A Financial Times report, "World
Economy Still on Life Support," pours more
cold water on the notion that conditions are returning to "normal."
economy “remains on life support” from central banks and has
deteriorated since last autumn, the latest Brookings Institution-Financial
Times tracking index shows, despite some recent signs of stabilisation.
weakness extends across the Group of 20 leading economies, according to the
TIGER (Tracking Indices for the Global Economic Recovery) index, but advanced
economies have deteriorated more than developing countries.
financial markets recovered significantly in the first quarter of the year as
investors welcomed the European Central Bank’s massive injection of
liquidity into the eurozone’s banks, the
outlook for growth and jobs has become more precarious almost everywhere
except in the US.
Professor Eswar Prasad of the Brookings Institution said:
“The global economic recovery is still sputtering due to a lack of
robust demand, policy tools that are stretched to their limits and unable to
muster much traction, and enormous risks posed by weak financial systems and
highly-paid pseudo-analysts and the usual contingent of permabulls
will zero in on the claim, noted above and later in the article,
that the U.S. is faring better in relative terms than the rest of the
probably forget to mention two things: 1) our economy also remains on
substantial life support from the Fed (if not, why have they kept interest
rates near zero and allowed their holdings of securities to balloon to nearly
$3 trillion?); and, 2) a great many of the export markets that helped keep
U.S. businesses afloat (in the face of weak domestic demand) are likely to be
hit by recession in Europe, slowing growth in China, Europe, and weakening
demand everywhere else.
I know, I know.
I just need to be a bit more positive -- right?
Michael J. Panzner