AND THE THIRD ANGEL FOLLOWED THEM, SAYING WITH A LOUD VOICE, IF ANY MAN WORSHIP THE BEAST AND HIS IMAGE, AND RECEIVE HIS MARK IN HIS FOREHEAD, OR IN HIS HAND.
*** REVELATION 14:9
Sunday, January 29, 2012
Davos Leaders Urge Europe to Resolve Crisis Threatening the Global Economy
By Simon Kennedy and Jana Randow - Jan 29, 2012 3:00 AM ET
Davos World Economic Forum 2012
Donald Tsang, Hong Kong's chief executive, left, sits with Christine Lagarde, managing director of the International Monetary Fund (IMF), center, and George Osborne, U.K. chancellor of the exchequer, during a session on Jan. 28, 2012 at the World Economic Forum (WEF) in Davos, Switzerland.
Global finance chiefs warned no economy is safe from Europe’s debt crisis, adding urgency to their calls for its governments to deliver a swift resolution.
Policy makers from Hong Kong to Canada used the last full day of theWorld Economic Forum to push euro-region counterparts to boost their bailout cashpile to protect Italy and Spain. They also pressed Greece and its creditors to strike a credible agreement to cut the nation’s debt.
Failure to deliver home-grown solutions would cost Europe any chance of further outside support and undermine the International Monetary Fund’s push for more crisis-fighting resources of its own, officials said. The concern tempered optimism from earlier in the week when delegates expressed hope that Europe had succeeded in calming markets after two years of turmoil.
“I’ve never been as scared as I am about the world,” Donald Tsang,Hong Kong’s chief executive, said yesterday in Davos, Switzerland. “Nobody’s immune. You need decisive action. You need to inspire confidence.”
Bank of Canada Governor Mark Carney estimated the European crisis will subtract 1 percentage point from global growth by the end of 2012 “and that’s in a world where this crisis is contained.” Europe’s pain could be transmitted via trade or financial channels with banks already hoarding cash or investing only in domestic markets, he said.
Yale University Professor Robert Shiller echoed the concern by estimating the euro-area will contract this year by more than the 0.5 percent predicted by the IMF. Nouriel Roubini, co- founder of Roubini Global Economics LLC, said Greece may be forced to quit the single currency within 12 months.
“The euro zone is a slow-motion train wreck,” Roubini said.
The concern leaves the euro-area’s leaders under pressure to raise the size of their rescue funds from the limit of 500 billion euros set to take effect in July when a permanent fund comes online aside the temporary European Financial Stability Facility.
While they plan to reassess that amount in March, U.K. Chancellor of the Exchequer George Osborne indicated they may need to do so sooner by demanding steps in “the next few weeks.” EU leaders next meet in two days time in Brussels to draw up a fiscal compact to strengthen governance of the euro area.
Not Dealt With
Osborne also sided with the consensus by urging a fast accord on slashing Greece’s debts, three months since creditors agreed to implement a 50 percent cut in the face value of more than 200 billion euros of debt. Negotiations continue in Athens this week.
“The fact we’re still at the beginning of 2012 talking about Greece is a sign this problem hasn’t been dealt with,” Osborne said.
Carney said a “credible” agreement is required even if that means increasing the participation of the private sector and perhaps the public sector. Turkey’s Deputy Prime Minister Ali Babacan said Greece should be prevented from defaulting because “once that door is open” others could follow.
Policy makers from Japan and the U.K. said while they and others might add to the IMF’s coffers, a prerequisite was Europe putting up more money of its own. Absent “firm action, I don’t think developing countries like China are willing to pay more money,” Japanese Economy Minister Motohisa Furukawa said.
Seeking to insulate the world from Europe’s woes, Lagarde wants to boost her institution’s lending capacity by $500 billion. She made her pitch by saying the world had “never been so interconnected” and that the IMF was always repaid with interest.
“I’m here with my little bag to collect a little bit of money,” she said.
Last-minute worries took the shine off the sentiment of earlier in the week when delegates sounded upbeat about Europe’s outlook after financial markets stabilized. Market lending rates eased again this week and Italian and Spanish bonds rose as borrowing costs fell at debt auctions. At the same time, Portuguese credit-default swaps hit a record and Fitch Ratings on Jan. 27 downgraded Spain, Italy and three other euro countries.
World Bank President Robert Zoellick said the respite was likely temporary and linked it to the ECB last month lending euro-area banks a record 489 billion euros for three years to ward off a funding squeeze.
“I’m really glad the ECB took these actions, but let’s not be complacent,” Zoellick said. “This buys time, you still have to act.”