IMF: Global economy 'in danger zone' over euro crisis
The IMF predicts the global economy will grow by 3.25% in 2012, down from an earlier forecast of 4%.
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But the eurozone is set for a "mild recession" in 2012, with GDP expected to shrink by 0.5%, compared with a previous forecast of 1.1% growth.
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However, the IMF stands by its 1.8% growth prediction for the US, based on recent strong domestic data on jobs and manufacturing.
http://www.bbc.co.uk/news/business-16699807
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dipsydoodle
(42,239 posts)what the actual need for growth is. Anyone got a concise lucid answer ?
caseymoz
(5,763 posts)That means more wealth has to be created to assure the newest generation's survival.
Second, and this one's theoretical, i.e. what I believe: entropy. If you haven't noticed, things fall apart, they need to be maintained or recreated, even for a sustaining population. You can recycle, but the more you cycle it through the less you can actually use. This is both a physical and an economic phenomenon. If you wonder why currencies tend to inflate over time, though not at the same rate, I think that's actually why. It is harder to do things in the future than it is in the present, and it will always be.
Third, social maintenance. In order for nation-states to hang together and people to live together harmoniously, they must do some combination of give the masses at the bottom of the social rung some benefit in return for allowing the wealthy to gain riches and live relatively safe, they must promise such benefits, and/or they must police. Except for the promises, two of those require growth. The second one requires some sign, now and then, that the promises can and will be fulfilled.
And there may be others, but those are the main ones I could think of.
Why do we need so much growth? I've always thought we could do well well enough with less productivity, since a lot of things are being automated now, meaning so many people will end up unemployed.
dipsydoodle
(42,239 posts)Thanks.
JDPriestly
(57,936 posts)So I would not accept that argument.
As for population growth. That's a problem. Regardless of the growth of our economy, our planet can only sustain so much human life. We need to cut back on population growth, perhaps end the growth of the numbers of births altogether.
Social maintenance is not an issue of growth, but one of distribution.
How are you defining productivity? If you think of it in terms of how much stuff is produced, then productivity can be increased through automation in spite of the increased unemployment.
But, if you think of productivity as useful human activity, then unemployment with high productivity cannot be.
We count productivity as how much stuff passes from one hand to the other in the marketplace. But a mother staying home with her child and making that child feel loved and secure can be productive although no measurable product exchange occurs in a marketplace. (Unless you count the home as part of the market.)
It may be that we need a different way to define "productivity."
If I grow vegetables in my garden for home consumption, am I being productive? If I bring vegetable soup from vegetables from my garden to my neighbor when she is sick, am I being productive? When I take care of a grandchild for a weekend so that my daughter and son-in-law can rest up from colds, am I being productive?
Maybe just for once, we need to increase the kinds of activity that makes us more successful as a society on the level of caring for each other and show some respect for activities that don't show up as wealth or productivity. Maybe we do have enough stuff -- but we just aren't sharing it as we need to.
Unemployment is a problem because we distribute wealth based on "jobs." Of course, are jobs selling something that poisons other people really productive? We have lots of those in our society. I don't want to mention which ones because that would change the topic, but you see what I mean.
It isn't the math that is wrong. It is the way we choose what we count that is wrong.
On edit, I apologize that my thoughts are so disorganized on this. I hope it is coherent enough to start people questioning and thinking.
And, I appreciate your post because it caused me to think. Thanks.
caseymoz
(5,763 posts)They're still in the material world, either being used in other ways, or taking up space or polluting, thus making replacement ever so slightly more difficult. Moreover, the materials used in making them are expended and more have to be found, and likely, are more difficult to get to. Thus growth becomes necessary just from the greater activity, tools, and energy needed to maintain.
I define productivity (which I think I questioned as being so necessary) as the amount of manageable, tangible effort expended in completing tasks, and in the specific case I gave, the production and distribution of commodities, and I had a to define it specifically that way. If you're going to redefine productivity to include things like the mother raising the child you must find a way to tangibly measure it. If you don't, not only are you making the term utterly useless, but you're opening it up for abuse. As teacher "productivity" programs like NCLB and STTT show.
