World Facing 50% Danger of Another Recession, Nobel Laureate Spence Says

[xchrom]

http://www.bloomberg.com/news/2011-08-25/world-economy-has-50-chance-of-falling-into-slump-spence-says.html

The global economy has a 50 percent chance of slipping into recession as Europe and the U.S. struggle to grow, according to Nobel laureate Michael Spence.

“I’m quite worried,” Spence said in a Bloomberg Television interview in Hong Kong yesterday. “A combined downward dip in Europe and America, which is a good chunk of the industrialized economies, I’m quite sure will take down growth in China particularly, and that will then immediately spread to the rest of the emerging economies.” He put the likelihood of such a scenario “at about 50 percent.”

Spence’s remarks follow cuts in global growth forecasts by institutions from Citigroup Inc. to UBS AG as central bankers from around the world gather for a Federal Reserve symposium this weekend in Jackson Hole, Wyoming. Unlike the aftermath of the 2008 global financial crisis when China cushioned the blow with a stimulus program, this time it would only be able to buffer its domestic economy, he said.

China “cannot make up for the kind of loss of demand that would go with a downturn in the advanced economies,” Spence said. Because Chinese inflation is running at an official rate of 6.5 percent, a figure many economists say is understated, Beijing would be “pretty close to nuts” to fuel further credit growth, he said.

[OHdem10]

1. Larry Lindsey, former Bush Advisor, former Fed Governor made

the same prediction --50/50 chance of Double Dip.
Participating in the Jackson Hole, Wy Meeting at which
Bernanke was featured.

Even Bernanke was grim in prediction slow weak growth
in coming years. He also said if there is Stimulus
Congress has to act. He will not do a #E-3.
(The very fact that he mentioned stimulus is an indication
it is needed. Wall St was hoping he would do QE-3.

[Demeter]

2. That's Ridiculous

The odds are 100%, because there was no recovery. The Greater Depression continues.

[Fearless]

4. +1

[bhikkhu]

3. Moderating growth is the first step to sustainable human societies

...looking at climate change, resource limits, species extinctions, etc, I'd worry more that we are too far out on a limb already.

[jtuck004]

5. "Spence said that the Fed could seek to encourage lending in order to help bolster

the real-estate market."

___________________

Oh, what a good move. More debt. This is the same housing industry whose debt, with other, was used to divert our attention from the loss of wealth-producing jobs for about the last 40 years, correct? We re-inflate the big "home-mortgage-debt" balloon in the front yard again and we still don't have any income. Just waiting for it to flop over again.

Instead acknowledge we are in a period, of indeterminate length, with little or perhaps negative real growth. Then invest in our people and create a plan to help more people thrive. Maybe 22nd century vocational schools, just blanket the country. Ten million jobs. Encourage community-based manufacturing and food - fund them not because there is a profit, but because we know our taxes are better used to grow people than corporations.