Global economy set for best years in decade, IMF says

April 22, 2004

Editor's note: What is such a bullish news article doing on such a bearish website? Normally I would throw this up for a balancing view on the news page, but this is so contrary to what I believe the near future will hold that I want it here on the site, to serve as future reference, right or wrong. Add your comments at the end.


THE world economy is on course for its best two years of expansion for more than a decade, the International Monetary Fund said yesterday.

The Fund’s bullish view came as Alan Greenspan, the Federal Reserve Chairman, stepped up his campaign to prepare markets for a rise in American interest rates, delivering his second signal in two days that an increase is on the cards by autumn.

In its bi-annual World Economic Outlook, the IMF said accelerating world growth meant that it was time for higher interest rates in most large economies.

The Fund raised its forecast for world growth to a buoyant 4.6 per cent, and projected growth of 4.4 per cent in 2005.

Raghuram Rajan, the IMF chief economist, said: “The tentative buds of recovery we observed six months ago are now blooming in many parts of the world.”

But as the IMF highlighted a series of risks to recovery, it stepped up pressure on Mr Greenspan to raise US rates soon. “The ground should continue to be prepared for future monetary tightening,” it said.

The IMF said that, if rates were kept low across Western economies, markets could become over-valued and potentially volatile when rates did rise.

Mr Rajan issued a call for leading economies to use the recovery to strengthen public finances and build ammunition to deal with future economic shocks.

The IMF also reinforced calls for the US to curb its budget deficit and highlighted risks from rising oil prices and terrorism.

In his latest hint at an impending rate rise, Mr Greenspan dropped his use of the word “patient” to describe the Fed’s stance and said rates “must rise at some point”.

Most economists now expect a move in August. But markets were rattled by what they saw as a hawkish stance from the Fed chairman.

The dollar jumped while shares on Wall Street were flat. The dollar’s gains pushed the euro to a five-month low of $1.1823.

Sterling slumped 2.5 cents to a four-month low.

Mr Rajan also sounded a warning that the global economy will be undermined if politicians in the US or other countries succumb to demands to throw up barriers to competition for foreign goods and services.

Mr Rajan reinforced his plea with a swipe at the climate of fear in many leading Western economies over the emergence of China as a potent force in world trade.

Posted by manystrom at April 22, 2004 07:54 PM

see my comment on the meltdown thread.
1 after all the crisis can wait another two years. May be the bubble can take some more. Some countries in europe can progress and borrow more before they reach the leaders level (JAPAN of the 90's, US UK and Netherlands now)
2 WHat needs to happen is a financial crisis. We've had a financial boom with an enduring economic crisis in most of europe. THe financial bust of the 60's 70's was a time of huge economic growth. THere can be a financial crisis with enduring economic boom in the world if well managed.
This is just a question of how to guide down the debt load without creating an economic crisis through reduced spending ...

What is really frightening is when greenspan comments, the rise in commodity price is no problem because they form only a small part of the business costs, labor costs wich account for the majority of the costs are down though more slowly.
That man is enjoying the fact that his own citizen are being paid less (or work less hours) and paying more to the foreign countries whre the commodities come from. He is saying a tax placed upon his country, reducing the spending power of its citizen, is no problem because wage are also down, also reducing the spending power of its citizen.
This comment says that the mood of those in control of the finance has not changed. Therefore they will have to be faced to "dire consequences" before they get replaced by others leading another cycle with little debt, more value added directed to wages, less for those with money, the aged ones, more for the working people.

SO I would say.
Prosperity can happen, but only if supply side economists, get replaced, if power shift from those who have, and expect returns to those who have not, and hope not to repay. With some cleansing on both sides (foolish lenders and foolish borrowers). Prosperity may be before us, but those who bet on it, do so for the wrong reason.

Posted by: François Dubreuil at April 22, 2004 08:33 PM

It all depends on your definition of "prosperity". A farm boy from the hinterland of China who moves to the city and sees his annual wages increase from $500 to $5000 will experience tremendous prosperity. The unemployed couple in Seattle who lose their $500K mcmansion and have to sell all of their toys on eBay to survive will see a different picture.

Governments everywhere are catching the same tax-n-spend disease that exists in an advanced stage here in the U.S. and the EU. Remember that all taxes are collected under the threat of force, and at some point taxpayers may return the favor.

We live in interesting times.

