Monday, September 22, 2014

Christine LaGarde Confident G20 will meet Growth Targets

With another G20 meeting coming up in November, there has been much discussion about ways to increase global growth by 2%. In this CNBC article, Christine Lagarde predicts the target will be met and also suggests things are doing just fine in the global economy.

When you read this article you will see the sharp contrast between the outlook projected by those running the present monetary system (like Ms. Lagarde) and those who say the present monetary system is on its last legs (like Jim Rickards).

Below are a few quotes from this CNBC article and then a few comments.

"Christine Lagarde, managing director of the International Monetary Fund (IMF), is confident that the Group of 20 will achieve their target of boosting global growth by 2 percentage points in time for the November summit in Brisbane, she told CNBC on Sunday."

"While the G-20 communiqué from the summit in Cairns said that "growth in the global economy is uneven and remains below the pace required to adequately generate much needed jobs" and "the global economy still faces persistent weakness in demand, and supply-side constraints hamper growth", Lagarde believes leaders capable of tackling these issues."

"Amid calls that some member countries need to do more to support growth, Germany in particular, Lagarde said that every country has to do its part."
"What we're learning is that each and every country is in a position of its own. Long gone are the days where you could say '2 percent stimulus across the board,' or 'you should all consolidate,'" she said. "Each and every country is a specific case, has a specific story and narrative." 
"We'll likely see a mixed bag of reforms and policy that will be more neutral for some countries and more accommodating for others, she said. "But it's going to be on the per-country basis, not across the board."

"Despite concerns about the economy, Lagarde expects China to achieve the 7.5 percent growth target set at the annual meeting of the legislature in Beijing in March." 
"When the Chinese authorities set objectives, they generally make sure they deliver," she said. 
"Regarding Australia's reliance on China - it's largest trading partner - to support growth, Lagarde doesn't see cause for concern."
"I trust the Australian business community to be smart enough to see where the wind is going, and there are clearly in this part of the world, countries that will develop and generate growth, probably at a stronger pace than they have recently," she said. 
My added comment: 
This article illustrates very well the almost polar opposite view of those running the current system and their critics. The message from Ms. Lagarde is very clear. In her view, while there are problems in the global economy, the problems are manageable. She sees no reason that things won't get better from here. She also talks about how solutions will come from the individual nations (and not a global solution like Jim Rickards predicts). On top of all that she directly contradicts those who are forecasting a dropoff in Chinese growth by stating they will meet their growth target. Australia? They will be just fine. Short version of her view; problems, yes; but no worries, be happy.
So virtually every point she makes in this article directly contradicts forecasts made by Jim Rickards and others who see failing policies leading to a new global financial crisis resolved by instituting global solutions at the IMF.
Somebody has to be wrong and we will follow it here to she who ends up getting it right.
Added note:  Here is a 20 minute video of her speech after the G20 meeting.

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