Trend Alert: 50 MILLION JOBS WILL BE LOST IN 2009 !!!
Krishna Guha and Alan Beattie in Washington and Chris Giles in Davos
The world economy will this year suffer its worst performance for more than 60 years with a serious risk that 50m people will lose their jobs, international organisations warned on Wednesday.
The warnings came as the Federal Reserve expressed fresh concern about deflation, noting that the US economy had “weakened further” since its last policy meeting in December.
Just what we need to garner new recruits to our movement and take direct action to fix the “problems.” - Hal Turner Show.
Economic pain to be ‘worst for 60 years’
By Krishna Guha and Alan Beattie in Washington and Chris Giles in Davos
The world economy will this year suffer its worst performance for more than 60 years with a serious risk that 50m people will lose their jobs, international organisations warned on Wednesday.
The warnings came as the Federal Reserve expressed fresh concern about deflation, noting that the US economy had “weakened further” since its last policy meeting in December.
The US central bank made no immediate move to purchase Treasury securities – disappointing some in the markets – and signalled that its preference is to expand targeted credit operations instead. The Fed said it would “assess whether expansions of or modifications to lending facilities would serve to further support credit markets”.
Earlier, the International Monetary Fund increased its estimate of credit losses on US-based assets from $1,400bn to $2,200bn. It also said world output, measured at market exchange rates, would fall in 2009 for the first time since the second world war. Weighted by purchasing power, growth would be very slightly positive.
The new growth forecasts mark a huge revision – down by more than 1.5 percentage points – from the IMF’s previous forecast for the year in spite of the inclusion of the fiscal stimulus efforts by governments into its predictions for the first time. Advanced economies, the IMF predicted, would contract 2 per cent in 2009 with the UK hit hardest.
In Geneva, the International Labour Organization said the global recession would lead to a “dramatic increase” in unemployment this year, which would certainly lead to 18m-30m additional unemployed and more than 50m “if the situation continues to deteriorate”.
The forecasts helped frame a sombre and gloomy mood as executives and policymakers started the annual meeting of the World Economic Forum in Davos, with leaders stressing the sharp and synchronised nature of the downturn, expressing concern about global policy co-ordination, and some scepticism that fiscal interventions would ensure a recovery.
Barack Obama, US president, meanwhile hosted a meeting with corporate leaders to rally support for a fiscal stimulus – which may now exceed $825bn – amid resistance from Republicans opposed to massive government spending. Werner Wenning, chairman of Bayer, the German pharmaceuticals group, was among several saying he did not expect solutions to be found during the week-long event. The problem, said Stephen Roach, chairman of Morgan Stanley Asia, was that the US consumer was only in the first stages of a rebalancing that would take a number of years and reduce consumption and increase saving. In the meantime, China, the world’s workshop, would find it difficult to expand production and, “as the Chinese economy has hit a wall, so has the rest of Asia”.
US bank stocks rallied on hopes that the Obama administration was moving ahead with plans for an “aggregator” bank that would buy toxic assets. Remarks by Tim Geithner, the new Treasury secretary, who played down the prospect of nationalisation, helped to buoy investor sentiment. In New York, Wells Fargo was up 30.9 per cent, Citigroup 18.6 per cent, Bank of America 13.7 per cent and JPMorgan Chase 10.4 per cent
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