Posted by: JM at April 22, 2004 10:38 PM

Comments from an old geezer: l. Life sucks.

Posted by: joel cook at April 23, 2004 01:59 AM

The harlots of Jerusalem will continue to use the evil blasphemous tools of central banking, to destroy savings, honest work, and freedom in favor of slavery, sloath, and fiat, until those tools are wrested from their filthy hands by the just "cultural" revolution or catastrophy.

Posted by: H. Fjahal at April 23, 2004 03:01 PM

Frankly I don't get the sense of your opposition to fiat money.
Crisis happened before it. And if it is replaced, crisis will happen after it.
The same with your opposition with government.
With or without, crisis happen, some use force ...

The good thing that could happen with one world democratic goverment, would be the end of wars, less useless spending in military ...
ans so on.

Posted by: Dubreuil at April 23, 2004 04:57 PM

Before I even began to visit this site, I had a very bad feeling about the future global economic outlook. I am sure that's why I ended up here - and the more I have read the more troubled I have become. My biggest concern before I came was the inevitable retirement (forced or otherwise) of the "baby boom" generation and the huge economic repercussions that would bring. Little did I know that there were other larger concerns - like the end of cheap oil that could well throw us back into the dark ages in my lifetime.

I have looked for positive news out there, but with the exception of garbage television, most of the news is negative and those who are bullish on the future appear to be full of bull****.

So then, how to prepare for the future?
I am not a wealthy individual, I cannot get involved in short selling stock or other schemes.... My job should be stable unless the unemployed hoards of the future line up for work at the coal fired power station where I am employed. Should I buy land and learn to farm?
What would you do as an Average Joe?

Posted by: Concerned at April 24, 2004 05:26 AM

To: H. Fjahal
Interesting post, and apparently anti Israel/ anti Zionist, I assume? You know, as a Christian I say, Israel is a great country,in a bad neighborhood, surrounded by 22 crazy neighbors. This is an economic board sir/ms, so take your hate elsewhere. If you are living on American land, I invite you to go home.

Posted by: Confused at April 24, 2004 11:19 AM

To: Confused,

Harlots of Jerusalem, is a biblical reference directed at the qustionable morality of existing Fed policies and the governors that direct it. It is apolitical, has nothing to do with the Jerusalem of today or any ethnic group! Don`t assume, ask.

Posted by: H. Fjahal at April 24, 2004 04:32 PM

To: H Fjahal
My apologies. Thank you for the lesson.

Posted by: Confused at April 24, 2004 07:59 PM

The economy is going to hell in a handbasket. Buy land, if you can. To be truthful, I don't have any answers for what can be done. All I know is that it is tough as shoe leather to make a buck that can be deposited into a bank account for savings. Every single penny flies out the window. Have a nice day.

Posted by: Ron at April 24, 2004 11:31 PM


I am so glad I'm not the only one who is struggling despite my best efforts to be ready with savings and no debt if it all goes pear-shaped.

In prior decade (I am 35), I found it effortless to make lots of money through either sales jobs, or entrepreneurial activities. For the last 2-3 years it has seemed nearly impossible to make a living let alone saving anything.

Until beginning this year I lived in $1600 apartment near beach in Los Angeles and in effort to keep outgoings down (income being so tough to generate), I recently moved into a room in older lady's rent controlled Bev Hills apartment for $300/month, incl utils.

This is how serious my effort of staying as far to the black side of the ledger is for me.

I am sure we are not alone here.

With a new circle of neighbors to quiz, I have been able to do a bit or research and most here are in deep on their cards, but not making any pride-swallowing 'adjustments' yet.

Unless as is written on another board, debt is either repaid or destroyed, someday most of the populace in is for a rude awakening methinks.

Posted by: Jason at April 26, 2004 03:41 PM

Ron & Jason-
We are a middle aged couple, whom until 2 1/2 years ago had it all. 3,700 sq ft home w/views, two paid off nice cars, money to pay the house off, no debt, traveled. Then outsourcing came along and changed our lives for the worse. We sold the house (panic set in), no job prospects, $500 a month medical insurance (soon to be canceled) and living with the illegals, seeing our lives work "eat cake". Our top of the line belongings in storage, we are living like our college days. I don't know about others, but we are trying to preserve what we have, and no income is really scary. No unemployment, and we still have no debt (hate consumer debt).
Yet I look around, and it looks like most folks are still doing great. Is it credit, or are we just the minority, stuggling? Beats me, but being poor sucks.

