IMF: global economy faces a ‘threatening downward spiral’(By Design!!…)
The International Monetary Fund has called on the US and Europe to abandon fiscal austerity and switch to stimulus measures, warning that the global economy faces a “threatening downward spiral”.
By Ambrose Evans-Pritchard
04 Sep 2011
Christine Lagarde, the IMF’s managing-director, said the outlook had darkened suddenly over the summer.
“There has been a clear crisis of confidence that has seriously aggravated the situation. Measures need to be taken to ensure that this vicious circle is broken,” she said.
“The spectrum of policies available is narrower because a lot of ammunition was used in 2009. But if governments, institutions and central banks work together, we’ll avoid recession,” she told Der Spiegel.
The comments come at the start of a dramatic week for the eurozone as Italy prepares to roll over record sums of debt and Germany’s constitutional court issues its long-awaited verdict on the legality of the EU’s bail-out machinery.
Markets are already tense after the EU-IMF ‘Troika’ withdrew abruptly from Athens on Friday, accusing the Greek government of failing to comply with rescue terms.