IMF Joins Bandwagon

IMF economistOliver Blanchard, a top economist for the International Monetary Fund (IMF), declared on Tuesday that indeed the global recession has ended and a slow recovery has begun. This announcement, of course, is following one of the largest one day declines in the Shanghai Composite as well as a rather strong sell off in the US markets. All of these "public declarations" are done very carefully with strong warnings. It feels much like a catchy slogan one would find on a medicine bottle, followed by all of the side effects and warnings that could accompany you if you decide to take the drug.

I found the following phrase comical, considering that it was found in the same address that declared the global recession is over:

"The United States can't rely on low interest rates to sustain the recovery, nor can it rely on consumer spending or investment filling the gap. Consumers are likely to save more in coming years. Businesses don't need to invest much for the next few years, because so much of their capacity is idle."
At least they are admitting that we cannot rely on the consumer to bail us out of this. However, unfortunately, our GDP is 70% based on the actions of the consumer. So to say such things is an oxymoron. After the very positive headline, the rest of his remarks consisted of explanations of how slow the recovery would be and how we may never return to the growth levels we were at originally.

It is clear that indeed it is the goal of government and political figures to maintain the confidence of consumers throughout the world. But I take these "declarations" with the smallest grain of salt.

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5 comments:

  1. Anonymous Says:

    FF

    What do you say to go long on stocks now? I have been reading your blog for an year.it is very informative and pessimistic.

  2. Anonymous Says:

    FF,

    When are you going to start talking about positive things also on the economy?

    It would've been nice for you and this website to have focused on the positives too, not just the negatives...

    anyways, keep up with the good work of spotting the just the negative stuff even when things are improving!! It's useful too, so keep doing it, if that's what you're best at!!

  3. Jeff Says:

    i think ff would note positive things in the economy if there were any, and technically he has. hes mentioned the unemployment easing as being good but non sustainable. hes also mentioned paying attention to the year over year changes in economic data being more useful than monthly changes.

    the only thing positive has been the stock market, the economy hasnt made any big strides forward

  4. Anonymous Says:

    Jeff,

    When the patient who was in a coma is being reanimated by the doctors tries trying to keep the patient conscient and breathing, familly will definitely rejoice. At least, that's a normal thing to do. Of course, you can focus on how the patient may never be able to walk again or live as before...But, still,....

    And mentioning that it would have been better to let the patient in coma to heal alone, is certainly a crazy thing to believe in...

  5. PENNY STOCK INVESTMENTS Says:

    Excellent