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IMF says G20 could do better

Stephanie Flanders | 22:15 UK time, Sunday, 27 June 2010

In a report to be published with the final communique, the IMF says that the G20 countries' economic plans carry "serious downside risks" for the global economy - and their leaders could do much more to promote global growth and employment.

World leaders in TorontoThe report says the policies that countries now plan to pursue carry "significant downside risks". If those risks were to materialise, the Fund reckons that global output could 3% ($2.25 trillion) lower than currently forecast, and an extra 23 million jobs could be lost.

The Fund's staff calculate that more constructive collaboration between countries on their economic and exchange rate policies would mitigate these risks, and increase global output by $1.5tn dollars over the next five years, relative to the path that countries are now on. It would also create around 30 million more jobs.

A crucial feature of this better future would be faster reduction of government deficits in countries such as the US, and more domestic-demand based growth in countries with large trade surpluses such as China and Germany.

In the "upside" scenario painted by the Fund, Germany's current account surplus would be more than 1% of GDP lower by 2013, than under existing plans. The average surplus in Asian emerging market economies would be 3% of GDP lower by that time. The US budget deficit would be 3% of GDP lower by 2014 than the IMF would now expect.

In a separate report, the World Bank estimates that greater collaboration along the lines suggested by the Fund would lift an extra 33 million more people out of poverty over the next five years.

In recent months, G20 countries have submitted their economic plans to the IMF - which would then assess what the net impact would be on the global economy.

"At face value", the report says, countries' plans "appear to deliver strong, sustainable and balanced growth." However, considering the past experience of recovering from financial crises, the authors believe that countries are being too optimistic in their growth forecasts.

Even if the growth does materialize, the IMF says that a number of rich country governments are not planning to do enough to cut borrowing. "Also, rebalancing of global demand was viewed as not being strong enough to sustain high global growth and achieve low unemployment."

The IMF was supposed to be telling the G20 whether their plans "added up". The answer given in this report is that they do - but the sum of the parts could be much higher.

Comments

Page 1 of 4

  • Comment number 1.

    Chris Martenson sums the fantasy thinking at the G20 summit up in his latest blog entitled, "Destined to Fail- Magical Thinking at the G20" at

    http://www.chrismartenson.com/blog/destined-fail-magical-thinking-g20/41097

    For a good explanation about the basic flaws with market economics that have existed since Adam Smith published the "Wealth of Nations" is clearly exposed by Nicholas Georgescu-Roegen in his book "The Entropy Law and the Economic Process".

  • Comment number 2.

    Fine, you can aspire to cultural step-changes in other sovereign countries but you cant build home policy on hope!Comparing G20 April 09 to G20 June 10 its starting to look like a leaders' love-in plus some hot air. Everyone knows that central bankers and markets are running the show....

  • Comment number 3.

    "greater collaboration" - this time in the last century the phrase that was used was "More Central Planning" – and this time on a Global Scale !
    Essentially the IMF are calling for a Global World Government based on Stalinist principles (which always require Stalinist methods of course)
    They also want more jobs ! – in an automated World – what nonsense ! – What we need is less and less jobs for humans as the work is taken on by the machines and hence more money for humans without having to work.
    To get this all we need to get this is to start using NEFS – Net Export Financial Simulation

  • Comment number 4.

    G20 [The Great to owe conference] SOUNDS LIKE WHAT COMES BEFORE H20 which is what their wickerred men with tiers in their ayes will need to put out their goodness gracious great balls of fire .

  • Comment number 5.

    I'M F SAYS GREAT TO OWE COULD DO BET ERR.... AAAgain


    Sirprize Sirprize

  • Comment number 6.

    If the G8/20 really wanted to stabalise the world economies they would grasp the nettle of globalised banking, rather than vying for position of "banking capital". It needs all governments to stand and break the hold that banks (rating agencies; financial markets) have on them. The recent crash was a reflection of these institutions flexing their muscles to see how far they could go. Having created through mismanagement; cohersion/temptation of Joe and Josephine Bloggs into personal debt; pressure for profit at all costs forcing "creative accounting", making the biggest fictitious banking collapse ever. The global response was to bailout the faltering institutions with even more fictitious money.

    The precident having been established that governments will be there for the financial markets "beck and call" they within an instant are back at their previous games. Creating new methods for profiting from fictitious debt; labelling countries bankrupt; forcing huge hardship on the very people that saved them in 2008/9, and making huge profits and bonuses at the same time.

    If it requires draconian action against these pernicious institutions that see themselves above the rule of governments, with peoples lives mere playthings in a gamble of wealth accumulation. Play their game, devalue currency to "monopoly money" - forget "free markets" that enable greedy individuals to profit from monopolising resources. Set every nation on a path of self-sufficiency; remove food miles from the food chain; remove energy dependancy from the blackmail of nations (exampled by Russia and its satellite states involving gas flows to Europe). Start investing national effort in national production - Europe and America have allowed the export of their productive capability to other nations for the purpose of individual/personal wealth creation. The Bill Gates of this world should be forced to reinvest the wealth created by false markets and restrictive practices; exporting labour to cheaper sweatshop cultures for the sake of increased profit. Tax, globally, every individual who makes money, where they make the money and where they live - it would soon return investment, or owners, to the point of creation. Cannot see Bill Gates moving to Mumbai in the near future, though much of Microsoft's wealth creation comes from that continent. Isolate the tax havens (such as Belize) of the world by imposing astronomical tarrifs on all exports, thus returning the sums filtered away to such places. Just as with anyother parasite an ample application pesticide rids the problem, so with those countries that syphon the wealth of nations. Make avoidance the same as evasion, not paying taxes punished in the same way as stealing for that is surely what it is. Any accountant/accountacy firm involved in such practices charged with aiding and abetting the personal crime of not paying taxes. Restore faith in a financial system created to aid trade, helping merchants to exchange goods in the safety of a money exchange system international, but localised to avoid crime. Rather than supporting institions in the crime of extorting money through the falsehood of profit making at all costs.

    The G8/20 should take their collective responsibilities more seriously, and remember what they were elected to do, that they represent the collective will of their nations. The IMF is the ultimate con, as all nations contribute to a fund intended to alleviate the disparity between the wealthier/productive nations and the developing nations. Yet its actions extend the banking controls to oppress nations not aid, placing draconian requirements on nations for the dispersement of funds put their for the purpose. We apply 19th century practices to a global problem created by 20th century notions of growth and expanding wealth that cannot be supported in any sense of reality.

  • Comment number 7.

    The IMF seem to be leading contenders, for the stating the bleedin' obvious award

  • Comment number 8.

    #6 It seems to me that you think that it's all the fault of "banks" (a convenient mythical creature to lay blame on) and not the fault of the governments that bailed them out !!

    As had been stated many times, these banks should *NEVER* have been bailed out !! If governments are stupid enough to do that, then they should take the blame for their actions and not pass on the blame to the mythical "banks" !! Is it any wonder that sensible banks are departing these shores as soon as they can; and taking their international profits and the related taxes with them ?? Why should they take the blame for irresponsible banks and the failures of the various governments ??

    Obama is behaving like a petulant child !! He is demanding that everyone should do everything they can so that he can carry on spending money he hasn't got on projects he can't afford !! And when things don't go as *HE* planned, he's firing off blame in all directions !!

    It was he who allowed deep-sea drilling for oil and when things went wrong with that, he blaming the oil companies for doing so !! He should never have allowed it in the first case !!

    He's blamed the Chinese for their low Yuan values. Now that the Chinese are revaluing their Yuan to that of a basket of currencies, the US $ will lose it's value as China's sole reserve currency which, in turn, means it will lose some of its value on the international markets !! He should be careful what he wish for because he may get it and truly regret it !!

  • Comment number 9.

    #7 Sometimes, "the bleeding obvious" have to be stated time and again in order to hammer home the import and significance of that into the rather thick skulls of various politicians !!

    For instance, Our former Glorious Leader and his cohorts seemed oblivious to the fact that you can't keep on spending money you don't have !!

  • Comment number 10.

    The statutory purposes of the IMF are the same as they were when formulated in 1943. So it was designed to help fund Keynesian reflations and yet has become Monetarist leading perhaps to poor decision making. Some would say, for example, that Argentina's 2001 crisis was caused by IMF requirements and conditions.
    All in all I think it pays to remember who is giving the advice. And as for KevinB it is not bleeding obvious, there are other ways.....

  • Comment number 11.

    >>"At face value", the report says, countries' plans "appear to deliver strong, sustainable and balanced growth." However, considering the past experience of recovering from financial crises, the authors believe that countries are being too optimistic in their growth forecasts.

    http://news.bbc.co.uk/1/hi/business/7294040.stm

    This is certainly true for America !! Already, the markets are pricing in the discounts to a falling US$ !! The price of gold is a good indicator; as are the two famous agricultural products that Americans find impossible to be without - coffee (Starbucks, anyone ??) and cocoa (for their Hershey bars or Oreos, presumably). This was true, decades ago, when I had to deal with the New York and Chicago Mercantile Exchanges and is probably true today !!

