9 April 2008
Economic Realities
Posted by Joy Bischoff under: World Economy .
For the last few weeks I have tried to stay away from too much bad news about the economy because I thought we might all be burned out on that topic. Peter Anderson sent me this article and I felt it had the credentials to make sure we don’t go to sleep on the subject. Most of us have work to do to prepare for a recession and facing occasional doses of economic realities will help us do that.
From The Times
April 9, 2008IMF fears credit crisis losses could soar towards $1 trillion
Gary Duncan and Suzy Jagger
Losses from the credit crisis by financial institutions worldwide are expected to balloon to almost $1 trillion (£507 billion), threatening to trigger severe economic fallout, the International Monetary Fund said yesterday.
In a grim assessment of the deepening crisis delivered days before ministers from the Group of Seven leading economies meet in Washington, the IMF warns governments, central banks and regulators that they face a crucial test to stem the turmoil.
“The critical challenge now facing policymakers is to take immediate steps to mitigate the risks of an even more wrenching adjustment,” it says in its twice-yearly Global Financial Stability Report.
The IMF sounds an alert over the danger that banks’ escalating losses, along with credit market uncertainties, could prompt a vicious downward spiral as they weaken economies and asset prices, leading to higher unemployment, more loan defaults and still deeper losses. “This dynamic has the potential to be more severe than in previous credit cycles, given the degree of securitisation and leverage in the system,” the Fund argues.
It says that it is clear that global financial upheavals are now more than just a shortage of ready funds, or liquidity, but are rooted in “deep-seated fragilities” among banks with too little capital. This “means that its effects are likely to be broader, deeper and more protracted”, the report concludes.
“A broadening deterioration of credit is likely to put added pressure on systemically important financial institutions,” it adds, saying that the risks have increased of a full-blown credit crunch that could undercut economic growth.
6 Comments so far...
Joy Bischoff Says:
9 April 2008 at 12:27 am.
I want to thank my friend Peter Anderson for keeping me updated on so much of what is going on around the world. Much of this information is from the UK Times and other sources and little is to be found in American papers about the serious food crisis that is growing world wide.
Egyptians riot over bread crisis
Last Updated: 12:51am BST 09/04/2008
Egyptian families are having to get up at dawn each day to queue up for bread rations, as the country struggles to cope with grain shortages that threaten a major political crisis.
Egyptians queue for bread in Cairo
Scuffles in bread queues are now a daily occurrence
“I’ve been here since six this morning, it is now nine o’clock and still no bread,” Asma Rushdi shouts in front of a tiny state-owned bakery in the overcrowded and impoverished area of Bulaq Dakrur in Cairo.
She is only allowed to spend one Egyptian pound (9p), which will get her 20 pieces of the subsidised flat round bread baladi - the staple of the Egyptian diet.
For Asma, who has to feed her family, including four children and two in-laws, from her husband’s monthly salary of £200, “bread is everything”.
Egypt is in the grip of a serious bread crisis brought on by a combination of the rising cost of wheat on world markets and sky-rocketing inflation.
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The price of bread has increased fivefold in private bakeries, creating panic in state-run bakeries that the staple may run out.
Scuffles in bread queues are a daily occurrence. In recent weeks, they have turned into violent clashes, leaving at least seven people dead, according to police.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/08/cnegypt108.xml
Terrie Soberg Says:
9 April 2008 at 2:06 am.
This brings a modern-day twist to the Pharoah’s dream of the seven years of plenty and the seven years of famine, doesn’t it?
Angela Rogin Says:
9 April 2008 at 9:30 am.
I’m going to bite the bullet and do it. The silver bullet that is. Now while the market has rallied a little, I am going to pull out and buy silver and stock up on canned goods. I’ve been meaning to do this but I can’t be sure what is coming or when so I won’t put it off any more. Thanks for keeping us awake. It is a lot more fun not to think about any of this but I have a feeling it will be a lot less fun in the future if I don’t think about it enough to act responsibly.
Cameron Says:
9 April 2008 at 9:52 am.
Food riots could spread, UN chief warns
By Gary Cleland
Last Updated: 1:49am BST 09/04/2008
Rising food prices could threaten political stability around the world, the UN’s leading humanitarian official said yesterday.
Sir John Holmes, the undersecretary general for humanitarian affairs and the UN’s emergency relief co-ordinator, was speaking after two days of rioting in Egypt over the soaring cost of basic foodstuffs.
He told a conference in Dubai that rising prices would spark unrest across vulnerable nations. Average prices have risen 40 per cent across the world in less than a year.
Sir John said: “The security implications should also not be underestimated as food riots are already being reported across the globe.
“Current food price trends are likely to increase sharply both the incidence and depth of food insecurity.”
As well as the riots in Egypt, rising food costs have been blamed for violent unrest in Haiti, Ivory Coast, Cameroon, Mauritania, Mozambique and Senegal. Protests have also occurred in Uzbekistan, Yemen, Bolivia and Indonesia.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/04/09/wriots109.xml
jobob911 Says:
9 April 2008 at 11:07 am.
Man, it’s getting pretty bad out there.
Nalvy Says:
9 April 2008 at 11:57 am.
Yes jobob it is!!! Imagine having to fight for a piece of bread or for a case of Top Ramen!!! Imagine what will happen when people in America start rioting over food…things will get ugly and fast…they are already ugly so i suppose they can only get uglier at this rate…
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