Ministers and experts called today for policymakers to act in order to deter another recession. Monday, the OECD’s monthly composite indicator lagged behind for a third straight month. The indicator shows global economic trends, but has taken no notice of the debt fears in Europe and the US.
This began volatile trading, with stock falling more often than rising, but continuing to go up and down. The consensus appears to be that things are about to get worse. Senior global economist at HSBC bank, Karen Ward, urged policymakers to act quickly. “What we need is a really strong steer from policymakers that they have got a strategy.
“But there is a feeling that none of our policymakers seem to have control of the situation.”
Problems in the US and Europe
The United States was stripped of its AAA credit rating last week, the UK growth forecast was today downgraded to 1.5% growth, and other European markets are weakening. The German economy suffered as Tuesday came with revelations that their exports fell in June. The French economy is also weakening, with attempts being made to restructure it using a ban on short-selling for shares. Short-selling is traders betting on prices falls, and making profits.
France has followed Greece in this ban, which will last for 15 days, and Italy will decide tomorrow whether to follow as well.
Professor Nouriel Roubini, economist, wrote, “There is a rising risk – approaching 50% now – of a double-dip recession in the US and most advanced economies.”
Difficult Debates Ahead
Governments need to take control of their deficits and take control of the situations. Decisions from the US will not come lightly either, as the recent debates between the two American parties over the debt default lid means other debates will be just as difficult.
Germany’s Foreign Minister, Guido Westerwelle, called for a more united front for the eurozone. He called the choice “between less Europe or more Europe” and called for “more Europe”. With this plan, countries such as Portugal and Italy would be completely bailed out, but would have to allow the EU to control tax and spending. This solution has previously been turned down, but could be reconsidered after the volatile market trends seen this week.