When will the recession end? Part 39 IMF & World Bank warnings of a double dip recession in 2010 unilaterally ignored by all mainstream media

I find it interesting to note what news items are left off the main stream media, as much as which ones make the front page headlines.

What’s omitted can often be more significant then what’s not. While the Haiti crisis dominated the front, middle and back pages of most newspapers around the world and justifiably so, I sometimes wonder if it’s a good excuse and distraction to avoid other equally or more unpalatable news. (The subliminal message being...Too bad for Haiti, but we have it so much better here..where ever here may be....)

None of the major syndicated media (print, TV or radio) bothered to report the dire warnings from both the managing director and chief economist of the International Monetary Fund (IMF) in this past week,  that the world economy could soon be heading back into a double dip recession. This is largely due to the 100 or so asset or debt bubbles around the globe that could burst in 2010 sending the world into a double dip recession.  I covered this in a blog psoting in December 2009.

One popular economics blog even went as far as to commit outight deception-misquoted the IMF suggesting that the world was not at risk of a double dip recession.

 

Usually when the IMF makes a major announcement it's religeously covered by all of the business press.WELL NOT THIS TIME!!

 

 

Here’s what Jamaican Radio reported:

IMF predicts double dip recession   

The head of the International Monetary Fund (IMF) has warned that the global economy could experience another downturn, a so-called double dip recession.

According to IMF Managign Director, Dominique Strauss-Kahn, countries should not exit from stimulus packages that have bolstered growth through huge amounts of government spending.

He noted that governments should be cautious as the recovery remains very fragile as there is not yet enough private demand strong enough to offset the need for public policy.

Mr. Strauss-Khan added that tackling high levels of debt will be a priority for many governments.

 

The World Bank echoed similar concerns:

 

The World Bank's chief economist Justin Lin warned the global economy may suffer a double-dip recession.  "The foundation for the recovery is very fragile… We may have a double dip," he said, citing excess global capacity that could linger until 2014.  Beyond the weak economic fundamentals underlying the emergence from recession, Lin said he is also concerned that the world economy is entering "uncharted waters."  In an environment of low interest rates and excess capacity, most of the liquidity could go into speculative investments, he said.  Other risks are that banks continue to hold bad debts on their balance sheets, as well as a potential rise in protectionism, said Lin.  While rising debts from fiscal stimulus is also a concern, it will only become an issue if the spending doesn't boost productivity, he said.  Countries should ensure their stimulus is enhancing productivity, and possibly even consider a second round of stimulus, he said."

In lieu of general excess capacity and low or dropping private demand for growth (goods and services) , the "military economy" and the "disaster economy" and government stimulus and infrastructure spending has taken its place to bolster GDP.

 

Walter Derzko, Smart Economy, Toronto

 

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times, published by J. Wiley and Sons

ISBN13: 978-0-470-73761-3

ISBN10: 0-470-73761-1