This piece was reprinted by OpEdNews with permission or license. It may not be reproduced in any form without permission or license from the source.
Titled, "Debt and Deleveraging: Uneven Progress on the Path to Growth," it suggests systemic unresolved problems.
It calls deleveraging begun in 2008 "proving to be long and painful." Moreover, it's "in its early stages in most countries." In fact, debt's risen in the "ten largest mature economies....due mainly to rising government debt." It exploded but MGI glossed over a major problem getting worse, not better.
Among the world's 10 largest economies, debt increased by $7.8 trillion. In fact, it's more because information's suppressed. US household debt shrunk $584 billion (or 4%) since 2008. Home mortgage defaults accounted for up to 80% of the total. Jingle mail's been heavy and promises to increase.
Historical precedence suggests years more deleveraging to go. When it ends, US consumers "won't be as powerful an engine of global growth as they were before the crisis." Why? Because excess mortgage refinancing is gone. It added $2.2 trillion in spending power.
In its mid-January report, the Bank of Canada was just as glum, saying:
Europe's recession is "expected to last longer and be somewhat deeper than anticipated." B of C blamed tight credit and fiscal austerity reducing consumer purchasing power.
Modest US growth is expected at best. At issue is "ongoing household deleveraging, fiscal consolidation, and negative spillover" from Europe's crisis.
So far, fallout from Europe's crisis "has consisted mostly of a general retrenchment of risk-taking. (Ahead), the impact is expected to become more widespread (in) the form of increased funding pressures, adverse confidence effects and reduced availability of credit."
Europe and US bank deleveraging will reduce credit and restrain investment. Yearend 2011 baseline trend in real GDP was 1.6%. B of C sees Europe's crisis erasing half of it. It suggests rosy scenario forecasts are misguided.
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
1