Posted by: outsourced at April 26, 2004 06:45 PM

A slippery slope, indeed.

About being poor: "It is no shame to be poor, to be ashamed of it is."- Ben Franklin

A few years ago, I was doing ok, too. These days, trying to make ends meet is impossible.

We can thank our politicians for the dire straits.

You can't blame, just thank them.

Posted by: Ron at April 27, 2004 12:07 AM

We both grew up poor, and worked out butts off to make something of ourselves, so sliding back into our humble beginnings cuts like a knife. We shop at $1.00 stores, and only drive when needed. Who would have "thunk" this would be our lives. Experiencing the meltdown of the middle class first hand.

Posted by: outsourced at April 27, 2004 01:34 AM

Engineering jobs are basically gone, that is a decent salary with bennies, and they have 100's of applicants for one position, paying 1/2 or less, of past salaries. Anthing in hi-tech, you might as well move to India.

My field is better,but no prospects yet, and its very competitive. Wish we would have started earlier on investments (in our 20's) and planned for the worse. Who knew! We kept thinking 62, not in our 40's and 50's. No death money coming to us either. Death money for some reason, bothers me. I say "Die Broke", which will be no problem the way things are going!

Posted by: outsourced at April 27, 2004 01:46 AM

We have gone from a country of making thimgs (manufacturing) to a country shifting around financial instruments. The politicians are so divorced from the economy (reality) and since GWB don't read the newspapers maybe his advisors are telling him that the economy is doing great. GWB should go to ohio and try to find a real job. What gets me is that the jobs go overseas and people make less money, so therefore, the tax moneys generated are substantially less. Perhaps we should link our politician's pay to their peers in India. What's good enough for the worker should also be good enough for "the servants of the people."

Posted by: dennis at April 27, 2004 02:28 AM

You are absolutely right. It amazes me how the current "free trade" mantra (I say where's the fair trade?) are talking about how all the bleeding of the jobs and the insourcing of foreign workers (H1-B & L-1's) are a transition to something better. Like What?

You are right about the tax base shrinkng, and no one, but I believe Lou Dobbs, has addressed this. And more people are going to vote in social programs. We will, if our situation does not show substantial improvement. The U S is already broke. Why in the world did our government let the corporations give away our manufacturing and hi-tech advantage. How dumb was that! Competitive Advantage doesn't apply to what's going on.

If you read the India Times, you see things like a front page Thank You to the Bush Administration, for the space jobs, and how mad the Indians are that Congress is starting to think about outsourcing, and slowing it down. The chutzpah of the Indians. As you know, they have come to DC to protest.

Greenspin and the Administration are corporate whores, and some of us are getting crushed. From $165K 2001 to less than $28K 2002, and almost nothing in 2003 (Los Angeles area). How's that for a decline in lifestyle!

Posted by: outsourced at April 27, 2004 09:17 AM


You hit the nail on the head: I agree the US has become nation primarily pushing around financial instruments. It is clear as day. I am the guy who wrote the post above about doing well in last decade and badly struggling now. So what is the solution? I am currently training to become one of those salespeople who trade in futures, options and derivatives at a brokerage. Unfortunately, there just doesn't seem to be anything else with plenty of monetary upside and in doing this, I am putting all the reading done on these bearish websites to good use. I mean, what else is a guy to do?

Posted by: Jason at April 27, 2004 02:07 PM

jason and outsourced:

I am a laid off engineer (3/01) and am retraining to be a RN. I lost it all too. Trying to rebound. Man it's hard. I had 17 years experience and I cannot pass on what I know. I kept up-to-date in my trade but it doesn't matter. This country is f****d. Manufacturing is like a natural resource and should be protected as such. I cannot offer any suggestions except that we are all getting hosed big-time. GWB says to get retrained. Retrained for what? WTF for if there are no jobs. It looks like GWB has gotten us into WWIII and we may just lose because we don't have any manufacturing capability. We move all the manufacturing overseas and how long will it be before our friends become our enemies or raise prices to hose those greedy Americans. Our politicians are rich but stupid. The worse thing is that they are selling our children's heritage. What will our children do?

