Specter of global depression haunts IMF, World Bank meetings

From World Socialist Web Site: http://www.wsws.org/articles/2011/sep2011/econ-s24.shtml

By Barry Grey
24 September 2011
Three years after the Wall Street crash of 2008, finance ministers, central bankers and economists assembled in Washington for the annual meetings of the International Monetary Fund (IMF) and World Bank present a picture of perplexity and fear as the crisis spins out of control and lurches toward a full-scale depression.

Following a massive sell-off on world stock markets Thursday, the finance ministers and central bankers of the G20 leading economies, meeting on the sidelines of the IMF-World Bank conferences, issued an unannounced and hastily composed late-night communiqué. Its aim was to shore up investor confidence and calm the markets.

The one-page document declared the commitment of the G20 countries to “supporting growth, implementing credible fiscal consolidation plans, and ensuring strong sustainable growth.”

Claiming that the G20 ministers and central bankers were “taking strong actions to maintain financial stability, restore confidence and support growth,” the statement asserted, “We commit to take all actions to preserve the stability of banking systems and financial markets as required.”

However, apart from vague language about increasing the flexibility and maximizing the resources of the European bailout fund, the communiqué offered no specifics. It did little to inspire confidence in the financial markets, which opened Friday in the red in both Europe and the US but ended the trading day slightly higher. The minimal gains did little to relieve the sense of gloom and crisis that produced a 5.9 percent drop (675 points) in the Dow Jones Industrial Average over Wednesday and Thursday combined.

In a Friday article headlined “Grim Mood in IMF and World Bank,” the Financial Times quoted Eswar Prasad, former head of the IMF’s China division and now a fellow at the Brookings Institution in Washington, as saying: “The crisis of confidence cannot be stanched merely by broad statements of concern and noble policy intentions at a time when decisive and concerted policy actions are sorely needed.” He added: “In the absence of specific and decisive policy measures, markets are unlikely to be calmed by such broad statements.”

Continue reading at:  http://www.wsws.org/articles/2011/sep2011/econ-s24.shtml

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