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World Bank Calls For Quantitative Easing To Stop Eurozone Stagnation

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http://www.theguardian.com/business/2015/jan/13/world-bank-quantitative-easing-eurozone-stagnation

The World Bank has warned of the risk of the eurozone sliding into permanent stagnation and urged the European Central Bank to embark on a money-creation programme to boost growth.

In its half-yearly health check on the global economy, the bank said there was a growing gulf in the west between the strong growth posted by the US and the UK and the weakness of the eurozone and Japan.

The bank said the problems of the eurozone and Japan had forced it to revise down its global growth forecasts for 2014 and 2015. It stressed that ingrained structural defects could be the reason for the continued failure to recover to pre-recession growth rates.

Kaushik Basu, the bank’s chief economist, said: “The global economy is still struggling to gain momentum as many high-income countries continue to grapple with the legacies of the global financial crisis and emerging economies are less dynamic than in the past.”

The bank’s report said global growth would be 2.6% in 2014, down 0.2 percentage points from predictions made last June. The growth forecast for 2015 has been shaved by 0.4 points to 3%, the fourth year in a row that the bank’s initial view of the prospects for the global economy have proved too optimistic.

“Worryingly, the weak recovery in many high-income economies and slowdowns in several large emerging markets may be a symptom of deeper structural weaknesses,” Basu said.

http://www.worldbank.org/en/publication/global-economic-prospects

I think this is the report in question.

Hilarious lets print free money, in history this has never worked now the World Bank is calling for it!!!

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Global growth in 2014 was lower than initially expected, continuing a pattern of disappointing outturns over the past several years. Growth picked up only marginally in 2014, to 2.6 percent, from 2.5 percent in 2013. Beneath these headline numbers, increasingly divergent trends are at work in major economies.

While activity in the United States and the United Kingdom has gathered momentum as labor markets heal and monetary policy remains extremely accommodative, the recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger, intertwined with structural bottlenecks. China, meanwhile, is undergoing a carefully managed slowdown. Disappointing growth in other developing countries in 2014 reflected weak external demand, but also domestic policy tightening, political uncertainties and supply-side constraints.

Several major forces are driving the global outlook: soft commodity prices; persistently low interest rates but increasingly divergent monetary policies across major economies; and weak world trade. In particular, the sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing developing economies. However, it will dampen growth prospects for oil-exporting countries, with significant regional repercussions.

Overall, global growth is expected to rise moderately, to 3.0 percent in 2015, and average about 3.3 percent through 2017. High-income countries are likely to see growth of 2.2 percent in 2015-17, up from 1.8 percent in 2014, on the back of gradually recovering labor markets, ebbing fiscal consolidation, and stilllow

financing costs. In developing countries, as the domestic headwinds that held back growth in 2014 ease and the recovery in high-income countries slowly strengthens, growth is projected to gradually accelerate, rising from 4.4 percent in 2014 to 4.8 percent in 2015 and 5.4 percent by 2017. Lower oil prices will

contribute to diverging prospects for oil-exporting and -importing countries, particularly in 2015.

Risks to this slow-moving global recovery are significant and tilted to the downside. Financial market volatility, compounded by the risk of a sudden deterioration in liquidity conditions, could sharply raise developing countries’ borrowing costs, an unwelcome development after several years of heavy capital market issuance in developing countries. Intensifying geopolitical tensions, bouts of volatility in commodity markets, or financial stress in a major emerging market could lead to a reassessment of risk assets. If the Euro Area or Japan slips into a prolonged period of stagnation or deflation, global trade could weaken even further. Although it is a low-probability event given China’s substantial policy buffers, a sharper decline in growth could trigger a disorderly unwinding of financial vulnerabilities and would have considerable implications for the global economy.

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Had a quick skim and I can't find any reference to quantitative easing in the report, they mention accommodative monetary policy so not sure if the journalist has interpreted the report differently to what the World Bank actually mean ie keeping interest rates low, or if accommodative monetary policy now means money printing as well.

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easing means that...cheaper and lowering loan criteria.

Easing is included in the term for QE(asing)...and nobody bothers to check the context.

I think the World bank is a clearing house.

Probably a bit worried about the decline in the number of international transfers and their bonuses.

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Bankers call for more free money for bankers.

I call for bankers to be locked up in prison for their crimes.

There aren't enough jail cells. We need to start hanging them to bring the numbers down.

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There aren't enough jail cells. We need to start hanging them to bring the numbers down.

