By MoneyMorning.com.au
Yesterday the papers splashed the latest warning from the World Bank.
The Financial Times reported:
“Predicting significantly slower global growth in 2012 than it expected last summer even if the eurozone muddles through its crisis, World Bank economists said that if financial markets deny funds to eurozone economies, global growth would be about 4 percentage points lower than even these figures, with poorer economies far from immune.”
There’s no doubt there will be another downturn. The pieces are already in place for it to happen. The only unknown is when.
Of course, the knee-jerk reaction is to say, what would the World Bank know? It never gets things right. But it is worth remembering what the Bank wrote in 2007…
“A soft landing remains likely, but the global economy has reached a turning point and many factors could result in a more pronounced slowdown. A faster-than-expected weakening of housing markets in high-income countries could generate a much sharper downturn and even recession, with potentially significant effects for developing countries. Much slower growth would likely cause commodity prices to weaken more than already projected…”
But we won’t big-up the World Bank too much. After all, the guys over at our sibling newsletter The Daily Reckoning banged on about the economic meltdown as early as 1999.
Besides, it’s important to understand why the World Bank is making this prediction. It’s not to warn investors about the risks of investing. It’s not to admit that the world is now paying for the mistakes of the past. No. It’s simpler than that…
It wants more taxpayer dollars.
Or rather, it wants governments to give taxpayer money to the International Monetary Fund (IMF) so the IMF can give more cash to broken banks and corrupt governments.
If you needed any proof, right on cue the following report appeared in the FT yesterday:
“The International Monetary Fund has asked its member countries for an extra $500bn in firepower to combat the world’s spreading fiscal emergencies, which it estimates will generate demand for bail-out loans totalling $1tn over the next two years.”
Coincidence? No.
It’s the latest attempt by meddling bureaucrats to stall the inevitable: a full-scale economic collapse. Whether it’s a repeat of 2008 or something much worse is anyone’s guess.
That’s why it’s vital you have an emergency plan…
Cheers.
Kris.
Related Articles
Special Report: Six Extraordinary Resource Investment Opportunities for 2012
How Global Oil Supplies Could Fall 40% Overnight