The World Faces A Hard Landing

Dr. Michael LaitmanIn the News (from “Moody`s Investors Service has slashed its growth forecasts for the advanced and emerging nations in the G-20, citing an increase in the downside risks to global recovery.

“In its latest Global Macro-Risk Outlook 2012-2013 update, the ratings agency says real growth in the G-20 economies will be about 2.8 per cent in the 2012 and 3.4 per cent in the following year. This is a respective 20 basis points and 10 basis points lower than Moody`s predicted in April.

“According to the agency, the main risks to global growth are the deeper than expected recession in the eurozone, the danger of a hard landing in major emerging markets such as China, India and Brazil, an oil-price supply-side shock caused by resurfacing geopolitical risks and the potential for sudden and sharp fiscal tightening in the US next year. …

“Moody`s group credit officer for sovereign risk Elena Duggar says: ‘In our view, fiscal consolidation efforts, weak consumer and business confidence, banking and household sector deleveraging, persistently high unemployment levels and real-estate market weakness will continue to constrain growth in advanced economies.’

“The ratings agency also predicts G-20 emerging economies will grow by about 5.2 per cent in 2012 and 5.7 per cent next year. This is ‘materially lower’ than the 6.6 per cent seen in 2011 and the 8 per cent achieved in 2010.

“Duggar says: ‘We are revising downwards our forecast for these large emerging market economies, where the weaker external environment and decelerating domestic demand are causing a slowdown in growth momentum.

“‘We continue to expect that the slowdown in advanced economies and volatile capital flows will suppress growth in emerging markets.’”

My Comment: There is only one question: Is the speed of the deepening crisis faster or slower than the speed of thought of politicians? If the crisis overtakes the opportunity to reflect on what is happening, the world will plunge into the darkness of war, famine, and natural disasters. If nevertheless, they will be able to interpret the events and threats and rise above their egoistic calculations (or rather failures), then we will pass the crisis with small losses and begin to build a new economy in the new society.

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