Don't conflate the words "productive" and "productivity." They mean two different things. Raising vegetables and raising children are productive, but it has nothing to do with productivity.
JDPriestly
(57,936 posts)Just measuring how much new stuff you make measures only a tiny part of what is important, really important in the functioning of a society.
Productivity as you define it pleases mathematicians because it can be measured. But the most important things in life cannot be measured.
This would not be a problem if measuring productivity were just one way that we evaluate our society. But it is a problem because productivity has become the most important measure of economic success in our society.
Since we cannot measure the value of fertility in our agricultural land through any indicator other than crop "productivity," we believe that the best farmer is he who produces the most of his product. In fact, the best farmer is he who cares for and cultivates his land so that it won't be barren in a generation or two. But you cannot measure the value of caring for the land so who cares?
That is how we got into our financial mess. Mortgage companies paid their loan representatives in whole or in part based on how many mortgages they sold. Their was no bonus for selling high quality mortgages, for qualifying borrowers carefully, for refusing mortgages on overvalued properties. The more sub-prime mortgages sold, the higher the productivity numbers for the mortgage salespeople.
I understand what you are saying. I am questioning the usefulness of your conclusions, but even more, I am questioning your assumption that productivity as you define it is a measure that is important. It is interesting, and it is easy to measure, but it is very misleading in real life.
If someone eats 2,000 French Fries a day, is he better off than the person who eats much less of a balanced diet? Numbers have their limits. Productivity just measures numbers. And the sum it comes up with is just one factor that we should consider. Producing 3,000 washing machines that will last only 3 years is not as useful as producing 3,000 washing machines that last (like my old Maytag) over 25 years. Productivity numbers do not reflect the quality of the products produced. In fact, shoddy products that have to be replaced frequently result in HIGHER productivity numbers -- a total waste of resources and human time.
Unfortunately, we are far too interested in the shiny, bright, productivity numbers and far too disinterested in looking at our quality of life and the human values that we are demonstrating in our lives.
caseymoz
(5,763 posts)Because you still don't understand what was wrong with your point. It's like somebody telling you that they have two dollars and you're saying they're counting wrong because it doesn't take Euros into account. And then when you say it's not important, or as important as I say (and you don't know how exactly how important I meant) it's like saying Batting Average is more important than Earned Run Average.
Every statistician knows that any stat you create is going to have limits, parameters of what it is and isn't measuring. You're not saying anything that a person who works with statistics won't tell you.
If you make productivity something that can't be measured at all, you make the term not only totally useless in considering the qualities you're trying to underline, but useless for what it did measure. Instead of having a stat that partially works, you have a stat that doesn't work at all twice as much.
And plus, the miracle of re-defining it won't bring any further regard for the qualities you want people to count. There was a motive for mortgage companies not looking at the quality of the mortgage, and paying regulators not to look at them either. Any encouragement to look closer would have been countered by that motive, not by the fact that the statistics were flawed. Or perhaps that the statistics were made defective to accommodate that motive.
Productivity certainly makes difference even if the Maytags now can't be compared to the ones in the past. If the Maytags of the past weren't produced and brought to market efficiently, by measuring productivity, it certainly would have affected Maytag's productive capacity now. Can they be compared? Well, considering that you know how long they lasted, that they performed the same tasks that they do now, yes. You can compare them statistically with one another and figure out how productive the company was then compared to now.
