In the lingo of the International Monetary Fund, the future of the world hinges on "rebalancing and consolidation," antiseptic words that would not seem to raise a fuss.
But the translation is a bit ruder, something on the order of: "Suck it up. The party's over."
To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive.
That's the practical meaning of a series of policy papers and statements issued in recent days by IMF officials, who have a long history of stabilizing economies and solving global financial problems, as they plot a course to keep the world economy growing and reduce the risk of another "great recession."
That message has been delivered subtly, woven into documents with titles such as "Resolving the Crisis Legacy and Meeting New Challenges to Financial Stability," and justified by concepts such as "raising retirement age in line with life expectancy," as IMF economic counselor Olivier Blanchard put it this week.
But fully deciphered, it means a pretty serious reworking of expectations in the developed world: changes in labor rules, product prices, currency values and even the social contract between governments and an aging citizenry.
"It is not that living standards will lower, but they will not increase as fast as they have been," said Domenico Lombardi, a former IMF executive director. The ideas being discussed by world leaders "are coded words," he said. "They don't like words like 'imposing higher taxes' and 'cutting spending.' "
Rebalancing
The IMF has long had a reputation as a bearer of bad news -- it dispatches well-educated and diplomatically deft teams to tell economically troubled countries how many people they have to fire and which programs they have to cut to get financial assistance. But the IMF now finds itself in the odd position of having that conversation not with a single ailing sovereign but with the developed countries at the core of the world system, including the United States.
Its prescription is centered on two concepts.
"Rebalancing" is an idea that most everyone endorses -- including the technicians at the fund and President Obama and the leaders of the G-20 group of economically powerful nations. In broad strokes, it means curbing what has been a massive transfer of capital from nations that consume more than they produce, such as the United States, to nations that produce more than they consume, such as China.
The imbalance has been key to China's modernization: The country buys U.S. government bonds by the tens of billions to keep the dollar stronger than it would be and to keep its domestic currency -- and its exports -- cheaper. Looked at one way, the flow of U.S. debt to the People's Bank of China has acted like a giant, collective credit card, underwriting consumers across the United States and driving the business models of major retailers such as Wal-Mart.
http://www.washingtonpost.com/wp-dy...4/23/AR2010042305258.html?hpid=topnews&sub=AR
THE ECONIMIC SITUATION IS NOT GOING TO GET BETTER FOR AMERICA IT'S GOING TO GET WORST. YOU HAVE THE IMF SAYING IN PUBLIC NOW THE PARTY IS OVER FOR THE NATIONS LIVING THE GOOD LIFE!!! WHAT DOES THIS MEAN FOR AMERICA??? IT MEANS THAT THEY ARE GOING TO BRING US DOWN TO THE LEVEL OF 2ND WORLD/ 3RD WORLD COUNTRY
!!!!
But the translation is a bit ruder, something on the order of: "Suck it up. The party's over."
To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive.
That's the practical meaning of a series of policy papers and statements issued in recent days by IMF officials, who have a long history of stabilizing economies and solving global financial problems, as they plot a course to keep the world economy growing and reduce the risk of another "great recession."
That message has been delivered subtly, woven into documents with titles such as "Resolving the Crisis Legacy and Meeting New Challenges to Financial Stability," and justified by concepts such as "raising retirement age in line with life expectancy," as IMF economic counselor Olivier Blanchard put it this week.
But fully deciphered, it means a pretty serious reworking of expectations in the developed world: changes in labor rules, product prices, currency values and even the social contract between governments and an aging citizenry.
"It is not that living standards will lower, but they will not increase as fast as they have been," said Domenico Lombardi, a former IMF executive director. The ideas being discussed by world leaders "are coded words," he said. "They don't like words like 'imposing higher taxes' and 'cutting spending.' "
Rebalancing
The IMF has long had a reputation as a bearer of bad news -- it dispatches well-educated and diplomatically deft teams to tell economically troubled countries how many people they have to fire and which programs they have to cut to get financial assistance. But the IMF now finds itself in the odd position of having that conversation not with a single ailing sovereign but with the developed countries at the core of the world system, including the United States.
Its prescription is centered on two concepts.
"Rebalancing" is an idea that most everyone endorses -- including the technicians at the fund and President Obama and the leaders of the G-20 group of economically powerful nations. In broad strokes, it means curbing what has been a massive transfer of capital from nations that consume more than they produce, such as the United States, to nations that produce more than they consume, such as China.
The imbalance has been key to China's modernization: The country buys U.S. government bonds by the tens of billions to keep the dollar stronger than it would be and to keep its domestic currency -- and its exports -- cheaper. Looked at one way, the flow of U.S. debt to the People's Bank of China has acted like a giant, collective credit card, underwriting consumers across the United States and driving the business models of major retailers such as Wal-Mart.
http://www.washingtonpost.com/wp-dy...4/23/AR2010042305258.html?hpid=topnews&sub=AR
THE ECONIMIC SITUATION IS NOT GOING TO GET BETTER FOR AMERICA IT'S GOING TO GET WORST. YOU HAVE THE IMF SAYING IN PUBLIC NOW THE PARTY IS OVER FOR THE NATIONS LIVING THE GOOD LIFE!!! WHAT DOES THIS MEAN FOR AMERICA??? IT MEANS THAT THEY ARE GOING TO BRING US DOWN TO THE LEVEL OF 2ND WORLD/ 3RD WORLD COUNTRY
!!!!
