IMF Warns Western Economies Mired in ‘Near Depression’

October 5, 2010 07:16

A new report by the International Monetary Fund paints a brutally grim picture of the global economic outlook, warning that continued European belt-tightening combined with possible deficit-cutting in the United States could lead to a global double-dip recession.

By: David A. Patten at


Evans-Pritchard reported the IMF analysis “more or less condemns southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain, and American in a slump for a long time.”

Nobel Prize-winning economist and former World Bank chief economist Joseph Stiglitz used even more drastic imagery. He said some governments may be caught in a “death spiral.”

The report stated that cutting government spending does help economies to grow in the long run. But first come slower growth and higher unemployment, at least as far as the current “fiscal retrenchment” is concerned.

In the United States, analysts are nervously awaiting Friday’s September unemployment report.

With less than a month before the November midterms, that report will receive heavy scrutiny as an interim report card on the U.S. economy. Most pundits expect Obama to face a much more austerity-minded Congress following the election.


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