Global economy continues to exist, despite strife

Greece may get more time to implement austerity, and the Fed has announced a shed load of QE in the States. The debt crisis euro-disaster economy-calamity saga continues to trundle on.

by Michael Northcott
Last Updated: 19 Aug 2013

The global economic plight becomes less intriguing with each twist and turn, so much alike are the government announcements whenever they are issued. But now the IMF’s managing director, Christine Lagarde, has revealed that Greece’s international lenders may give the country more time to meet the conditions of its hefty bailout package, rather than allow the country to face real-life bankruptcy. Probably a good idea if a default is the alternative…

There had been concerns that the country would go to the wall, with tax receipts continuing to plummet and public services at risk of not being given their salary. But with lenders extending a bit of patience over the bailout deal we can expect, well, an even more prolonged euro-agony than we already have. Add to that growing concerns that Spain – with its massively bigger economy – will have to ask formally for a bailout out some time soon, and you’ve got real concerns. But let’s not freak out right away: no doubt there will be a couple more years of uncertainty and impending doom for us to endure before anything improves anyway.

It’s a pretty mixed back in the US, too. Fed central banker Ben Bernanke has cut the growth forecast for 2012, but has also announced a third round of quantitative easing with low interest rates until 2015. The news has pleased investors, with markets rallying in New York in response to the announcement, but the stock exchange joy betrays the typical short-termism of investors. If growth forecasts have been cut then obviously the situation is not good. With each round, QE looks more and more like a government bone to the stock market dog. 

Still, we can but hope that various economic measures being taken in Europe and the US can help turn this mess around. It sure has been going on long enough.

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