  • Comment number 12.

    Growth, Growth, Growth
    Why? Why? Why? do these institutions never learn?
    What we need right now is some good old fashioned navel gazing

  • Comment number 13.

    http://news.bbc.co.uk/1/hi/business/8499693.stm - US jobless numbers hide scale of problem

    http://news.bbc.co.uk/1/hi/business/8625666.stm - US housebuilding at 16-month high as repossessions rise

    What this means is that, removing the bovine manure using William of Occam's famous shaving implement, the US recession is deeper than they are willing to let on. This will definitely have a knock-on effect on the UK economy !! Sooner rather than later, this fantasy bubble will burst and there will be bitter tears !! Unless we face up to facts and batten down the hatches, there'll be hell to pay in the near future !!

    Personal message to Richard Dingle - Wipe that damn smirk off your face !! I know Germany beat England 4-1 yesterday !!

  • Comment number 14.

    The IMF view of "serious downside risks" is an understatement. The deficit reduction plans of Germany and the UK in particular are certain to impede recovery, and may not even reduce the deficits significantly as planned. Without growth, deficit reduction is virtually impossible.

    Collaboration between the G20 to control exchange rates by open market central bank operations, could completely neutralise any attempts by speculators to exploit fear of currency instability caused by the continuation of the public deficits necessary for recovery.

  • Comment number 15.

    "6. At 03:10am on 28 Jun 2010, honestgeraldinho wrote:
    If the G8/20 really wanted to stabalise the world economies they would grasp the nettle of globalised banking, rather than vying for position of "banking capital". It needs all governments to stand and break the hold that banks (rating agencies; financial markets) have on them. The recent crash was a reflection of these institutions flexing their muscles to see how far they could go. Having created through mismanagement; cohersion/temptation of Joe and Josephine Bloggs into personal debt; pressure for profit at all costs forcing "creative accounting", making the biggest fictitious banking collapse ever. The global response was to bailout the faltering institutions with even more fictitious money.

    The precident having been established that governments will be there for the financial markets "beck and call" they within an instant are back at their previous games. Creating new methods for profiting from fictitious debt; labelling countries bankrupt; forcing huge hardship on the very people that saved them in 2008/9, and making huge profits and bonuses at the same time.

    If it requires draconian action against these pernicious institutions that see themselves above the rule of governments, with peoples lives mere playthings in a gamble of wealth accumulation. Play their game, devalue currency to "monopoly money" - forget "free markets" that enable greedy individuals to profit from monopolising resources. Set every nation on a path of self-sufficiency; remove food miles from the food chain; remove energy dependancy from the blackmail of nations (exampled by Russia and its satellite states involving gas flows to Europe). Start investing national effort in national production - Europe and America have allowed the export of their productive capability to other nations for the purpose of individual/personal wealth creation. The Bill Gates of this world should be forced to reinvest the wealth created by false markets and restrictive practices; exporting labour to cheaper sweatshop cultures for the sake of increased profit. Tax, globally, every individual who makes money, where they make the money and where they live - it would soon return investment, or owners, to the point of creation. Cannot see Bill Gates moving to Mumbai in the near future, though much of Microsoft's wealth creation comes from that continent. Isolate the tax havens (such as Belize) of the world by imposing astronomical tarrifs on all exports, thus returning the sums filtered away to such places. Just as with anyother parasite an ample application pesticide rids the problem, so with those countries that syphon the wealth of nations. Make avoidance the same as evasion, not paying taxes punished in the same way as stealing for that is surely what it is. Any accountant/accountacy firm involved in such practices charged with aiding and abetting the personal crime of not paying taxes. Restore faith in a financial system created to aid trade, helping merchants to exchange goods in the safety of a money exchange system international, but localised to avoid crime. Rather than supporting institions in the crime of extorting money through the falsehood of profit making at all costs.

    The G8/20 should take their collective responsibilities more seriously, and remember what they were elected to do, that they represent the collective will of their nations. The IMF is the ultimate con, as all nations contribute to a fund intended to alleviate the disparity between the wealthier/productive nations and the developing nations. Yet its actions extend the banking controls to oppress nations not aid, placing draconian requirements on nations for the dispersement of funds put their for the purpose. We apply 19th century practices to a global problem created by 20th century notions of growth and expanding wealth that cannot be supported in any sense of reality."
    Some interesting points in this post. I think the need for a more "self sufficiency" approach is the right one, in that in environmental terms its the most sustainable approach, whereas globalisation seems to represent the opposite, e.g. a nice solid wood cabinet, made in the UK from a sustainable wood source, would be more sustainable that a chipboard effort made in China and shipped round the world, which last a few years and then ends up in landfill. However, because goods prices are not based on the environmental impact of that product you get distortions and therefore encouage less sustainable outcomes. How you deliver this alternative sort of pricing is the real challenge.


  • Comment number 16.

    1. At 10:55pm on 27 Jun 2010, Richard wrote:
    Chris Martenson sums the fantasy thinking at the G20 summit up in his latest blog entitled, "Destined to Fail- Magical Thinking at the G20" at

    http://www.chrismartenson.com/blog/destined-fail-magical-thinking-g20/41097


    Excellent point, and in my humble opinion, very true.

  • Comment number 17.

    ''A crucial feature of this better future would be faster reduction of government deficits in countries such as the US, and more domestic-demand based growth in countries with large trade surpluses such as China and Germany.''

    We knew something was up in Germany in Feb 2010. A lot of enthusiasm and enquiries just went off the radar and those folks have never returned. The idea Germany helps the world by spending, savings or not, is doubtful from here. The US is much more on the up, debt or not. Perhaps the IMF should ask the German public if they want to spend rather than wishfully thinking and scratching out equations. I mean its just so unusual fo somebody to say, Hey you've got some dough, you can help me by getting rid of it. This seems to be the weakness at the top in the West at present, too much imagination and disconnection. And suddenly the idea that people who save will spend. Its because they dont spend that they save, saving is negative spending. Growth was fueled by people who borrowed and spent. Much of Europe looks shot, which incidentally also shoots anybody arguing for protectionism, which crops up every so often.

    China has already said it wants to focus on domestic activity to replace exports but is apparently facing inflationary pressures.

    So I would forget this fantasy. But I'll have an IMF chocolate teapot if they do one, to go on the shelf.

  • Comment number 18.

    10. At 08:20am on 28 Jun 2010, Ilkeston_Tim wrote:
    The statutory purposes of the IMF are the same as they were when formulated in 1943. So it was designed to help fund Keynesian reflations and yet has become Monetarist leading perhaps to poor decision making. Some would say, for example, that Argentina's 2001 crisis was caused by IMF requirements and conditions.
    All in all I think it pays to remember who is giving the advice. And as for KevinB it is not bleeding obvious, there are other ways.....

    The headline states

    IMF say G20 could do better

    I think that is bleedin' obvious

    Do you agree?

    I think you do from your post

  • Comment number 19.

    I wonder who the G20 "brains" think they are kidding, with all their fatuous insistance that we should be growing our way out of the current mess. When will they realise that today's world is very different from even a few decades ago and the concept of continuous global growth which requires us all to continue to buy more and more tat from each other is not only stupid, but downright dangerous? This policy, if we were foolish enough to pursue it, would simply accelerate the demise of the human race, which is even now more a question of "when" and not "if".
    When they come to their senses, survival will become the hot topic.
    It should be very obvious to us all that the term "sustainable growth", which is one used by politicians and economists, when they want to appear intelligent, is completely meaningless.

  • Comment number 20.

    What exactly is the 'computer game' (model) that the IMF uses for forecasting GNP? Will they let us have an xBox version so we can all play? And can we have the OBR and UK Treasury 'games' as well? (I understand there are several of the latter.and GO chooses the one he fancies)

    And will anyone publish their confidence limits?

    The question is simple. If the models are not robust in predictive power then what are appropriate policy choices?

  • Comment number 21.

    angloscotty @19
    This name thing is fascinating. Is yours a reference to Star Trek? "She canna' take anymore, Cap'n!" Weirdly appropriate with knobs on.
    Just to annoy Kev I'm going to say that you are, as someone else said earlier, 'bang on the money' However your timescale is way out. They've been extracting money for themselves at our cost for well over 300 years and it seems doubtful that it ever really worked in anyone's interest except their own.

  • Comment number 22.

    # 16. At 09:09am on 28 Jun 2010, Dempster wrote:
    "1. At 10:55pm on 27 Jun 2010, Richard wrote:
    Chris Martenson sums the fantasy thinking at the G20 summit up in his latest blog entitled, "Destined to Fail- Magical Thinking at the G20" at

    http://www.chrismartenson.com/blog/destined-fail-magical-thinking-g20/41097


    Excellent point, and in my humble opinion, very true."