Don't need a jail. Just put them on a small island somewhere and let them manage it themselves.

http://www.dailymail.co.uk/sciencetech/article-2676753/Beware-snake-island-Forbidden-rock-coast-Brazil-home-worlds-deadliest-serpent-venom-MELTS-human-flesh.html

  • An island off the coast of Sao Paolo is home to the golden lancehead viper
  • It is the only place the so-called 'world's deadliest snake' is known to live
  • Their venom is potent enough to kill people and melt human flesh
  • Access to Ilha de Queimada Grande is banned by the Brazilian government
  • In the past humans have been killed by its deadly inhabitants

I think this one sounds ideal.

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Breaking news this morning on the Beeb:

A top European Union lawyer has said that the European Central Bank's planned bond-buying programme is legal.

Advocate General Cruz Villalon said the ECB's Outright Monetary Transactions programme is compatible, in principle, with EU law.

But he said that if the programme is implemented, its compatibility will depend on certain conditions being met.

The bond buying was aimed at avoiding a break-up of the euro, but faced a legal challenge from Germany.

Announced in 2012, the OMT has never been put into practice, although it helped restore confidence in eurozone markets.

However, with the eurozone facing the threat of deflation and recession, there is increasing pressure on the ECB to start quantitative easing, which would involve starting a bond-buying operation similar to OMT.

Jonathan Loynes, chief European economist at Capital Economics, said: "Overall, then, the final hurdle to quantitative easing appears to have been cleared.

"But given the ECB's natural caution, Germany's objections and the limited effects of QE in other countries, it would be hopeful to expect it to transform the eurozone's economic outlook."

Analysis: Andrew Walker, BBC World Service economics correspondent

The sighs of relief from the ECB and eurozone finance ministries are almost audible.

It's worth emphasising just how successful the OMT programme has been in taking the heat out of the eurozone financial crisis. Of course, the wider economic challenges are still profound. OMT will not fix them. But it did bring real calm to the financial market dimension of the crisis, despite the fact that the ECB has not spent a single euro under the programme.

It's a striking example of how a policymaker's statement that it's willing in principle to do something can sometimes shift expectations so much that the announcement alone gets the intended result. As for quantitative easing - which we expect the ECB to embark on soon - this legal opinion may not have a direct bearing, but QE is also about bond-buying, so it could have presented some serious legal complications.

The Advocate General has avoided them.

Challenge

Germany's Federal Court challenged the OMT's legality in the European Constitutional Court of Justice, arguing the ECB was acting beyond its mandate, effectively financing government deficits.

In his opinion, published on Wednesday, Advocate General Villalon argued that the ECB must have a broad discretion when framing and implementing the EU's monetary policy.

He said it would first have to spell out its justification for any bond-buying programme and not be involved in any direct aid programme to any eurozone member state involved.

He also warned that the courts lacked the expertise and experience of the central bank in this area and should be careful about criticising the ECB.

Wolfgang Kuhn, Aberdeen Asset Management's head of pan-European credit, said: "The opinion criticises the German court for daring to refer the case the way it did and seems to say that it can't be up to national courts to judge what goes on at a European level.

"The opinion removes another inconvenient obstacle to [ECB president Mario] Draghi's big quantitative easing gamble, which will now almost certainly be announced next week. But the voices that see both OMT and QE as a blatant breach of EU treaty law will only grow more shrill."

The Advocate General's opinion is an influential legal proposal to the Court of Justice, but is not binding.

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Who is the World Bank ? another Quango that missed the bonfire maybe

I think the IMF go in and offer 3rd world countries debt.

They (inevitably) cant pay the debt.

The world bank goes in, forces them to privatize and sell state assets to their buddies for cents on the dollar.

Everyones happy.

Basically if you or I did what the world bank did, we'd be in prison.

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why doesnt some bright journo actually ask a banker making the case for printing, just who the central banks represent..Just one will do.

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Advocate General Cruz Villalon said the ECB's Outright Monetary Transactions programme is compatible, in principle, with EU law

So it's compatible with eu law even though not so long ago they were saying it's not allowed under eu law.

It sounds as if a bit more explanation is needed from him/them.

He's an Advocate General so presumably he's only putting the case in favour of QE and he doesn't have the final say.

Will the advocate against QE get as much publicity.

http://

rt.com/business/germany-court-omt-ecb-023/

Edited by billybong

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urged the European Central Bank to embark on a money-creation programme to boost growth.

If growth can be achieved by creating money from thin air would this trick not have been discovered sooner? Is the assumption that all previous generations were too stupid to have worked this out?

Or is it a case of doing something just to be seen doing something, no matter how futile that something might be?

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If growth can be achieved by creating money from thin air would this trick not have been discovered sooner? Is the assumption that all previous generations were too stupid to have worked this out?

Or is it a case of doing something just to be seen doing something, no matter how futile that something might be?