Posted by: dennis at April 27, 2004 04:20 PM

It could help to have a reform of the election system, which would bar companies to fund the political parties, and provide some public fundings for parties.
People tend to work for those who pay.

Posted by: Dubreuil at April 28, 2004 12:11 AM

Reforming of our political system was the solution prior to the melt down of the middle class. Most folks do what is easy, TV for news, local newspaper,don't even know what is excluded from the CPI. As Reagan said, and I'll paraphase, the government is not the solution, it's the problem. Add to that the moral bankruptcy in corporate America, and open borders.

Posted by: outsourced at April 28, 2004 02:19 AM

Looks like others have fallen off the cliff. I didn't think I was alone, but I didn't know I had so much company.

The war in Iraq has cost some 200 billion dollars and the money will be gone by August. Looks like the war will end then, eh? Don't bet on it. That money would have gone a long ways in all 50 states.

Senator Kent Conrad of North Dakota was on C-Span commenting on Social Security revenues approximately two weeks ago. I will never forget his words, they were: "Revenues have collapsed." Say good-bye to your Social Security. If fact, say good-bye to every single dime the government receives from the hapless taxpayer. Uncle Sam says, "I want you to go to work and send your money to me."

I do go to work and everytime I turn around, Uncle Sam is there with his hand out. He is breathing down my neck and leaning on me all of the time. He is beginning to look like a freeloading bum. There will never be enough money for the guy.

The government is in deep doo-doo. The US government has so shamelessly conducted itself in the foreign policy arena that it now has a war to burden us. The term 'blowback' means unintended consequences. What is currently being experienced, to be sure

There is no resolving it, no fixing it and, unfortunately, no saving it.

I don't mean to bring anyone down. America will move forward, with or without the federal government.

Sorry folks, but I'm broke. Who is going to hire a 53 year old tired old workhorse like me? I must fend for myself, I guess.

And, yes I do look ragged and funny, 'cause I ain't got a barrel of money.

They told me, "Cheer up, things could be worse." So, I cheered up and sure enough, things got worse.

Don't know what I am going to do, but I'll find a way.

Good luck to ya.

Posted by: Ron at April 28, 2004 03:01 AM


I am from Europe (Austria) and read some of the comments here.

You should check out these links and read them very carefully:

You should also try to prepare for a great depression Nr. 2 thanks to our great and fair capitalistic system which automatically and inevitably crashes all 2 - 3 generations (as you hopefully know). Nobody knows what comes first deflation or hyperinflation (altough everything logically ends in hyperinflation of course!), so you should prepare for both scenarios.

You can email me if you want at

(you have to leave away the nospam rofl)

BTW (if you are interested in this LOL) cancer and AIDS can be cured as well as almost all other diseases...but this does not bring profit so just forget about it and think it is a joke from me. After all, this is capitalistic wonderworld.

Best regards and wishes,


Posted by: Medicineman at April 28, 2004 09:31 PM

Old people in US being dumbed-down with heavy-metals in yearly flu shots and 50+ hours/week of TV. Weakening minds are attributed to 'old age' which is entirely false (history proves this).

Today's economic trends are no different than the trends of the last 40 years. We just miss the recent bubble.

No TV, no vaccines in my house. I have 3 kids and a wife.

Posted by: Bill at May 11, 2004 10:14 PM

I'm sorry to say, but this mess is a lot older than the current administration. The bubble popped in 2000 and we should be not in a recession, but a full blown depression. I too think they should get the power out of DC, but this wasn't arranged in the 1960's, 1970's, 1980's, 1990's or in Y2K. It was created to start by giving popular election of the Senate in 1913 and moving the representation of the states from the legislature in most cases to the multinational corporate world. There was also the passage of an income tax, which wasn't a direct tax as levied, but an excise tax to be passed on as a cost of doing business. There was so much done under the eyes of Woodrow Wilson and his crony, Colonel Mandel House, a new world order communist that just slipped by us. The Federal Reserve was one of the planks of the communist manifesto and one of the organizations that few of our founding fathers favored. It transferred all money power from the people to a few.

One of the things that happened in the Wilson administration was we went to War in Europe. Our history books blame the Lucitania incident, but that occurred in 1915 and Wilson was re-elected on a platform of, he kept us out of war. Back in that day and time, the inaugeration of the President was the first week in March, not in January as we have it today. By March 1917, we were of course in war. With war came the passage of war power acts, which allowed the executive to prosecute the war. Among these powers was a law called the trading with the enemy act, the act of October 6, 1917.