    Interesting point about a possible GDP depreciation spiral in the event of significant cuts. I appreciate US economic measures are different to ours but this is something I've been trying to get my head round with the scale of the UK austerity measures.


    My work here is nearly done.

  • Comment number 23.

    Obama's chief flaw, economically speaking, is that he is economically illiterate. He and his advisors think that a growth in GDP means that the economy is growing. The Labour Party, and not a few Tories, believe it too. That is why they think that government spending is the key to recovery, because it promotes "growth". It does nothing of the sort. Governments can NEVER grow an economy. Only private sector industry grows an economy.

    What government spending promotes is growth in spending, and it is growth in spending that is measured by GDP and not economic growth. It does not matter whether you borrow or steal to spend. It will grow GDP, certainly, but where is the economic growth of the country? It hasn't taken place. While manufacturing output shrinks, and the US unemployment rate grows, it is ludicrous to talk of economic growth there. There has been no recovery there. The recession is well and truly on. It is still on here too. It has merely been disguised by frauds on the public like quantitative easing and government spending.

  • Comment number 24.

    A bit of perspective on Government debt:
    Government debt: 52% of GDP less 20% it owes itself(BoE). Therefore 32%?

    HouseHold debt: 210% of GDP (£3trillion)
    Non-Financial company debt: 120% of GDP (£1.8trillion)
    Financial company debt: 450% of GDP (£6.7trillion)
    Bail-out funding: 8% of GDP

    Cutting the welfare bill by R10billion pa will seemingly change all of this... according Condem economics. Reducing Non-EU immigration by a few thousand will also seemingly lighten the load

  • Comment number 25.

    In a report to be published with the final communique, the IMF says that the G20 countries' economic plans carry "serious downside risks" for the global economy - and their leaders could do much more to promote global growth and employment.

    They are trying to say more policies as advocated by Gordon Brown and less like Merkel and Osborne.

    I agree. The 'downside' is serious, especially for the fragile UK economy.

  • Comment number 26.

    Of course all of what the IMF, the G20 nations and just about anyone else predicts, as an economic outcome is based on the output from different models. And the phrase "Essentially, all models are wrong, but some are useful" attributed to the statistician George Box, is something that appears to be persistently (and conveniently) overlooked by economic commentators and academics alike.

  • Comment number 27.

    I agree with Angloscotty. If we are in a hole why keep on digging.

    The wealth of nations created over hundreds of years from the earth's resources is running out. We need a new paradigm of how to exist into the future.

  • Comment number 28.

    #14 >>Collaboration between the G20 to control exchange rates by open market central bank operations, could completely neutralise any attempts by speculators to exploit fear of currency instability caused by the continuation of the public deficits necessary for recovery.

    I'd so dearly love to see this come into being !! Then again, so will the BRIC countries !! The US, for a start will kick up a massive stink if the US$ is valued according to its true worth based on the US $14 trillion, and rising, worth of US debts !!

    In fact, during the G20 meeting in London, this is what was proposed by the Chinese when they wanted the SDRs to be the International Reserve Currency so that all other currencies can be valued against it !! Then, the reserve currency will not be the plaything of any one country !! Of course, this was met by horrified gasps from the Americans who immediately marshalled every argument they could think of against it !!

  • Comment number 29.

    In 1975 there was a report called the Geneva Project which was all about the redistribution of the worlds resources at that time according to the report a US citizen consumed forty barrels of oil to the third worlds one and that the developed world would require a drop of three percent in their standard of living for the third world to have a eight percent increase in theirs, one would think that with the competition for the limited resources that correction we are having now could be permanent the ration according to a report on Bloomberg said that it is now twenty five barrels to two with china

  • Comment number 30.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 31.

    Re 21
    300 hundred years ago a limited number of wise guys were able to fill their boots at the expense of the rest of us, but then, there were plenty of other fish in the sea, and the world was our oyster, to coin a phrase, with masses of scope for entrepreneurs to develop businesses based on converting raw materials into goods, greatly helped by scientific and engineering advances.
    There were far more opportunities than there were people and the future was way over the horizon and effectively unlimited.
    Today we have a totally different story with almost more people than fish, with estimates that there will be nothing left to catch by 2050, and huge problems feeding the continued exponentially growing world population.
    Preventing the banking wise guys continuing to fill their boots is a worthy goal for the G20, but failing to face up to continued population growth will be our undoing in the not too distant future.

  • Comment number 32.

    What a great article this is.
    http://www.chrismartenson.com/blog/destined-fail-magical-thinking-g20/41097
    Clearly sets out, we are between a rock and hard place economically, and that solutions require new thinking. Not that any government's are seeking to do this though.

  • Comment number 33.


    Newtons First Law "Every Action has an equal and opposite reaction" cannnot be applied when dealing, changing or meddling with Global and National economie.

    Nevertheless, there seems to be some laws which are being establshed which deserve consideration:

    "Every Fiscal or Economic Change has exponential and unfathomable impacts on society to make them potential weapons of mass destruction"

    Motto: Financial interventions will destroy nations and societies overtime

    "Economic Growth always creates many winners and many losers"

    Motto: The demand for Global Growth will create international, national and regional losers"

    "Beware of those calling for everyone to be in it together they will always be ruthlessly persuing selfish goals"

    Motto: "No one is in it together if there are alternatives to self financial preservation"

    Nevermind, the pound is climbing against the Euro, damaging our opportunity for growth, improving europes opportunity to grow at our expense - maybe time for a holiday to Germany

  • Comment number 34.

    As several bloggers have pointed out, sustainable growth is fundamentally impossible long term.

    And if ‘sustainable growth’ is being relied upon to solve the current financial crisis, then it’s pretty unlikely it’s going to be solved, at least in the long term.

    As far as I can see there are simply too many promises to pay (debt) issued by governments, companies and individuals that are, in reality no good, because they are never going to be honoured.

    They’re either going to have to be written off, or the central banks will have to print more money to satisfy them.

    And whilst I believe that there will be plenty more ‘austerity measures’ coming our way, I still reckon they’ll end up having to print more money in the end.

    I just hope that in so doing, they don’t cause a currency crisis.
    Because if faith is lost in a country’s fiat currency, the country that relies on it really would be stuffed.

  • Comment number 35.

    16 Dempster

    JD, They individually want growth as the alternative is more cuts.

    Its like motorway traffic it flows fine then there is a accident. The tailback grows rapidly. The accident is then cleared bar rubberneckers causing another. But the tailback bottleneck does not clear, it can last for hours afterwards (about 4 to 6 hours is not unusual). Now the interesting thing is that the lane blocked is not the one moving slowest. It is the lane absorbing the traffic from the closed lane which moves the slowest, so you stick in the blocked lane to move fastest. The more people move to the clear lane the faster the block lane will flow and the slower the clear lane will flow. This is used in crowd flow mapping. If everybody stays in the blocked lane then the advantage disappears. If you are looking for an advantage to pick you dont want everybody doing exactly the same thing.

    The issue is not what happens in the world overall, it is what happens where you are.

    So the argument in the link is right in the overall sense but wrong in the individual sense. Individual can be a country in this case.

    'I'm not programmed for your guilt' George Harrison.

  • Comment number 36.

    6. "Obama's chief flaw, economically speaking, is that he is economically illiterate."

    3 words come to mind; pot, kettle and black.

  • Comment number 37.

    It's a case of 'Prisoner's Dilemma' again isn't it? What makes good sense for any one country is disastrous if all pursue it at the same time,exacerbated by what is an internation recession. What will be the use of supply side stimulation if there is a lack of effective demand? Where is growth expected to come from? Competitive devaluation?
    It's all literally and metaphorically depressing.And yet this is just the argument that Obama has made, so it's well understood. The reason we continue on such a course seems to be short-term market needs determining govt. policies. Jam today. No doubt our own govt. will take the opportunity and excuse of fiscal prudence to privatise what's left of the social safety net, leaving the poor to the mercies of charity.

  • Comment number 38.

    31 angloscotty:

    I guess your trying to say your not an entrepreneur then.

    'The one who adapts his policy to the times prospers, and likewise that the one whose policy clashes with the demands of the times does not.'
    Niccolo Machiavelli

  • Comment number 39.

    Before banging on about the GDP growth we really need, could you all please have a look at a projected world population graph? Try Wikepedia, Google, or whatever else takes your fancy. (That's the graph of an exponential function, for those who don't know, but still like to tell us all what's what). And consider that a similar graph will apply to all commodities, food, energy, etc, since consumption of all these things must broadly follow population? That is why the free-market model is no longer viable, unless we can colonize a few new planets very quickly. Any answer, free market fundamentalists? Let's hear it from you, how we can grow our way out of trouble? What does your religion have to tell us?

  • Comment number 40.

    Growth - Profit - Growth - Profit - Growth - Profit .... oh when will the people learn that the rat race of seeking ever more growth and extracting every ounce of profit only benefits the small percent of the population who are already extremely money rich, and apart from a few philanthropists, the majority of these individuals use their wealth to enslave us all through "aspirational debt fuelled lifestyles".

