United States remains the global economy into chaos with the ability, at least from the 1920s onwards, it has such a capacity. Therefore, the deleveraging of high-income countries and emerging economies struggle between growth, the former will eventually achieve a decisive victory. Alas!
but not entirely a bad thing: Inflation pressure is rapidly reduced. Nevertheless, this masks a more bad news. Disintegration of the financial system will weaken the monetary easing on the economy of the conduction, which will make the coming economic slowdown last a long time. Although the parties to take decisive action to the financial system from the recent “heart attack” in the rescue over, but the “patient” is still very weak.
2007, the global economy (at market exchange rates) the actual growth rate of 3.7%. International Monetary Fund (IMF) latest “World Economic Outlook” (World Economic Outlook) expects global economic growth rate of 2.7%, while only 1.9% next year. The agency expects high income country’s economy will stagnate next year, while emerging economies are expected to grow by 6.1%. The speed seems very fast. However, compared with the expected in July, has declined by 0.6%, well below 8% in 2007 and 2008, economic growth still expected to achieve 6.9% growth.
pleasant surprise is that the African economy is expected to grow 6% next year. According to forecasts, developing Asian countries will continue to lead global economic growth rate of 7.7%: 9.3% of which China and India will fall to 6.9%. At the same time, is expected to Central and Eastern European economy will only grow 3.4% next year, while growth in the Western Hemisphere even more slowly, only 3.2%.
made the prediction on the occasion, in September and October the most serious financial impact has not erupted. Bank of England (BoE) Governor Mervyn ? Gold (Mervyn King) in the 21’s a speech that evening: “need to take radical action to ensure the banking system to survive.” * In fact, governments are its financial system is necessary to inject such a huge amount of new capital, which in itself shows the extent of the crisis.
recent release of U.S. retail, housing starts, industrial production and consumer confidence data showed the U.S. economy is in recession. Several other countries also face similar difficulties, especially in England.
think about pressure in these countries shoulder the heavy burden it. 1980 to 2007, the U.S. fiscal debt to gross domestic product (GDP) ratio - a measure of the status of a standards-sector debt - jumped from 21% to 116%. As a result, the economic lifeblood of the now flooded with bad debts.
In addition, although the United States (and other Western countries) the government is committed to save the core of the banking system, but with the gradual depletion of finance, will inevitably be forced to sell financial assets, and to be more bankruptcies, including hedge fund sector, including non-bank financial system seems destined to collapse.
This is the kind of euphemism, “deleveraging” (deleveraging) behind the reality. Unless the private sector bad debt was moved to the public sector balance sheet, otherwise the situation will be in the form of large-scale bankruptcies. “Debt destruction” (Debt destruction) is a better listen to the argument. In the United States and elsewhere, asset prices (especially housing) also continued to drop. Who borrow money to buy these assets? Unless these assets get a lot of capital protection guarantee, or Which lenders will agree to use it as collateral? Credit mechanism has collapsed. When a higher risk when credit spreads jumped sharply (see the end the chart), will happen. If banks can not easily borrow money, no one can borrow.
In addition, people should remember that U.S. household spending in recent years, a percentage of revenue has been unusually high, debt levels are exceptionally high. With the family in dire need of credit to reduce the consumption of people who suffered huge losses to increase savings, this situation will change.
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