Going forward, in 1933, the Federal Reserve bank was bankrupt and so were most of the other banks. The currency was not any good. Coming to the rescue was Franklin Roosevelt and his moral equivalent of war. What was this moral equivalent of war? Well, it was the repeal of traditional constitutional limitations on government under the concept of emergency and it is codified in 12USC95a and together with 12USC95b, made the President, the Secretary of the Treasury and others with delegated power dictators. Roosevelt replaced the liabilities of the Federal Reserve with liabilities to the Federal Reserve. Instead of the Federal Reserve owing us, we owed it and the only remedy was to try to borrow ourselves to prosperity.

You can also find this 12USC95a codified in 50USC5b. If you don't know what 50USC5b is, go check and you will find out. Senate report 93-547 was put out after the Vietnam war and it discusses this law broadly.

What happened under this law? Well, you have all heard of War on Poverty, War on Drugs, War on Crime, etc. In times of war, there is no constitution or private property. You might have heard of the Schecter poultry case where the New Deal was overturned. It basically said that a tax was for the legitimate support of government and what was being practiced was socialism, in direct violation of the 5th amendment of the constitution. See, there is no just compensation for taking of property and when one group is fed the property of another group by the government, that is taking and not tax. Like it or not, we have been deluded in thinking we live in a government set up in 1787 by our founding fathers.

Roosevelt and then Truman took this mess one step farther. At the end of world war II, the United States was made the banking system for the world. One of the reasons our trade deficit runs so high is we are the only country in the world that can create good and unlimited credit. Money when needed takes the path of least resistance. There are always rumors that such and such a country is going to quit buying our bonds, but the truth is that Japan and Europe went broke fighting wars decades and in some cases close to a hundred years ago. The Federal Reserve was created for no other reason but to allow for the continued modern fighting of more wars.

To wit: Much was made of the recent massive buying of treasuries by the Japanese with dollars bought with yen. Japan has tried to interest rate themselves out of their bankruptcy, social spend their way out of their bankruptcy, but the only way they could produce money for their system with any validity was to use American credit in the form of banknotes.

The 1990's and the Clinton administration was an economic nightmare. I can't say much about the administration since or the ones before either, but Robert Rubin with the assistance of Greenie created and perpetuated a bubble. Did anyone notice the Congress voting money to bail out Mexico in 1994 or 1995? No, Rubin acted on his own, a few months after he and his former employer, Goldman Sachs took all the money out of Mexico to help finance this bubble. The United States leveraged the credit out of Asia, then the IMF came in and replaced it.

What we really need is a cleanout, but that isn't politically feasible. We are in a time of permanent financial overhang and the times are going to get rough. Had Roosevelt left the situation alone and people taken their losses in the 1930's, we would be a prosperous country today, but the fib is that he saved the country. Instead he put us under the same system as Adolph Hitler set up within weeks of the same event, corporate socialism, better known as fascism. Like a frog in a cold pot of water put on the stove, we have been boiled and never knew it was happening.

Why do you think every socialist in the United States walked up to the stand in DC when a man was nominated to the Supreme Court by the name of Robert Bork, who favored something called original intent? I think people on that side of the aisle didn't want to be reminded of the law. They would rather deal with these illegalities like some right to privacy that only applies to right to privacy from other private citizens, not the government itself. Who cares about right to privacy when we are having our capacity to act as living humans taken from us by some system that now can tell us when to jump, when and where to empty our pockets, look in our bank accounts over some assinine international war or some war on drugs. Someone mentioned buying land, well Roosevelt nationalized farming in 1933 and now there aren't any farmers left, only corporations who run on huge central planned agriculture programs and subsidies.

You don't have to take my word for it. Plug in a search for war and emergency powers and look for a guy named Eugene Schroeder. Schroeder published a book called "Constitution, Fact or Fiction". Do your best to find Senate Report 93-547, as it has some very interesting statements in it. You will probably have to go to a Federal Repository. We aren't a constitutional republic any more, but an excutive branch bureaucracy that enforces and carries out powers given it by Congress and never gives the power back. In the meantime states are now sucking on the central planning tit and jump when the Feds say, do so or lose your Federal Funds.

Posted by: mannfm11 at May 26, 2004 06:30 PM
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