    Wake up people - just say NO. Ask yourself do you really need all those new clothes and shoes, cars (£20,0000 ??), mobile phones (£35pm + ?), computers (ipad £500 + monthly data ??), coffee shop visits (£7 a visit ??), gym memberships (£80+ pm ??), fake tan products (why look orange?). I'd suggest giving them up now voluntarily before your forced to give them up when you simply cant afford it all and spend 10 years in deep depression!

    I challenge everyone to write to their company's shareholders and ask them what they do with their profits/dividends/money? Do they invest it in much needed social enterprises, charities or oil, gas, mining stocks and anything else which is a depleting resource which is being extracted for the continued financial benefit of a very few - the opportunity which of course you worked so hard to earn for them.

    If you continue to believe that scrabbling around for the little scraps of money you can get your hands on first before someone else does then truly we are all in deep trouble.

    Maybe its time to look for a new type of money, something not owned by the banks and the extremely wealthy nor which can be manipulated by governments and defunct global trade bodies - and something which values goods and enables trade but is constructed so that the system doesn't work on "the continued accumulation of more at someone else's expense".

    In a way we need a new money which is more like linux - rather than windows or Apple!

    Contrary to the majority belief.... we are not defined by the car we drive, the job we do, the clothes we wear, the phone we have. Strip it all away and ask yourself who you are - and then put a value on it and see what it is?

    Rant over - I'll crawl back under my rock again.

  • Comment number 41.

    In the nick of time, the equivalent of the cavalry is coming to the rescue of stalled Eurozone economies.
    Yes, it’s the Brown plan to the rescue! Not Brown the colour. But Gordon Brown - the author in 2008 of the ‘Bank Re-capitalisation’ approach that the Eurozone is belatedly drifting towards. And which the US Government adopted as the key part of its own bank rescue - instead of TARP. Which is why Eurozone growth is still stalled and the anglo-saxon economies are still moving forward.
    Here’s an overview of how the Brown Bank rescue plan will unfold in the Eurozone over the next few months. Results of stress tests of some Spanish and German Banks will inevitably provoke demands from bond markets for stress tests on other banks. Those demands will provoke widespread and similar audits all across the Eurozone. Resistors will be punished with declining Bond values and commensurate higher interest charges on their debts. Those pressures for widespread stress tests will become irresistible.
    Some banks will be found to be technically bankrupt. Or so very nearly bust that they must cease lending. Rather than allow either, Eurozone governments will inject capital into their distressed banks in exchange for equity shares priced at suitably distressed levels. In some cases they will also offer guarantees of bank debts (paid for with more share issuance) to enable Banks to raise capital from open markets rather than face control of their operations by their governments. In short, the mirror image of the Brown (Gordon) plan of 2008 that has kept our economy afloat and growing since.
    Governments and Lande that own portions of those bank equities will face a steep drop in the value of their assets. That massive ‘haircut’ is their punishment for not taking care of their duty of supervision in the past. Just as UK shareholders that owned Northern Rock, RBS and Lloyds Group have lost much of their share values.
    Governments all over the Eurozone will at first curse the Brown Plan for forcing them to take on more bank liabilities. As their re-capitalised banks resume lending, households get spending again and their economy picks-up, they may change that curse to a blessing. Especially as they find their shares are appreciating in value over their initial market value.
    History will be very generous to the ‘Brown Plan’. It’s already been successfully adopted in the USA and in the UK and will now spread to the Eurozone.

  • Comment number 42.

    31. At 12:51pm on 28 Jun 2010, angloscotty wrote:
    Re 21
    300 hundred years ago a limited number of wise guys were able to fill their boots at the expense of the rest of us, but then, there were plenty of other fish in the sea, and the world was our oyster, to coin a phrase, with masses of scope for entrepreneurs to develop businesses based on converting raw materials into goods, greatly helped by scientific and engineering advances.
    There were far more opportunities than there were people and the future was way over the horizon and effectively unlimited.
    Today we have a totally different story with almost more people than fish, with estimates that there will be nothing left to catch by 2050, and huge problems feeding the continued exponentially growing world population.
    Preventing the banking wise guys continuing to fill their boots is a worthy goal for the G20, but failing to face up to continued population growth will be our undoing in the not too distant future.
    -------------------------------------------------------------------
    Fine. I wasn't disagreeing. Just suggesting that your type of analysis is closely linked to what made all that expansion possible. Namely the the perpetual money making machine of the bankers. They claim to have discovered a perpetual motion machine that can expand money for ever and therefore support the notion that we can expand for ever. Any scientist will tell you why perpetual motion is impossible but economists, at least many of them, don't seem to be listening.

  • Comment number 43.

    36. At 2:09pm on 28 Jun 2010, nickja wrote:
    6. "Obama's chief flaw, economically speaking, is that he is economically illiterate."

    3 words come to mind; pot, kettle and black



    0000000000000000000000000000000000000000000000000000000000000000000000


    That's four words and tally ho

  • Comment number 44.

    The IMF is an agent of dollar hegemony, a pro-USD relic of the Bretton Woods empire, surviving on loans to developing nations, and driven to expand dollar domination through instigation of debt defaults. It is desperate to maintain the status quo, and it wants to supplant sovereign debt with dollar debt.

    If the IMF says the G20 could do better, then the G20 did something right.

  • Comment number 45.

    If greater control is not brought over the banks and financial institutions none of this will matter. Banks were "bailedout" so they would have funds to invest in business. Apparently the business of bonuses is what they meant. Didn't want to lose all that talent that formed the collusion that made it all happend. Either the heads of these institutions were extremely stupid or criminal in intent, in either case they should have been let go and the courts should have decided the matter, but friends of government never are charged, it is the other terrorist that are policed.
    Until we see what happens in the other faultering economies, it is simply too early to say what the future will hold but my guess is that the bailout of the banks will go down in history as one of the major governmental blunders of all times and the primary cause of the changes to come in the future.

  • Comment number 46.

    GDP trough is not a measure of wealth except for the pigs who are all equal providing they share their wurst with the ducks and give them something to quack about like"all ducks are equal prepare for the wurst" providing they intern also give to themasses [who also think that they are all equal] the wurst heehaaaw thing to ride home about .



    All based on the fractional reserve Bun King system where the ability to consume buns plus a proven track record of OBEcity forms the basis of continual truckloads of bun vouchers arriving by the hour to save the crumbling economy for a rainy day at which point they all expect to get invited into the ark with their nearrest and dearrest bungees so they can go over the top without a fear in the world ....wheeeeeeeeee .

  • Comment number 47.

    46

    ....................in the interest of environmental friendliness,assterity and security the over the top bungees will be reinforced with old cut down bicycle innertubes with "thou shalt knot"clearly stamped on the open ends ,health and safety ex reg 269764667889 plus a disclaimer and puncture reepAir kit .


    Untill bisickall repairman arrives [also known as the 1]with a bolt from the blue cropper.

  • Comment number 48.

    Take 186 independent experts from disparate backgrounds and ask them to forecast the economic outcomes resulting from the emergency actions of 20 diverse economies suffering a variety of internal financial problems.

    Forgive my reticence, but I don't think I'd bet the farm on their conclusions!

    The IMF, by the way, is composed of 186 member nations.

  • Comment number 49.

    Kevin - apologies I thought you may have been writing about the content not just the headline. Various folk provoked me into thinking more about population growth....
    6 Billion people now; 9 Billion people in 2050 assuming a decrease in average fertility rates from 2.5% to 2%! Means 50% (although some suggest more than that) more food and water needed by 2050.
    A really good idea for the UK to become self-sufficient then? What we need is a stimulus package for farmers that aims for more food? Maybe we could pull out of the EU and reinstate our 200 mile limit and then care lovingly for our fish stocks beneath our ever increasing number of wind turbines?
    Food stocks at a 50 year low I've read somewhere.... mmmmm. Fans and brown stuff come to mind. Maybe we all need to become veggies and if we do..... then CO2 goes down so does Nitrous Oxide and maybe fewer obese people saving NHS money and .... So a huge tax on meat then?
    Kubrik said "If you can talk brilliantly about a problem, it can create the consoling illusion that it has been mastered". Good job some here accept that they, like me, can't talk brilliantly about it but instead write enthusiastically about elements of potential solutions.
    Also Kubrik - "You sit at the board and suddenly your heart leaps. Your hand trembles to pick up the piece and move it. But what chess teaches you is that you must sit there calmly and think about whether it's really a good idea and whether there are other, better ideas." Still thinking then......

  • Comment number 50.

    re #40
    Not a rant. Useful/helpful/challenging post. Oh, well perhaps slightly ranty but Ta! anyway.

    The thought hiccoughed between my two dusty (hot weekend) brain cells this am whether England footie fans might boycott their clubs this next season and deprive the highly paid players of their income as punishment. Would perhaps concentrate the minds of the officials of the FA & Premier League on much needed reforms?

