Wednesday, 6 October 2010

Economists On The Current Situation

There have been a number of statements about today by Economists and Investors like George Soros about the current situation. George Soros, who famously made £1 billion, in a single day, betting against Sterling, has blamed austerity measures, particularly in Germany, for sending Europe into what he sees as a deflationary spiral. He is quoted by CNBC,

"Additional fiscal stimulus — and not fiscal discipline — is the way out of the crisis for both Europe and the United States, Soros said in a speech at Columbia University on Tuesday.

"Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learnt from the Great Depression of the 1930s. It is liable to push Europe into a period of prolonged stagnation or worse."

That is in direct contradiction of the policies being pursued by the Tories in Britain, and their right-wing, populist co-thinkers in Europe, and in the Republicans in the US.

Meanwhile, Joe Stiglitz, has warned that the Currency War, I have previously spoken about, which is being fought out by each country printing more and more money, in order to lower the value of its currency, is throwing the global economy into chaos. Stiglitz says that each country is increasing liquidity to stimulate its own economy, but the effect is to caue chaos. As I have written elsewhere, there would be no reason for that if this were a co-ordinated policy by states, which was combined with fiscal stimulus. The real chaos arises from the combination of increasing liquidity at a time when those states are tightening their fiscal stance. His comments were basically echoed by the IMF's Straus-Kahn.

Meanwhile, the US Fed's, Evans argued that much more QE was required by the Fed to stimulate economic activity in the US.

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