And after all this, ironically, I think you misunderstood me. When I said, productivity is the problem, I meant that we shouldn't be pressing for more. Maybe you misunderstood that point. With unemployed, we don't need to press efficiency to make more of them unemployed. The promise of technology was supposed to be that work would be less burdensome, but that's not how it's being done. We're working people who are employed too fucking hard and making the rest idle. That's what I meant by productivity is the problem. We should be looking at a society that, if it's not quite like The Jettsons, where people complain about their workday, all the while just hitting a button and letting robots do it, but something similar. But that's not the direction society is going. We have a class under crushing poverty and another that must work its collective ass off to not join the former. Then we have the wealthy, who are driving it all.
muriel_volestrangler
(101,322 posts)As well as a growing population, an ageing one, with more time spent in retirement (but maybe needing more spent on healthcare) will need a larger economy to support everyone at the level they're at now. Modern economies have evolved to expect, and depend on, growth to fulfill past promises and loans. It'd be possible to redirect a nation, or the world, to zero growth or maybe even contraction over a long period (contraction of physical resources used would be a good thing, for instance), if there was the political will and control, but the present system (interest-bearing loans and so on) is built on the expectation of growth.
You'd expect some economic growth through innovation, as well; zero growth would indicate no ability to improve on old methods or designs, which would indicate a society vulnerable to unforeseen changes.
dipsydoodle
(42,239 posts)Dat's me. Yes - definately more growth needed then. 
Demeter
(85,373 posts)No growth means privation, no profits to steal, riots in the streets.
The2ndWheel
(7,947 posts)More people need more stuff, or else more people get pissed. Governments need more tax money, or else governments don't function. Business needs more customers, or else you're out of business. Infrastructure needs, at the very least, maintenance, or else it crumbles.
As a post above basically said, physical reality is always chasing us.
Just as the corporations that so many detest, we don't like those limits imposed on us by the governing web of existence. We attempt to write the rules in our favor. Those attempts at control require growth, in some shape or form.
Civilized humanity is the 1% on this planet. We want, and need, more.
dixiegrrrrl
(60,010 posts)In order to make a profit, you gotta keep selling the widgets,
in order to keep selling the widgets after everyone has bought one, you have to create desire for "new!!!" "improved" "better" widgets
or
for planned obsolescence of the widgets
or
for new customers to come along on a regular basis.
Subsistence capitalism is an oxymoron.
magical thyme
(14,881 posts)Money created is actually debt created, and more money is needed to pay the interest on the debt.
If you have a fixed money supply (eg gold) and the bank lends you 1 brick of gold to buy a house, you need to get 1 1/2 gold bricks to pay back the bank. Eventually, there isn't enough gold to go around because interest causes the demand for gold to exceed the physical supply. So the economy is forced to contract and growth is restricted by the restricted supply of gold.
If you have an infinite supply of money (eg computer bits that represent debt), growth becomes first possible and then necessary to keep up with the interest payments on that debt.
Nixon took us off the gold standard to allow continuous growth. Now continuous growth is necessary to pay the interest on the debt. Because all of our money is, ultimately, debt. Your bank "owes you" the numbers in your savings account. Etc.
NickB79
(19,253 posts)Soon the demands of a global economy that requires infinite growth will hit the wall of being constrained in a world of finite resources, and then the shit will really hit the fan.
caseymoz
(5,763 posts)Who hasn't known this for two years while watching the EU do nothing about this crisis?
The Eurozone is about to die, and the world economy is about to take a hit again because of it.
JDPriestly
(57,936 posts)Who are the creditors in this crisis?
Creditors and debtors need to work out a deal in which each side loses. Both sides made big mistakes.
Creditors are not gods. They don't have the right to crush entire societies just because they made bad loans.
If we allow the creditors to walk away with the Parthenon, we will be rewarding loan sharks.
The creditors should have known better than to lend money to bad risks. And the bad risks should have known better than to borrow and live above their means.
Both sides are at fault. And the two sides should share the losses pretty much equally.
caseymoz
(5,763 posts)If you have butloads of money doing nothing, in other words, if you're wealthy, how would you rather support government? With taxes or with loans?
With loans. The wealthy can collect a cut on them, of course, and have the option to sell the debt to recoup their principal. In other words, deficits make government an investment for them. And how is the government paying this interest? The greater proportion comes from the taxes paid by the lower and middle classes.
Nobody yet has seen that it's in the interest of the wealthy to have government deficits. That's the real reason why we have runaway government debt for decades. Meanwhile, it's in the lower and middle class interests to support the government with taxes. (No pun intended).