    We have some strange forms of wealth re-distribution in the UK. Relatively low income/poor people happily hand over the little they have to a media munchdog, broadcasting excessivitives and their overpaid insultainers, plus the aforementioned underplayformers. {If you are wondering why the 'Rita-write' (but not up to her standard), I just thought it might be wise not to name specific names ... .}

    When we merely think about asking the high income/wealthy people to pay a bit more tax to help everyone along and do a bit for the country, all hell breaks loose.

    Ho hum! Let's be careful out there today, tomorrow, the next day .....

  • Comment number 51.

    #31 >>300 hundred years ago a limited number of wise guys were able to fill their boots at the expense of the rest of us, but then, there were plenty of other fish in the sea, and the world was our oyster, to coin a phrase, with masses of scope for entrepreneurs to develop businesses based on converting raw materials into goods, greatly helped by scientific and engineering advances.

    300 years ago, there were plenty of "damned natives" to loot, plunder and enslave, too !! There aren't quite so many now !! They've all become that little bit smarter !!

  • Comment number 52.

    #41 To cut a long story short, you are suggesting that the governments do what the nasty old banks have been accused of doing wrong - manufacture something out of nothing !!

    Absolutely brilliant !! Just what Brown did, didn't he, with his QuEasing ?? And just who's going to accept all those useless bits of paper when the markets are flooded with every government doing the same ??

  • Comment number 53.

    #49 >>Maybe we all need to become veggies and if we do..... then CO2 goes down so does Nitrous Oxide and maybe fewer obese people saving NHS money and .... So a huge tax on meat then?

    If we all became veggies then the amount of methane ejected from the other end goes up exponentially and methane is an even "better" greenhouse gas than CO2 !! Of course, we could all attach hoses to our other ends so that the methane can be collected centrally and re-used as fuel; but that is not qute so practical, is it ?? And that's aside from the agony of it all ??

  • Comment number 54.

    "In a report to be published with the final communique, the IMF says that the G20 countries' economic plans carry 'serious downside risks' for the global economy - and their leaders could do much more to promote global growth and employment."
    Which economic plans was he referring to:
    a) stimulus
    b) auterity
    c) both?
    I wish he had been more specific; after all, he's talking global output ending up 3% ($2.25 trillion) lower than currently forecast, and an extra 23 million jobs that might be lost.
    Dominique Strauss, Managing Director of the International Monetary Fund (IMF), seemed to welcome the agreed actions of the Group of 20 nations. The only drawback is that no comprehensive plan was finalized. Nothing will be finalised till the Seoul Summit; at least, that's how I understood the situation. Therefore the best he could say was that: "This initiative holds out great promise.” Again he didn't tell us which initiative "holds out great promise".
    He remarked that IMF analysis shows that appropriate collective action could increase global GDP by 2.5% (medium-term), creating tens of millions of jobs, lifting tens of millions more out of poverty."
    Darn, does that mean he wants the US to stimulate and the EU carry out austerity? What "collective action" is he referring to?
    Mr. Strauss also remarked that more robust growth is needed to lessen the burden of large public debts. The G-20 Mutual Assessment Process is the mechanism through which the challenge for growth can be assessed. It delineates three areas:
    1. fiscal consolidation in advanced countries. This means putting in place credible fiscal plans. (I would have prefered the word “reform”.)
    2. economies with surpluses need to boost internal demand (Which countries I wonder does he envision will have this type of “surplus” to "boost internal demand"?)
    3. structural reforms, especially in the advanced economies encompassing changes in goods and labor markets that will lift growth, and financial reform that will make it sustainable. (If someone can translate this for me, I’ll be happy to comment.)"
    Strauss remarked that the Toronto Summit had made progress toward a comprehensive set of new standards to enhance the strength and stability of the financial sector. "I am heartened by the renewed commitment by G-20 Leaders to implement the financial sector reforms agreed to in London and Pittsburgh.” (Really? Having read the United States reform package, I can’t seem to find those financial sector reforms that were agreed to previously at London or Pittsburg.)
    He said that a healthier and safer financial sector will supply the credit needed to finance recovery and serve the needs of the real economy. Where is that going to come from? (Please refer to United States’ New Reform Package. If it's not in there, it's not going to happen, at least not in the United States. Perhaps, he's referring to Europe, post stress-testing.) There is also nothing in the American financial reform package that suggests it will play fair; in fact, tell me after you’ve read the thing if it still isn't riddled with derivatives and non-regulation.
    In line with the Pittsburgh Summit commitments, he said, "Todays commitments will bolster IMF legitimacy and credibility."
    To tell you the truth, I do not feel that the IMF has bolstered its legitimacy or credibility. I believe the IMF could have done a whole lot better.

  • Comment number 55.

    Tonight I find myself disgusted at the Conservative - Lib's I had hoped that the new Government would be fair, but the old Norman Tebbit line of get on your bikes and look for work is being used again by David C and Nick C They want to continue to pay child benefit to millionares and high earners. They say they are going to cut incapacity benifit for the sick and disabled typical of these two silver spoon public school boys. They have not got the guts to take the child benifit off the people who do not need it.

    Typical Torys take the money off the poor Pensioners and the sick and the unemployed whats worse is Nick Clegg is going along with it in the hope of getting
    PR

    and don't their friends in the Daily Mail just love it

  • Comment number 56.

    55 Jeff..... couldn't agree with you more except I do think that those who don't deserve Incapacity shouldn't get it. As for the LibDems - one of my previous blogs suggested they need to pull out of things now otherwise they will never be elected. Leaving now with honour may save some of them. We need a new election and Kevin - no we didn't vote for a Tory governement; we may have voted for a coalition but we just haven't got one worthy of the name.
    54 Blues..... agree with you too. IMF could do an awful lot better. I think what they meant to say was - those countries with lots of cash please spend it preferably on exports of those without any cash.
    53 Ish.. you must be eating the wrong veg foods! Fewer cows lowers CO2. Higher taxes (gradually so our meat producers don't all go bust at once) on meat is the way to do it. Or do you have proof that reduced meat consumption does not affect CO2 in a positive way?

  • Comment number 57.

    55. At 01:49am on 29 Jun 2010, Jeff King wrote:
    Tonight I find myself disgusted at the Conservative - Lib's I had hoped that the new Government would be fair, but the old Norman Tebbit line of get on your bikes and look for work is being used again by David C and Nick C They want to continue to pay child benefit to millionares and high earners. They say they are going to cut incapacity benifit for the sick and disabled typical of these two silver spoon public school boys. They have not got the guts to take the child benifit off the people who do not need it.
    ---------------------------------------------
    I would agree that in their recent (last few days) PR, the Coalition seem to be using the same advisors as BP. I D-S made a bit of a hash of the pensions proposals and the Coalition haven't been too clear or positive on this one.

    You obviously missed the essential thrust of their suggestion that an existing public housing tenancy should be transferable if the unemployed occupier chooses to move in order to obtain employment. In other words, you can get a job, keep your family with you and be guaranteed accommodation.

    Can't be bad. If you are a private tenant you have to sort it all out for yourself. You have obviously forgotten that in Norman Tebbit's day, public tenants didn't get that sort of help.

    I can understand that the changes that the Coalition are making are a bit difficult for some to understand. They are new. Even Millipede Minor didn't quite get it and opened his mouth on Monday morning and planted a foot firmly in it.

    The gist of what he said - "It's terrible, the LibDems are forcing people to keep their homes. We would make it harder for unemployed people to find work."

  • Comment number 58.

    34. At 2:00pm on 28 Jun 2010, Dempster wrote:
    As several bloggers have pointed out, sustainable growth is fundamentally impossible long term.
    --------------------------------------------------
    Really? Not me. If we were living in a nearly fully 'developed' world, I would agree with that statement. But we are not there yet. And surely we are a some way off being so? And there obstacles that have been put in the way. The present economic hiatus. Climate change. War and other conflicts.

  • Comment number 59.

    re #51 to #53
    Chuckle of the Day Award. (various eminent previous holders){Poor old writaRita seems to be in trouble with the Mods at the moment.}

  • Comment number 60.

    The IMF is really US foreign policy in action. It is also going to run out of money at some point in the next few years and those countries that cannot pay or borrow will default.

    Obama is simply scared that others get their houses in order and expose the US to the kind of scrutiny that will cause further collapse of the $US against emerging market currencies and make open their hidden and entrenched depression. The average American is far poorer than even they realise. What a dissapointment he has turned out to be.

  • Comment number 61.

    At 08:55am on 29 Jun 2010, Up2snuff wrote

    34. At 2:00pm on 28 Jun 2010, Dempster wrote:
    As several bloggers have pointed out, sustainable growth is fundamentally impossible long term.

    58. Really? Not me. If we were living in a nearly fully 'developed' world, I would agree with that statement. But we are not there yet. And surely we are a some way off being so? And there obstacles that have been put in the way. The present economic hiatus. Climate change. War and other conflicts.

