World bank head issues serious warning to political leaders
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The head of the World Bank has warned that markets are being pushed into a "danger zone," which policy makers have to take seriously. In his comments at the Asia Society Dinner in Sydney, Australia, Robert Zoellick, was referring to the recent economic crisis in Europe and the political drama in the Unites States. "What's happened in the past couple of weeks is there is a convergence of some events in Europe and the United States that has led many market participants to lose confidence in economic leadership of some of the key countries. I think those events combined with some of the other fragilities in the nature of recovery have pushed us into a new danger zone," he said. "I don't say those words lightly ... so that policymakers recognize and take it seriously for what it is."
Highlights
Catholic Online (https://www.catholic.org)
8/16/2011 (1 decade ago)
Published in Business & Economics
Keywords: Zoellick, world bank, economics, economy, depression, recession, crisis
LOS ANGELES, CA (Catholic Online) - Zoellick's comments come after a volatile week in the international markets. Most notably, Zoellick blasted the process of dealing with competitive issues in the Eurozone as tending to be done, "a day late." The concern is that countries may be sufficiently proactive or even moving in the wrong direction on their economic woes.
While many of his comments were directed at Europe, Zollick also pointed out the role the US plays in the world economy, but downplayed the impact of the recent debt debate saying, "Frankly that markets are used to the United States playing a key role in the economic system and leadership."
Still, he calle don the US to extend cuts from discretionary spending and to consider other programs such as social security for cuts. "Until they make an effort on those programs, there is going to be continued skepticism about dealing with long-term spending."
Zoellick pointed out that the world recovery was ongoing and that it was, "multi-speed" meaning the pace of recovery was moving at different speeds in different places, most notably in the developing world which has experienced a boom in recent years. He pointed out that these growing markets would be a source of growth for the world.
Markets up on Monday
Despite the alarm, markets were up around the world on Monday, especially in Asia. Good news from Japan fostered exuberance among investors there. The Japanese have announced the March earthquake and tsunami did not have the dampening effect on their economy that was expected and the economic recovery in that country was progressing faster than predicted.
Another boost came from the low stock prices as bargain-hunters started buying stocks they felt were undervalued after a week of volatility in international markets.
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