japan, which is running into more and more problems, falters in its attempts to pay for its now-chronic deficits?

The conditions that prevail in Greece exist in many countries, which is why governments around the world are paying such close attention to how -- and if -- the Europeans gain control over the crisis.

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http://www.imf.org/external/np/vc/2009/011309.htm

"The Hungarians made their own contribution", Dominique Strauss-Kahn, Interview with Népszabadság

January 13, 2009

....

5. Recession times are not considered to be the best opportunity to reduce budget deficits. For example, the US is heading for a 10 percent deficit this year, while leading economists such as Paul Krugman or Jeffrey Sachs find even an 750 billion dollar stimulus package too small. Don't you think that insistence on beyond-capacity deficit reduction might, under the current macroeconomic circumstances, deepen recession, fuel deflation and eventually jeopardize loan returns as well?

A: Fiscal policy needs to support macroeconomic stability and ensure the sustainability of government debt. The government depends on investors' willingness to finance its deficit and to refinance debt that is falling due. Investors are only willing to finance the government if they think that the government will be able to meet its obligations in the future. Investor confidence has a high pay off in ensuring that financing will continue to be available to support growth.

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http://www.dailymarkets.com/stock/2010/06/23/the-time-bomb-of-global-government-debt-and-deficits-is-ticking-louder/

Dominique Strauss-Kahn, IMF managing director, says this global rise in public debt requires countries to aim at rapidly reducing borrowing so debt ratios can begin to fall – something he warns will require a sizeable and “sometimes unprecedented” effort. There is little alternative, he adds, as “failing to do so would ultimately weaken the world’s long-term growth prospects”.

Policymakers appear to have got the message. Across the world – from the US to Greece – plans are under way to cut spending and raise taxes. The UK on Tuesday became the latest country to join in the cutting crew. It follows Germany, Spain, Italy and Portugal, which in recent weeks have all also unveiled austerity budgets.

Some differences are already apparent. Advanced economies are initially planning to rely more on spending cuts; emerging countries have plumped more heavily for tax increases. No one is sure what the combined effect of this will be on global growth, but there is sufficient concern about the consequences that the US has put it on the agenda for this week’s meeting of the Group of 20 leading economies.

So cut debts but not jobs.

Just how do they propose to do this?

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http://www.wsws.org/articles/2010/jun2010/fran-j26.shtml

In this Migaud is fully in line with the IMF director general and PS heavyweight Dominique Strauss-Kahn, who is the frontrunner for the nomination as PS candidate in the 2012 presidential elections. Strauss-Kahn has been instrumental in imposing the Greek austerity programme, among others, which have cut wages and pensions by up to half.

And now the IMF is warning over "warning the 'livelihood, security and dignity of millions' is under threat"????

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http://uk.reuters.com/article/idUKTRE68C2CL20100913

Mon Sep 13, 2010 5:03pm BST

OSLO (Reuters) - The world's rich countries need to extend initiatives to boost spending and support employment to fix a "dire" labour market that could threaten entire societies, the International Monetary Fund said on Monday.

At a conference co-hosted by the IMF and the International Labour Organisation, visiting Spanish Prime Minister Jose Luis Rodriquez Zapatero said high unemployment may trigger a "crisis of confidence" in Europe.

The IMF said more and more workers worldwide were unable to find jobs for longer periods, weakening social cohesion and raising risks of unrest and even undermining democracy.

"The labour market is in dire straits," IMF Managing Director Dominique Strauss-Kahn told the one-day meeting, adding that the Great Recession had left a "wasteland of joblessness." "We must acknowledge that the crisis will not be over until unemployment declines significantly," he said, calling growth and jobs the "most urgent problems."

According to International Labour Organisation (ILO) data, 30 million people have lost their jobs since 2007 -- three-quarters of them in the developed world. A further 23 million would be without a job if not for stimulus packages.

The IMF said that extended fiscal stimulus was worth the additional debt if it helped cut long-term unemployment, which imposes an even costlier burden on society as workers get discouraged, lose lifetime earnings or leave the labour market.

More printy printy required then!

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8000561/IMF-fears-social-explosion-from-world-jobs-crisis.html

"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).

He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said.

........

Historians say the last time that the wealth gap reached such skewed extremes was in 1928-1929. Some argue that wealth concentration may cause investment to outstrip demand, leading to over-capacity. This can trap the world in a slump.

Still I'm sure it's contained....

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I'm expecting Brown to pop up somewhere in the IMF having secured an influential role. God Tony help us.

The US will block it. You can not "dis" Conndie Rice and expect no retribution.

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http://www.dailymark...ticking-louder/

So cut debts but not jobs.

Just how do they propose to do this?

The debts have come from forcing the 99% to support the asset prices and wealth stolen in the previous period by the 1%. It's a transfer of wealth from the poor to the rich.

The obvious solution now the 'crisis' has been mitigated is to claw those deficits back from those who benefitted.

i.e. the 1%

It's simple really. A period of windfall wealth taxes, accompanied by protectionist tariffs to break the Chindian trade/welfare protectionism.

Won't happen of course 'cause the 1% control the govts. and the levers.

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The debts have come from forcing the 99% to support the asset prices and wealth stolen in the previous period by the 1%. It's a transfer of wealth from the poor to the rich.

The obvious solution now the 'crisis' has been mitigated is to claw those deficits back from those who benefitted.

i.e. the 1%

It's simple really. A period of windfall wealth taxes, accompanied by protectionist tariffs to break the Chindian trade/welfare protectionism.

Won't happen of course 'cause the 1% control the govts. and the levers.

Won't work anyway. They've stolen enough food to keep themselves fat but set fire to the fields in the process. Now there isn't enough food to go around however we spread what's left, including what they took.

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  • 145 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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