"It's different this time". Actually, I think there's an arrogance amongst these people that they are superior to their predecessors over the centuries, that we are so much cleverer and sophisticated that we will make it work when our ancestors couldn't. Pure arrogance and doomed to failure. Either that, or the feckers have never read a book on economic history. The fact is, our economic situation, the errors being made, and ignoring the obvious solution is all textbook stuff - history is repeating itself - where are the Austrian school economists?!

Edited by mikthe20

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"It's different this time". Actually, I think there's an arrogance amongst these people that they are superior to their predecessors over the centuries, that we are so much cleverer and sophisticated that we will make it work when our ancestors couldn't. Pure arrogance and doomed to failure. Either that, or the feckers have never read a book on economic history. The fact is, our economic situation, the errors being made, and ignoring the obvious solution is all textbook stuff - history is repeating itself - where are the Austrian school economists?!

I think you are right- they genuinely seem to think that they have a unique insight into the nature of economics that previous generations lacked- sadly they don't- and as the old saying goes- those who fail to learn from history are doomed to repeat it.

I read a fascinating account today of a small island in the pacific called Yap whose inhabitants- though small in number- had a highly developed system of money and credit- the 'wealth' was in the form of vast stone disks, some as heavy as a car and virtually impossible to lift unless you had four strong men to do it. So- of course- the stones never moved, they just acted in the same way that Gold reserves act in a gold based system- so just as German and French Gold might actually reside inside a vault in the Unite States but still function as a national reserve these huge stone 'coins' were the 'wealth' backing the economy of this small island.

So strong was the faith in this system that even when one families 'wealth' sank while being transported by boat their status as owners of this wealth remained intact- wealth ultimately backed by a carved stone disk sitting on the sea bed.

So there really is nothing new under the sun when it comes to money-these people numbering in the low thousands living on a speck of land in the pacific ocean had evolved a system of money that was in it's way as sophisticated as the one used by the most advanced societies on the planet- at least until Nixon abolished the Gold Standard in the 1970's.

http://www.npr.org/blogs/money/2011/02/15/131934618/the-island-of-stone-money

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"It's different this time". Actually, I think there's an arrogance amongst these people that they are superior to their predecessors over the centuries, that we are so much cleverer and sophisticated that we will make it work when our ancestors couldn't. Pure arrogance and doomed to failure. Either that, or the feckers have never read a book on economic history. The fact is, our economic situation, the errors being made, and ignoring the obvious solution is all textbook stuff - history is repeating itself - where are the Austrian school economists?!

Nah, they are bum coverers...and they cover their bums with pieces of paper with statistics on them.

In a deflation we can all be getting richer, acheiving 6% growth and living as happy as a bug in a rug, but the GDP shows everything is collapsing, the world is getting poorer and what we need is more of the bankers product.

The press are complicit by spouting the achievements of Policy using the GDP...they dont question reality.

Politicians use the same thing to prove their worthiness for re-election.

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Does anyone else think of the Monty Python "just one more waffer thin mint" / Mr Creosote sketch when they see these calls for even more QE? Just me then....

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I read a fascinating account today of a small island in the pacific called Yap whose inhabitants- though small in number- had a highly developed system of money and credit- the 'wealth' was in the form of vast stone disks, some as heavy as a car and virtually impossible to lift unless you had four strong men to do it. So- of course- the stones never moved, they just acted in the same way that Gold reserves act in a gold based system- so just as German and French Gold might actually reside inside a vault in the Unite States but still function as a national reserve these huge stone 'coins' were the 'wealth' backing the economy of this small island.

So strong was the faith in this system that even when one families 'wealth' sank while being transported by boat their status as owners of this wealth remained intact- wealth ultimately backed by a carved stone disk sitting on the sea bed.

So there really is nothing new under the sun when it comes to money-these people numbering in the low thousands living on a speck of land in the pacific ocean had evolved a system of money that was in it's way as sophisticated as the one used by the most advanced societies on the planet- at least until Nixon abolished the Gold Standard in the 1970's.

http://www.npr.org/blogs/money/2011/02/15/131934618/the-island-of-stone-money

Wow, interesting story. Never heard of that before - thanks!

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it's not a fiscal problem, it's a regulatory problem.

no amount of QE can make up for incessant meddling and micromanagement...and diktat from on high is the elephant in the room that they are all choosing to pretend does not exist at the moment.

until europe and it's leaders figure that one out, eurozone is going down the toilet.

international response to these sort of diktats from political leaders so far:

US:....Feck off ,get outta my face or i'll shoot you

Russia(of all peoples)......we went through this crap 70 years ago..niet comrade.try it again and we'll nuke you.

EU......You MUST obey, for I AM CAESAR!!!

Edited by oracle

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