If the lower and middle classes would catch on to this, the Tea Party idiots wouldn't be clamoring for lighter taxes and "not punishing" the wealthy. By not "punishing" the rich, they reward the rich. It guarantees the rich will get richer, and definitely at the expense of everyone else.
Of course, this only works for the wealthy if they don't go too far and cause the loans to default. That's why you're hearing all these calls for austerity because default is becoming a danger. My guess is, propaganda and deliberate mis-education are behind those calls.
Governments are now the next investment bubble. Remember when housing was "safe?" These days, when it gets around that something is a completely safe investment, that's when you have to worry. They'll milk it until it's no longer safe, then they'll milk blood until it's dead.
The US government is a two-generation-old bubble. Now Europe's a bubble, too. So are most governments.
Meanwhile class division is really what's behind this failure, and people need to see it.
JDPriestly
(57,936 posts)I vote against borrowing more. We should raise taxes, not borrow.
I agree with you 100%, and you said it really well.
You should start a new thread with your post.
suffragette
(12,232 posts)You can just see the drooling in articles like this:
http://online.wsj.com/article/SB10001424052702304563104576357240646607566.html
JUNE 1, 2011
Want to Buy a Piece of a Greek Island?
Now might be your chance to buy that portion of a Greek island you have been coveting.
As part of Greece's privatization plan to raise cash to reduce its mountain of debt, the national government is preparing to sell as much as €30 billion ($42.9 billion) of public property. It is still early in the process, but future sales are likely to include assets ranging from the government's stake in the Mont Parnes Casino resort in Athens, hotels, and even a concession to develop a luxury resort with a world-class golf course on the island of Rhodes.
The Hellenic Public Real Estate Corp., the government body that manages public property, has a list of about 75,000 individual government-owned properties. The corporation has appointed National Bank of Greece SA to lead a consortium of advisers who are now preparing to sell an initial portfolio of 20 to 30 properties, the first of which could be put on the market in the next few months, according to Aristotelis Karytinos, general manager of the real-estate division at National Bank of Greece.
The International Monetary Fund, in its latest report on Greece, estimates that as many as €15 billion could be raised through real-estate sales. Mr. Karytinos says expected proceeds from property sales or leasing is now estimated at between €15 billion and €30 billion. The first step is to sift through the long list of public property, identify the best real estate, and resolve any legal issues to ensure that the property is able to be fully developed by investors.
And agree that your post would be a good OP.
caseymoz
(5,763 posts)And then clean up buying the assets.
OP soon, then.
suffragette
(12,232 posts)caseymoz
(5,763 posts)seems uninformed. The European Union is much more stable than you realize. I worked in banking and finance and IT for a decade and a half in Europe and the fundamentals are sound. Did you know that the kingdom of the Netherlands is the third richest nation on earth based on actual returns from investments. Germany is very well off, even having had to assume the debts of East Germany? Spain is reducing its deficit in leaps and bounds, the latest bond auctions came in at expected rates, as did the French bond auctions. Greece is accepting the necessary austerity to help drive down the deficit. All this "Eurozone crisis" malarkey is nothing but propaganda designed to drive up the dollar. But with nothing but debt and war and police state tactics to offer the world, the dollar is dying and it is on it's way out as a reserve currency. The next decade will prove my claims. My money remains in Euros, because I make money just by having them. The European Union shall laugh over the American dollars grave.
caseymoz
(5,763 posts)First, isn't Europe well capable of putting out its malarkey to counter the malarkey put out by the US? It has seemed very passive about doing this, for some odd reason.
Germany having to assume debts of East Germany is now twenty years old. If you're having to reach that far back to cite the good news it indicates a dearth of it. Spain paying off their debts by leaps and bounds is an absurdity, given the fact that a "leap" of two years is too short a time span to make that judgment. You could either say they had a leap or a bound, not both. And statistics have an odd way of not being forecasts. Greece accepting austerity measures is more than a bit premature in my opinion. And then there's Italy . . .