    ***
    It either is fundamentally impossible or it isn't - where do you stand? But what do you mean by "nearly fully developed"? Sounds utopian. Remember the Bob Hope gag circa mid 60s saying (I paraphrase) he would come back to Britain "when you have finished building it"?

    But I agree there is plenty of scope for further growth - the trick is to manage it sustainably and define that tightly.

  • Comment number 62.

    #56 >>53 Ish.. you must be eating the wrong veg foods! Fewer cows lowers CO2. Higher taxes (gradually so our meat producers don't all go bust at once) on meat is the way to do it. Or do you have proof that reduced meat consumption does not affect CO2 in a positive way?

    Reducing meat consumption is a *GOOD THING* !! Becoming total veggies will only incease the amount of methane in the atmosphere !! And methane is even deadlier than CO2 and that's aside from the fact that methane is highly combustable !! The general advice is - don't eat lots of beans and then light a ciggie !! The results could be spectacular !! Rumour has it that Sir Frank Whittle invented the jet engine because of that !! Scurrilous rumour, of course !!

  • Comment number 63.

    #60 >>What a dissapointment he has turned out to be.

    So true. I had suggested that we should give him support to make it through his first 100 days. But the longer he is in office, the more he seem to stick his foot in his mouth !! Quite unbecoming of a President of America, let alone the fact that it's a very uncomfortable pose to hold !! The Democrats must be regretting that they didn't choose the Clinton-who-wears-the-pants as their candidate !!

  • Comment number 64.

    57# Up2snuff
    Fair enough the unemployed should be able to move to find work if work is available in other area's.

    But why is this so called government going to continue to pay millionares and high earner's child benefit.

    And I don't buy the BS line that its to hard to means test millionares and high earners so we have to continue to pay them billions in unneeded child benifit.



    why should Pensioners with income over £20,000 PA continue to get free Bus and Train travel.


  • Comment number 65.

    I would like these discussions to refer more to society rather than just the cold world of economics. Governments clammer for economic growth, but economic growth does not result in happier people - see "The Spirit Level" for evidence: it results in more suicide, family breakdowns, beatings for men, women and children. This suffering is accelerated when economies shrink. It is like we are constantly spiraling downwards.

    Politicians do not have the answers to these problems: all they offer, for the most part, is lies, deceit and self-interest. The answers reside in the people that the politicians represent. There are a lot of very clever people out there: why don't they put their minds together to find ways to involve people more directly in the future direction of our society? With the internet, interactive TV, satellite communication, surely we can bring people more into the decision-making processes that affect us.

    PS. Please stop using the word "trillion". £1.5 trillion seems less worrying than £1500 billion; somehow decreasing the size of the problems facing all of us.

  • Comment number 66.

    Every poster to Stephanie Flander's Blog should listen to today's BBC R4 'Call You and Yours' from 12.03 to 12.57pm, if you have not already done so.

  • Comment number 67.

    #65 >>I would like these discussions to refer more to society rather than just the cold world of economics.

    Thee are plenty of blogs about siciety in general or in particular. This one, fortunately or unfortunately, is about economics. Therefore, most comments here will be about "the cold world of economics" !!

    >>PS. Please stop using the word "trillion". £1.5 trillion seems less worrying than £1500 billion; somehow decreasing the size of the problems facing all of us.

    What is in a name ?? That which we call "£1500 billion" is still a humoungous debt which still needs repaying !!

  • Comment number 68.

    64. At 12:22pm on 29 Jun 2010, Jeff King wrote:
    57# Up2snuff
    Fair enough the unemployed should be able to move to find work if work is available in other area's.

    But why is this so called government going to continue to pay millionares and high earner's child benefit.

    And I don't buy the BS line that its to hard to means test millionares and high earners so we have to continue to pay them billions in unneeded child benifit.
    -----------------------------------------------
    Means testing is expensive (lots of people, paper, filing, etc): the simple thing to do would be to make child benefit taxable.

    There are a couple of problems with that. Children are one of the new 'gods' of our society and there is a psychological haze around child benefit anyway, because the mother and child are seen to benefit. And with, apparently, an awful lot of feckless fathers still around, it probably does some good.

    Secondly, the Left are currently devoid of leadership and policies. All they can do in Parliament is attack the LibDems and try and drive a wedge in between them and the Tories. Outside Parliament, all they can do is threaten, and perhaps carry out, strikes in the public sector. A measure like this at present, might give the Left something to misrepresent as taking child benefit away in general (despite it still being paid to the lower paid) and thereby give the Left something to unite and mobilise around.

    So patience is one of the keys. If GO & Co have got their strategy right, the changes from this year's Budget will be working through next year, so in 2012, (hopefully with good PR rather than 'spin') the Coalition will be able to ease the tax burden upwards by opening all benefits to tax, and the higher rates as well.

    It might be possible to have, with computerised tax returns, a trigger (similar to the one that deprives high earners of the basic tax free allowance) that would claw back child benefit from people above a certain income level. However, HMRC's computer system still has a lot of problems, so I'm not sure whether doing this might be practical at the present time. In addition, I'm not a fan of tax churn, either; I always have an uncomfortable feeling that some of it will leak through the cracks!

  • Comment number 69.

    re #61
    Take Vietnam as an example. Slowly enjoying growth after the horrors of war and Communism. They are moving steadily into being a player on the world economic stage. Unthinkable thirty years, forty years, fifty years ago.

  • Comment number 70.

    re #62
    That's how we discovered that the supposed 'Doc' doing a dietics thing on primetime UK TV was a fake!

  • Comment number 71.

    69. At 1:29pm on 29 Jun 2010, Up2snuff wrote:

    re #61
    Take Vietnam as an example. Slowly enjoying growth after the horrors of war and Communism.
    ==========================================================================

    Isn't Vietnam still a communist country?

    And what does this have to do with whether a global economic model based on constant growth is sustainable or not? I refer you, yet again, to the exponential function. That is the mathematical reason why free-market economics can only work for a limited time on an essentially empty planet. Why don't all you free-market "thinkers" put on your tinfoil hats, climb into your spaceships, and find such a planet, instead of constantly screwing up this one for the rest of us.

  • Comment number 72.

  • Comment number 73.

    The IMF seems to be offering opinions in a lot of areas. As an unelected body it might be best if it carried on doing its day job.

    Exactly when did the role of the IMF change to what it is now, it was certainly never constituted to behave as it does now? Also talking of elections will the views which it is suggesting be similar to Mr. Strauss-Kahns maifesto should ne stand for French President?

  • Comment number 74.

    #64 Jeff King. Ah yes why indeed should pensioners with income of over GBP 20k continue to qualify for free bus and train travel (do they?)?

    Why should multi millionaies and billionaires continue to qualify for free corporate jet travel?

    Or do you just calculate that crushing the poor and the weak is an easier task than facing down the rich and the powerful?

  • Comment number 75.

    #71 haufdeed. Your theory is correct, but not necessarily relevant. Take solar power, wind power and wave power - for all practical purposes these things are available without limit.

  • Comment number 76.

    75. At 4:30pm on 29 Jun 2010, armagediontimes wrote:

    #71 haufdeed. Your theory is correct, but not necessarily relevant. Take solar power, wind power and wave power - for all practical purposes these things are available without limit.
    ===========================================================================
    Energy is only one of a number of things we need- we need minerals, arable land,clean water, etc. Plus space to live. We simply cannot grow indefinitely on a finite planet, no matter how much energy we have.

  • Comment number 77.

    71. At 2:33pm on 29 Jun 2010, haufdeed wrote:

    Isn't Vietnam still a communist country?

    And what does this have to do with whether a global economic model based on constant growth is sustainable or not? I refer you, yet again, to the exponential function. That is the mathematical reason why free-market economics can only work for a limited time on an essentially empty planet. Why don't all you free-market "thinkers" put on your tinfoil hats, climb into your spaceships, and find such a planet, instead of constantly screwing up this one for the rest of us.
    ----------------------------------------------------
    Well, as you know, there is Communist, and communist and communist as in China for the last twenty years.

    And what country has ever enjoyed exponential growth? To suggest the world has/is/will enjoy(ed)(ing) exponential growth is ... is ... kinda mind boggling! Would you like to borrow a tin-foil hat? One of the other posters dropped one and I don't think I need it.

    Let's be careful with our math out there today.

  • Comment number 78.

    Child Allowance - make it a tax free allowance through income tax and hey presto means testing costs disappear. Gross over £30k (or whichever limit) then no tax free allowance. Not a hard bit of software really. Bus Passes - rich pensioners don't catch buses so take the passes off them and see who complains.
    Vietnam/China - let's all up sticks and live there and enjoy the benefits of growth - oops we'd then find out why they are growing.
    Power - windiest country in Europe needs more wind turbines around the coast. And can't we combine wind turbines and wave power generators; string a few between the windmills.

  • Comment number 79.


