We have a China economy thread but no world economy thread so i will now start one. We live in interesting times of global economic uncertainty. The news on the economic front is bad all over the world from a potential Eurozone breakup to America's fiscal crisis to the economic slowdown in China the picture is getting increasingly bleak. I believe that the economy maybe the single most important thing in the world and in our lives. It's effects the very big things in the world of politics, geopolitics and geostrategic issue's. But also effects the very mundane aspects of our lives like what kind of car we drive to what we have for dinner. The economy is in a way perhabs the only issue where geopolitic and geostrategy crosses with the dinner table. This is one of the few threads on this forum that we discuss things that directly affects our lives. So in this thread we post and discuss the latest news on the world economy. Issue's on the Chinese economy can be posted here too or in the China economy thread if you like.
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World Economy
- Thread starter Franklin
- Start date
Let's get started on today's big news.
Federal Reserve to buy more debt to boost US economy
Ben Bernanke Ben Bernanke recently spoke of the benefits of "non-traditional policies"
The US central bank has announced it will resume its policy of pumping more money into the economy via so-called quantitative easing.
The Federal Reserve said it will buy "additional agency mortgage-backed securities at a pace of $40bn (£25bn) per month".
The central bank also said it could increase the size of its purchases if the economy does not improve.
The economy is a pivotal issue in this year's US presidential election.
Interest rates in the US have been close to zero for several years now, and the Fed againt kept them at below 0.25%.
'Matter of time'
Speaking later, Fed chairman Ben Bernanke also lowered the Fed's growth forecast for the US economy to 2% this year, down from the 2.4% it predicted in June. But it expects growth to rebound in 2013 to as much as 3%.
"The committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labour market conditions," said the Fed.
US stocks, which had been little changed, gained after the announcement. The benchmark Dow Jones average was 0.7% higher.
The US central bank has tried to support the economy by quantitative easing - buying $2.3tn (£1.4tn) in bonds in two rounds.
For some analysts, the latest measures - dubbed "QE3" - were less than expected.
"We doubt it will be enough to get the economy on the right track," said Paul Ashworth, an economist at Capital Economics. "It's only a matter of time before speculation begins as to when the Fed will raise its purchases from $40bn a month."
The Fed calls such measures "asset purchases", where the central bank buys bonds to keep the long-term cost of borrowing down. The last round of asset purchases ended last year.
Mortgage-backed securities are debt backed by loans made to homeowners.
The unemployment rate in the US has been above 8% since January 2009, but the current 8.1% is down from the recent high of 10% in October 2009.
"To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens," the Fed said.
The Fed also confirmed that its $267bn (£170bn) programme to reduce long-term borrowing costs for firms and households would continue for the rest of the year.
In a move dubbed "Operation Twist", the central bank buys longer-term bonds from retail lenders and swaps them for shorter-term bonds.
QE infinity!!!!!
This is going to create massive GLOBAL inflation since the world will absorb most of these printed dollars due to it being the reserve currency.
There will be dollar inflows to countries with higher interest rates.
It's clearly to devalue the debt, all this talk about dual mandate is an excuse to devalue the debt load.
This is going to create massive GLOBAL inflation since the world will absorb most of these printed dollars due to it being the reserve currency.
There will be dollar inflows to countries with higher interest rates.
It's clearly to devalue the debt, all this talk about dual mandate is an excuse to devalue the debt load.
QE infinity!!!!!
This is going to create massive GLOBAL inflation since the world will absorb most of these printed dollars due to it being the reserve currency.
There will be dollar inflows to countries with higher interest rates.
It's clearly to devalue the debt, all this talk about dual mandate is an excuse to devalue the debt load.
Nations around the world can midigate the effects of these policies by allowing their currencies to rise against the USD and circumventing the USD in their bilateral trade. But no nation can completely escape the effects of this policy because of the USD's status as the world's reserve currency. As for inflating the debt away, don't forget the USD is a debt based money every dollar you print is a dollar of debt that needs to be repayed with interest and not to mention that the US government is getting in debt at a rate of over atrillion dollars a year. Especially when the money created is going into the government bond, housing and stock markets that are artificially inflated which somewhere down the road will lead to a massive crash. And millions of people in America and around the world will be whiped out.
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Brazil cuts growth forecast to 2% for 2012
Brazil has cut its growth forecast for this year as the global downturn hits exports and rising local debt levels weigh on consumption.
The country will grow 2% this year, down from its previous forecast of 3%, Finance Minister Guido Mantega predicted.
That would be the weakest annual performance since 2009 and a sharp slowdown from growth of 7.5% in 2010.
Brazil became the world's sixth-largest economy this year, overtaking the UK.
The Latin American nation's economy grew 2.7% last year, official figures showed.
President Dilma Rousseff recently launched the first in a series of measures that could inject up to $50bn (£32bn) into the economy over the next five years.
The plan included privatising about 14,000km of railways and roads, followed by selling ports and lowering energy costs.
Expensive energy, poor infrastructure and increasing labour costs - known as "Custo Brasil" or the "Brazil Cost" - have weighed on growth, analysts say.
The stimulus measures are intended to increase the role played by private investors, who were seen to have lost ground during the government of Luiz Inacio Lula da Silva, Brazil's popular president from 2003 to 2010, and Ms Rousseff's mentor.
World economy is going through a tough time in these days but China is the country which economy is very strong as China's strategies are unique. Small or big business is being run in every second home of China that is why China's people are living sound good life. China is best country for a business.
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