I hate to suggest that austerity might not be the engine of prosperity you think. It was the program that Heinrich Bruning implimented for Germany, 1930-1932. He was called "the Hunger Chancellor." I think you know where I'm going with this. It didn't end well. Bruning discredited the his Center Party, the last political hope against Hitler. The wealthy love austerity, and it has never, ever had the effect they insist it would. So, I have no reason to think austerity is going to do anything but discredit the European Union to its less wealthy member nations.
And why would austerity work? It's the wealthy insisting that they get paid no matter what. Yes, that's a guaranteed stimulus, all right. It also unifies societies so well.
I have a lot of respect for the European Union, or had. I myself thought the Euro would replace the dollar as the reserve currency by now especially after the housing market burst. There's a paradox that, overall, the European Union is better off than the US in terms of debt. However, the problem is that this good fortune isn't shared equally by the members. How well Germany and the Netherlands do won't matter to the Euro if Greece, Italy and Spain unravel. Given human nature, envy alone could unravel it once the well-off countries show they have little in common with worse off ones. Germany and the Netherlands will take a big hit if this happens, along with the rest of the world.
Now, given the fact that I expected the Euro to perform better, I've been dismayed at how badly Europe has approached this crisis. It does look like an economic version of the hand-wringing that Europe did as Yugoslavia descended into bloody war. Now, that didn't threaten European unity, this might.
But then again, maybe you're guessing right. Predictions have a way of being wildly wrong, even by experts. I'd say go ahead, make the Euro part of your portfolio-- but I don't you bet your house on it.
carla
(553 posts)and I cry BULLSHIT on the basis that the euro is now where it was a year ago despite dropping to 1.26. the world economy is fine, it just isn't producing billions for rich a-holes like in the past. More BBC complicity in trying to trash the only reserve currency that isn't crumbling. The Euro will be here after the dollar and the pound are gone. Mark my words.
muriel_volestrangler
(101,322 posts)http://www.google.com/hostednews/afp/article/ALeqM5hCZ6PU2mxukNaJxPYz8iQDV1M-SA?docId=CNG.73f31b2d466ccb097c30c2646801f235.6c1
http://www.euronews.net/2012/01/24/imf-warns-europe-is-global-recession-risk/
http://presstv.com/detail/222908.html
How deep does your conspiracy go? Maybe you need to be reminded "don't shoot the messenger".
Is Prof Krugman part of the complicity too?
http://www.truth-out.org/europes-austerity-measures-may-guarantee-recession/1324573439
carla
(553 posts)trumpet the same figures that differ from European Union accounting? Please. Media complicity doesn't have to be approved, it is simply follow the leader. IMF is the source and it is full of bull. Same source, same tale...follow? Conspiracy isn't what I call it, I call it parroting.
caseymoz
(5,763 posts)And the journalists be the correct ones, then? Who has the most to gain from telling the world that, yes, everything is fine, just fine. No reason to panic? Or rather, who has the most to lose if the world doesn't believe it?
And in the case of the news, how many organizations have to fall into line to make it work, that is, be controlled by the pro-dollar conspiracy? Whereas in the other, how many extremely invested, interested parties have to get their stories straight?
Your argument reminds me of: well, what if all scientists say Global Warming is occurring and is man-made? Why, it must be a conspiracy by socialistic infiltrators in the scientific community! Those commies! And look! Industry has their own figures and they all say it's not.
In the one case, you can clearly see the vested interest and you don't have to infer it into the scientific community first to make the conspiracy work, but in the other you can clearly see who has the vested without inferring it at all.
It looks to me like it comes down to believing the one you most want to be true. However, even if you do that, you might be right, by chance. Again, I suggest you make the Euro part of your portfolio. I just suggest strongly you not bet your house on it, if you still have a house after betting it on that bubble.
And also: there's nothing encouraging about an austerity program. That's just the wealthy insisting they be paid no matter what happens. That policy is not an engine of growth.
Vidar
(18,335 posts)Never mind that American investment bankers had a large part in the Euro crisis.