USA will follow economy growing in each case
U.S. intends to pressed their economic partners of G20 is not rash with plans to tighten fiscal policy, while recovery in the global economy still looks uncertain, says the Wall Street Journal. U.S. President Barack Obama expressed concern that the context of fragile global economic recovery may again fall into a recession if government incentives are withdrawn too quickly, as happened during the administration of President Herbert Hoover in the 30 years past century, soon after the start of the Great Depression. Obama will call on leaders of the G20, which will meet in Toronto this weekend to extend their programs to stimulate the economy and thereby promote economic growth. Meanwhile, governments worldwide adopted measures to cut spending and tightening fiscal discipline. Especially wary European leaders have proved over the situation in Greece, where the huge debt and the prospect of bankruptcy of the state scared investors and led the European Union and the International Monetary Fund to adopt a rescue plan for nearly a trillion dollars. Representatives of the Chinese government stressed that if the programs to stimulate the economy be maintained, this can create financial bubbles that will generate risk. Analysts say one reason why China announced on Saturday that will allow some flexibility in its currency, is inflation, making the country imports more expensive. Furthermore, fiscal policy and other topics, which are expected to be discussed at a meeting in Toronto, have low levels of consumption and large trade imbalances of Germany and Japan.
Canada in turn calls for double reduction of budget deficits by 2013. Administration officials in Washington said that the apparent difference of the G20 are just the surface. He stressed that all work in the same direction – to gradually restrict government programs to stimulate the economy, the markets are convinced that governments will be able to reduce its budgetary deficits over the next 3 to 5 years. The pace of reduction in state funding is vital for the world economy is gradually recovering from deep recession. Main debate is what constitutes a greater risk to growth – reduced demand and escalating debts? Theme number one discussions will be how fast to download packages to stimulate the economy, “said Kenneth Rogoff, former chief economist of the IMF. “The U.S. is at one extreme, pursuing economic growth at any cost, while other countries are more cautious.”
Economists say Obama, if the level of government funding is reduced too quickly, it will negatively affect demand, which in turn will undermine growth and the world will be facing a new recession – a scenario known as the inertia of Hoover.
Tags: Barack Obama, business, economic partners, economy growing, IMF, Mutual Fund, USA