    77. At 6:04pm on 29 Jun 2010, Up2snuff wrote:

    And what country has ever enjoyed exponential growth? To suggest the world has/is/will enjoy(ed)(ing) exponential growth is ... is ... kinda mind boggling! Would you like to borrow a tin-foil hat? One of the other posters dropped one and I don't think I need it.

    Let's be careful with our math out there today.
    =========================================================================
    It is clear that you do not understand the meaning of exponential growth, so a little care with your own maths would be in order. Check it out if you are competent to do so, and feel free to correct me once you have done so. But on a mathematical basis, please.

  • Comment number 80.

    Vietnam is growing because business follows cheap labor. Big business is always in search of the next country to abuse. Taiwan, once a producer, now out-sources work to Vietnam and other countries. This happens throughout Asia. China is now having labor strikes and the East Coast of China is starting to develop a middle class with middle class ambitons...higher pay, better living conditions. Look at any Western major city and you will see over time that neighborhoods become run down and finally when the land is cheap developers come in and upgrade to make a profit. Of course the current residents are usually displaced with the hand of the government and never realize any of the profits. Profit and taxes that is all that matters, people no longer hold any value. We are all building the Bridge on the River Kwai, financed by the banks and constructed by the government.

  • Comment number 81.

    78 Ilkeston_Tim:

    'Power - windiest country in Europe needs more wind turbines around the coast. And can't we combine wind turbines and wave power generators; string a few between the windmills.'

    I can tell you where to stick the wind turbines. Something to do with Ed Milliband bending over but you can stand in if you want. You should look into the financial structure of ROCs (renewable obligation certs) which even the National Audit Office say gives about 3x too much yeild to the turbine owners. Do you realise each one of these things is a multimillion pound windfall (excuse the pun) to the energy companies all paid for by effectively surcharging each consumer. Above 56 mph and they get shut down in case they fall appart, below 11 mph they dont turn. The lastest are the size of a Jumbo jet on a giant cane. Wind is intermittent. The roads are not even good enough to move these thing about in many locations.

    A Severn barrage was looked at a few decades ago but appeared to have projected continual silting problems and unacceptable environmental impact. The last I heard these facts are now acceptable, strange innit. Same facts. Waves, or duck power has never really got off the drawing board so I guess they havent worked out a subsidy for them yet. People using better techonlogy and less energy sounds a good idea but the financal guys dont make money doing that do they. Funny how all the things that can make somebody money get pushed for. And anybody saying hang on a minute gets shouted down by the companies. But never mind lets bypass the local democracy and centralise 'planning' process.

  • Comment number 82.

    The biggest problem in the global economy is the idea that all and sundry can get a rescue loan from the IMF - The penny has dropped! (Sorry ... should that be... the penny has been filched by a banker)

    When will the IMF realise that the problem with the global economy is now the money itself and together with:

    - the universality of money
    - bad GDP unsustainable growth models
    - ineffective and vague accountancy standards
    - lack of grass roots innovation and bottom up investment in sustainable green enterprise
    - massive trade and energy and commodity and food imbalances
    - lack of adequate restructuring of individual economies

    Obama is real clever and is right ... we're all in this together ... we have to do the right things... except Obama does not know what to do or how to it! (he's 'pretty dumb' in actual fact... said some general somewhere and not me, by the way)

    The answer is that we (the UK) and the ROTW have to do 101 difficult things simultaneously and in the right measure (including those things listed above) ... but no one knows how to do this ... yet ... possibly never.

    The current slow GDP growth planet is fantastic and is nature's way of rescuing us all ... from ourselves and our profligate consumption and destruction of our world.

    Thank goodness that our politicians do not know how to create imminent and massive GDP growth as supported by ill advised IMF loans to all and sundry.

    We have to learn how to live with less and operate with new money that rewards sustainable and environmentally beneficial economic activities.

    The next massive global GDP upswing will create a later, massive downswing and all manner of economic and international probelms.

  • Comment number 83.

    79. At 8:22pm on 29 Jun 2010, haufdeed wrote:

    77. At 6:04pm on 29 Jun 2010, Up2snuff wrote:

    And what country has ever enjoyed exponential growth? To suggest the world has/is/will enjoy(ed)(ing) exponential growth is ... is ... kinda mind boggling! Would you like to borrow a tin-foil hat? One of the other posters dropped one and I don't think I need it.

    Let's be careful with our math out there today.
    =========================================================================
    It is clear that you do not understand the meaning of exponential growth, so a little care with your own maths would be in order. Check it out if you are competent to do so, and feel free to correct me once you have done so. But on a mathematical basis, please.
    -----------------------------------------------------
    I am being careful with my maths as I am not good at it. Please provide an example or examples of a country or countries in the world that have enjoyed exponential growth.

  • Comment number 84.

    78. At 8:09pm on 29 Jun 2010, Ilkeston_Tim wrote:
    'Child Allowance - make it a tax free allowance through income tax and hey presto means testing costs disappear. Gross over £30k (or whichever limit) then no tax free allowance. Not a hard bit of software really. Bus Passes - rich pensioners don't catch buses so take the passes off them and see who complains.'
    -------------------------------------
    Agree could be done. If HMRC computers can handle the strain. Not doing too well so far even without that complication. Tad harsh on bus passes. Many pensioners are forced to give up driving by reason of age. The wealthiest can hire cars+ driver, so could be a source of employment - we may need it! Where do you set the cut off point?

    'Vietnam/China - let's all up sticks and live there and enjoy the benefits of growth - oops we'd then find out why they are growing.'
    -------------------------------------
    Some Brits have already and more, I understand, are going.

    'Power - windiest country in Europe needs more wind turbines around the coast. And can't we combine wind turbines and wave power generators; string a few between the windmills.'
    -------------------------------------
    Problem is that if 'climate change' happens our wind may disappear. Don't think it will, actually, but there is a chance of wind droughts with global warming. Offshore turbines require maintenance visits by boats burning fossil fuels. To provide sufficient power we would have to destroy our whole coastline and part of the landscape and put up more pylons and build some fossil fuel or nuclear power stations. Seems peculiar for so-called environmentalists to want to destroy our landscape and coastline.

  • Comment number 85.

    I agree with some others on this blog that the article at:

    http://www.chrismartenson.com/blog/destined-fail-magical-thinking-g20/41097

    is very thought provoking. I suspect it is merely addressing directly issues that are in many of our minds already.

    Perhaps Stephanie might exercise that big brain of hers on some of the questions it raises before she disappears off to North America (boo hoo).

  • Comment number 86.

    Consumer confidence falling ..... http://uk.reuters.com/article/idUKTRE65S6V520100629

    And 1.3 m coalition-effect job losses......
    http://uk.reuters.com/article/idUKTRE65S6TC20100629

    ......yes in UK we could do a lot better.

    Is this a Torydemogenic Slump?

    Could we have your estimate of the impact on growth of the new Government ,compared to the old one ,and the impact lower growth from these policies has on public finances,Stephanie?

    Also what are your thoughts on the recent big rise in the pound versus the Euro, and the likely impact of this on manufacturing?

  • Comment number 87.

    83. At 10:41pm on 29 Jun 2010, Up2snuff wrote:

    I am being careful with my maths as I am not good at it. Please provide an example or examples of a country or countries in the world that have enjoyed exponential growth.

    ========================================================================
    Firstly, my apologies to all those on this blog who are mathematically literate, this little lecture will come across as infantile, so please don't read on.

    Here is a definition of exponential growth: "Exponential growth means that some quantity grows by a fixed percentage rate from one year to the next"

    Depending on the fixed percentage growth rate, the original quantity will eventually double, then double again, and again and---ad infinitum. The percentage growth rate simply determines how long until that first doubling, on a basis of- doubling time = 70 divided by annual growth rate percent, for example at 5% annual growth, whatever you start with doubles in 14 years (70/5), at 10% growth in 7 years,at 2% growth in 35 years.

    Now you can surely find for yourself many examples of economies that have enjoyed 2% or more annual growth over a long period? Well that is exponential growth, and is wholly unsustainable, because what is really scary is what happens after that first doubling period.

    Take a start point of 100, and a rate of 10&. After 7 years your 100 has become 200. After 14 years it has become 400, after 21 years your 100 has become 800, after 28 years you have multiplied your starting quantity by 16 times to 1600. All that alters with lower growth rates is the timescale, but whatever your growth rate it becomes very very scary in the end.

    Try cutting and pasting this: http://www.chrismartenson.com/crashcourse/chapter-3-exponential-growth

    In summary, what many people, including our politicians, don't understand is that all growth is unsustainable. The word exponential is completely misunderstood, and is applied only to the money supply in Zimbabwe, for example, on the basis that it means very, very fast growth rates. That is a total misunderstanding.

    I hope that this helps, and sorry to go on so long. I'm sure many others could provide a much clearer explanation.

  • Comment number 88.

    GDP 'Growth' can continue indefinitely so long as the measure of inflation used when calculating the figures is lower than that actual rate of inflation in the economy in question.

    Does anyone honestly believe that inflation in the UK is as low as the official figures suggest?

