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Roubini Topic Archive: IMF and International Economic Institutions
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Neither Grexit, Nor Spexit, It’s Fixit or Fexit
The aftermath to last weeks EU summit has certainly proved to be a damn sight more perplexing than the actual summit itself. Contrary to earlier experiences, this time round the more the details have been “clarified” the more confused we have become. Just what exactly was approved? Will Spain’s banks really obtain capital directly from the ESM, and [...]
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On the Brink of What?
This weekend I have been thinking quite a lot about what the world is gonna look like on Monday, and have come to the conclusion that it won’t be that different from the way it was last Friday. The big news surprise of the weekend was in fact Greece related - since the national football team qualified for the [...]
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What Wolfson Did Next
At around 9:00am London time this morning Lord Wolfson held a press conference to announce the five finalists in his economics prize contest. I have done a podcast discussing the prize objectives and their implications with the Spain based British blogger Matthew Bennett. You can download it here. The first thing that needs to be said about [...]
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Portugal Gradually Shuffles Its Way Towards the Front of the Debt Queue
Well, a weekend during which Greece seems to have been finally able to pass muster on its bond deal, while Mario Draghi has given the official “all clear” on the debt crisis, seems to be as good a moment as any to have a look at the country which many investors consider likely to be the next [...]
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Staring Into the Ukrainian Economic and Political Abyss
It’s been a long time now since Paul Krugman spoke of the Ukrainian economy epitomizing the arrival of what he then termed the “second great depression“, and it’s been an even longer long time since we lay awake at night dreaming about the coming conquests of the Orange Revolution. It’s also been a good time since I looked [...]
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Ireland: Crying All the Way to the Bank
Ireland’s Minister for Finance Michael Noonan is an optimistic man. He is also a persistent one. He is optimistic, since he clearly feels that his country’s 85 billion euro IMF/EU programme is going to work as planned, and he is persistent as he patently refuses to let sleeping dogs lie. The dogs in question here [...]
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High Noon Approaching for Greece?
The Greek tragedy in several acts would appear to be approaching a climactic moment. The warnings coming out of Berlin all week have been hard to ignore: “Greece either puts up or shoves off” would seem to be the blunt message being offered. Only yesterday, German Finance Minister Wolfgang Schauble informed members of the parliamentary [...]
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How Many Times Can One Driver Fall Asleep at the Same Wheel (And Live)?
“Break the thermometer, then you won’t have a fever.” – Former Polish President Lech Walesa
Watching the TV news here is Spain at the moment is often a rather discomforting and sad affair. The normal menu seems to consist of a constant stream of ministers who have to appear before the cameras and the public to explain something that they, in all fairness, don’t really understand themselves. And so it was on Saturday, as I tucked into my early morning breakfast of sausage and beans (Catalan style) in the village near my mountain retreat, there in the background I could see the face of Spain’s Labour Minister Celestino Corbacho (photo above), giving details to the assembled press corps of the latest government decision to make another six month extension for the 426 euro monthly “exceptional” payment for those whose unemployment benefits have run out. Why there are so many unemployed in Spain, and why renewing this subsidy is now an almost permanent necessity (this is now the third time that this “temporary” means of support has been extended), or what the real prospects of creating enough jobs to start reducing the unemployment mountain any time in the foreseeable future, was not explained. Well, the future is not ours to see, so “que sera, sera”.
Of course, the decision to extend the payment is to be welcomed not rebuked, but it is the set of circumstances which makes the measure necessary which is so worrisome, and the feeling that the country whose economy these ministers are responsible for managing is now more akin to a ship in mid Ocean, where the steering tackle is jammed and the captain has neither the faintest idea in which direction land is to be sought, nor knowledge of the appropriate wavelength across which to send out a Mayday rescue call.
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The Shape of Bulgarian Things to Come
As the IMF say in their most recent staff report on the country, the aftermath of the recent severe economic crisis leaves us with the question as to whether potential output growth in Bulgaria in the years to come is going to be markedly lower than it was during the boom years. As the IMF point out, the current recession was preceded by an investment boom in construction, real estate and the associated financial sectors. Now that the boom (which was always unsustainable, Bulgaria’s current account deficit in 2007 hit almost 27% of GDP) is well and truly over in these sectors, the strong associated decline in investment could have large negative effects on output. Moreover, it will take considerable time before the excess labor and resources that are no longer needed in these sectors can be absorbed by other sectors, which suggests that the rate of unemployment may rise yet further and remain higher for some considerable time. Not a uniquely Bulgarian story, but none the less important for that.
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One Chart to Rule Them All, One Chart to Find Them (Out)
Look, if there is one simple chart which sums up everything that is wrong with current thinking at the International Monetary Fund, then it is this one.
Basically, I spent much of the day yesterday scratching my head, trying to work out how the hell the IMF could be forecasting Spanish GDP growth of 1.7% in 2012, of 1.9% in both 2013 and 2014 and 1.8% in 2015. And now it has dawned on me how and why they can. Quite simply they are forecasting current account deficits for Spain of 5.3% of GDP in 2010, 5.1% in 2011, 5.0% in 2012, 5.0 in 2013, 5.0% in 2014%, and 5.0% again in 2015. In other words, the assumption is that nothing fundamental is going to change in the post 2008 world, when compared with the years that preceded it. And this is clear when you come to look at the whole structure of current account balances revealed in the chart above, which are based on the IMF forcasts through 2015 as set out in the April 2010 World Economic Outlook. It is a case of plus ça change.
