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Jonathan Street London
SE11 5NH United Kingdom Press
release: Embargo Thursday 18th September 2003
Responding
to the publication of the IMF’s “World Economic Outlook”, Ann
Pettifor, editor of nef’s “Real
World Economic Outlook” said “We
do not share the IMF’s optimistic view that ‘the balance of risks’ for
the global economy ‘has improved significantly’”. The
US stock-market bounce-back and the upsurge in consumer confidence are like
mirages in the desert, based as they are on an extremely fragile credit
bubble. “We
find the outlook for the global economy deeply alarming. In our first
counter-report on the global economy, we predict that US interest rates
must, and will rise soon. America’s creditors are already losing
patience with the Bush Administration’s profligacy. Scepticism about the
creditworthiness of the US government, corporates and consumers is pushing
up long-term interest rates. “The
US economy, perched precariously on a mountain of debt, is at a dangerous
tipping point. We believe higher interest rates will push it over the edge. The
US could be the next to face an emerging-market style financial crisis.
Given its role as the engine of the global economy, this will have grave
implications for the rest of the world.” Real
World
Economic Outlook (RWEO), published by Palgrave Macmillan, notes that three
decades of financial de-regulation have led to one of the biggest credit
bubbles in history – hyper-inflating asset values and generating massive
debts. It is this credit bubble, RWEO demonstrates, that has propped up the
US economy and US consumption. Romilly
Greenhill, author of Chapter Two of Real World Economic
Outlook, said, “The
US is able to indulge in excessive government and consumer spending to an
extent that emerging markets can only dream of. This is because the rest of
the world, particularly the thrifty savers of Asia, is willing to make low
interest loans to the US, in the form of dollar reserve holdings, mostly US
Treasury Bills. China and other Asian countries are selflessly handing over
their savings to prop up an international system not of their choice, but
one they are effectively forced to maintain. Yet, incredibly, these
countries are now being attacked by the US, architect and beneficiary of the
system. There can be no better
example of a country biting the hand that feeds it.” -
ENDS – 1.
Contact: Ann Pettifor can be reached on 00 44 7770 886 146. Romilly
Greenhill can be reached on: 00 44 7812 605 131. 2.
nef
is an independent think and do tank that inspires and demonstrates real
economic well-being. We aim to improve quality of life by promoting
innovative solutions that challenge mainstream thinking on economic,
environment and social issues. We work in partnership and put people and the
planet first. 3.
Ann Pettifor, leads the Jubilee Research team at nef, specialising in
international finance and governance at the new economics foundation. 4.
Real World
Economic Outlook is an annual report on the global economy, examining the
international system from the point of view of economic and environmental
justice. It is published by Palgrave Macmillan, and is available from their
website at www.palgrave.com/rweo.
Ms Pettifor and her colleagues are staying at the Jumeira Rotana Hotel in Dubai Tel: 971 – 4 3455 888 |