    Same applies to pretty much any other developed nation.

    If you try adjusting reported GDP according to shadow stats rather than official inflation figures you will find rather less growth than you might expect...

  • Comment number 89.

    Sigh. Seems obvious to me that if you sell all your seeds and don't plant a crop this year then sure, you'll be better off in the sort term with the profit from the sale, BUT next year there will be no crop and a famine and no way to start over. Of course we have to continue trying to invest for the future and for growth as well as restructure spending. It frightens me that the Conservatives seem only to be concentrating on 'selling off the seeds' as if that is the only answer.

  • Comment number 90.

    As each member of the G8/G20 is accountable, in varying degrees, to their own countrymen, why would anyone - or in this case the IMF/World Bank - imagine that one sovereign state would happily limit their own economic growth for the benefit of another.

    If EU members can't agree amongst themselves how to rescue the Euro because of infighting over "Greek profligacy" versus "German rectitude", why would anyone imagine nation states in Asia, that have no common cultural heritage with the US, are going to forgo greater economic growth so that the richest nation on Earth can reduce its debt quicker?

    May be somebody should tell all those varying flavours of parochial natiobnalism that infest a number of parts ot the planet that they've got it all wrong and should be turning swords into ploughshares. If thats the big idea, and the proposal is to build a global cloud cuckoo land, good luck with that.

  • Comment number 91.

    89. emilly

    Seeds being sold. All seeds. What seeds. What were we growing.

    Maybe we had grew a few too many funny money trees. Not all seeds produce valiable crops. Some just weeds that blight the useful crop.

    Sigh. Sounds like you have been smoking a few seeds.

  • Comment number 92.

    The growth model is the USD centric status quo. It works like this:

    The USA imports Asian goods and Arabic oil. It pays for both in dollars. The Asians don't want dollars and the Arabs only want dollars to buy US weaponry. So the rest, what is called 'current account surplus,' is reinvested back in the USA. The idea is that by reinvesting, they promote 'growth,' which means that more dollars get created to buy more of their goods, and the surpluses of worthless paper generate a potential return.

    These cycles result in huge trade deficits. The USA (and other nations close to the US hub) end up consuming more than they produce, but the exporter nations are willing to live with it if the paper money they receive can perpetually, or for the foreseeable future, increase.

    This status quo is now broken, but the participants are finding it hard to develop alternatives without entering into catastrophic breakdown. The pressure for alternatives is there, apart from from those who insist that 'growth' can be perpetuated. 'Growth' is a kind of Western nationalism, an ideology, a belief that the West can continue to be consumers and the periphery can remain the slave periphery.

  • Comment number 93.

    The West is sleep walking into poverty, production as well as services & banking needs to take place in the UK ask yourself what items you purchase are actually manufacturerd here and what effects long term this is having on our economy. The Lib-Con government blocked loans / investment recently in manufacturing in Sheffield but were happy to bail out greedy bankers who still insist on huge bonuses. Dyson often lauded as a British success makes nothing in the UK because he can better line his own pocket manufacturing in the far east. Britain & the US have foolishly allowed out of balance economies in the stupid assumption of free trade yet the BRIC countries blatently dont prescribe to free trade and its our balance of payments and our young people who will suffer from our over consumption of slave produced goods.
    Ask yourself how Apple can make such huge profits? Why workers in the asian plants it uses are commiting suicide? Greed is the simple answer.

  • Comment number 94.

    re #87
    Thanks. But now I have problems. I have a different understanding (from elsewhere) of exponential growth. Your explanation sounds like compound growth, which is how (normally) economies expand (and sometimes contract) but not exponential growth.

    Not sure if I will be allowed to link here: http://en.wikipedia.org/wiki/Exponential_growth
    but hopefully it will get through. If not, may I suggest you G**gle 'exponential growth'. You will immediately get some graphs and these show an exponential curve and there is a link to a well-known encyclopedia which tended to back up my schooldays understanding of exponential.

    Once again I ask, please give an example of a country that has enjoyed exponential growth in its economy. I do not know of one. It may have happened. Probably only for a couple of years. Where? What can we learn from it?

    As I understand, it is not the model of growth enjoyed by most economies worldwide ever and certainly not in the modern era. Please do correct me if I'm wrong.

  • Comment number 95.

    90. At 11:46am on 30 Jun 2010, Paul wrote:
    As each member of the G8/G20 is accountable, in varying degrees, to their own countrymen, why would anyone - or in this case the IMF/World Bank - imagine that one sovereign state would happily limit their own economic growth for the benefit of another.
    -------------------------------------------
    Good point and how would you (ie any given Chancellor) do it with any certainty in the modern world? Consumer tastes can be fickle. And tax tools can have unpredictable and unforseen consequences as we discovered in Britain in the pre-modern world.

  • Comment number 96.

    I agree that there should be international control of all banks because they are just looking after themselves again and appear not to be helping the SME's at all, nor the individual. I cannot understand why the G20 does not move on this very quickly. We need manufacturing back in this country so we do not rely on the financial sector as much as we do now. That would create many jobs particularly in the areas in the Uk where there is high unemployment at the moment.

  • Comment number 97.

    #94,

    Compound growth is exponential growth. Exponential growth is compound growth. They are the same thing.

    If you have a compound interest rate of 5% pa, your money grows exponentially. It will double approximately every 14-15 years.

    To put that another way (in the form of an exponential equation), y=1000*e^0.0488x, where y = account balance and x = years passed.

    - The 0.0488 is ln(1.05) to 3sf, if you were wondering.

    To summarise: If a country is indeed growing at roughly a constant percentage per year, it's undergoing something very close to exponential growth.

  • Comment number 98.

    94. At 2:31pm on 30 Jun 2010, Up2snuff wrote:

    re #87
    Thanks. But now I have problems. I have a different understanding (from elsewhere) of exponential growth.
    =========================================================================
    The following is the opening sentence of the Wikepedia article you have linked to.

    "Exponential growth (including exponential decay) occurs when the growth rate of a mathematical function is proportional to the function's current value."

    Please explain to me how that differs from my explanation at 87?

    Every Western economy has "enjoyed" exponential growth (but with the odd blip for recessions) since WW2. The "enjoyment" is now at an end- that is why the world economy is down the pan, unless, as I have previously posted, you have a nice empty planet and the means of getting there.

  • Comment number 99.

    Uptosnuff

    Why are you bothered about exponential growth. Its not going to happen other to a individual or small subset in a population.

    However >

    What happens in a population where as a proportion of lifespan less work occurs.

    What happens in a population where employment is shipped overseas.

    What happens in a population where wealth transfer from one group to another occurs leaving many in debt with assets held with a declining price.

    What happens in a population where money is taken out of the disposable income envelope and instead spent on housing.

    What happens in a population when progressively more young are denied access to work and therefore part of the wealth creation.

    What happens when people living longer demand access to higher cost welfare provision.

    There is however a victim mentality about, and not just in the UK. In interview a successful far east manufacturer with several hundred employees said - We know our place in the supply chain we have to produce at a very low cost and supply components onwards - in response to questions about worker welfare.

    The answer is embedded in this position. To be in control of your destiny you have to have more direct sales to a customer base, not be a small cog in a supply chain where you can be played off one against the other. This is the big, ie multinational, business game at the moment, play one off against the other and drive everyone into the ground, including ultimately themselves. Unfortunately stepping outside the box is not what many want to consider.

    In the UK part of the problem is that people expect to be 'employed' ie work provided, preferably by a large corporation. This is the industrial revolution model. The dark satanic mills as cleaned up by H&S.

    But recently a woman interviewed on TV said - 'They' should 'bring' work 'here' - when questioned about whether she should move to get work. Problem is big corporations are in trouble and shrinking or going overseas, and government subsidy to startup or relocate to depressed UK areas is due to drop I would guess. And businesses are most unlikely to go there to offer work as some sort of service to that woman. The reality is they are much more likely if relocating to move overseas. So my guess is she will remain unemployed.

    Growth is sought to try and track inflation, inflation being needed to encourage purchasing, in the belief we would not buy today what would be cheaper tomorrow. It sort of breaks down for me with stuff you dont want to put off buying whatever eg making that phonecall I put off for a couple of years till it was cheaper, but thats the model they like from what I can see.

    At the moment inflation is greater than GDP growth yet they appear to claim we are in growth and produce graphs showing it. Wheras I would suggest we are still contracting. House prices are 'rising' at 0.1 or 0.2 percent per month, depending on the month so really they are dropping adjusted for inflation, but I guess it makes better copy.

    In short they will talk about almost anything other than what is actually happening.

  • Comment number 100.

    93# I couldn't agree more. everything we buy is produced some ware else and the UK is mindlessly consuming with no real idea of where the goods we buy come from or how they have been produced. We are a mindless nation obsessed with consumerism and celebrity. Until this stops and we collectively start buying and therefore increasing demand for British goods we will be staring down the barrel of poverty.


 

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