Tampa Prep 2009-2010 Impact Defense File
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- 5. American economic slowdown won’t bring down the rest of the globe
AT: Economy 2/23. IMF checks Business Week 2010 (7/19, IMF to Seek $250 Billion Boost to Lending Capacity, http://www.businessweek.com/news/2010-07-19/imf-to-seek-250-billion-boost-to-lending-capacity.html, WEA) July 19 (Bloomberg) -- The International Monetary Fund is seeking a boost in its lending capacity to $1 trillion, from the current $750 billion, at a Group of 20 summit in South Korea in November, according to a Korean government official. The increase would help strengthen a global financial safety net to counter crises, the official said on condition of anonymity because the talks are private. South Korea is chair of the G-20 this year. IMF Managing Director Dominique Strauss-Kahn told the Financial Times that a boost to $1 trillion in IMF lending firepower was a “correct forecast.” Strauss-Kahn has sought to enhance the IMF’s role in serving as a buttress against financial crises, already overseeing a trebling in the fund’s war-chest to $750 billion since early 2009. While the IMF doesn’t foresee the global economy sinking back into a recession, the European debt crisis and elevated U.S. unemployment threaten to curtail the recovery. “They will have to increase the lending capacity over time to contain a crisis more effectively,” said Ham Joon-Ho, a professor of international economics and finance at Yonsei University in Seoul. Ham added that the IMF will also need to work to encourage members to line up contingency financing with the fund, which most have steered clear of given concern such a step would carry the “stigma” of signaling financial trouble. Takes out their impact—it’s a financial safety net AFP 2010 (7/19, IMF to boost lending resources: report, http://www.google.com/hostednews/ap/article/ALeqM5hixr2M_Qx1JQ-RsMvvAlU1RwLPiwD9H2AAR80, WEA) SEOUL — The International Monetary Fund is seeking to boost its lending resources from 750 to 1,000 billion dollars to better handle future financial crises, a report said Monday. The Financial Times, citing IMF Managing Director Dominique Strauss-Kahn, said the bigger credit lines should be used to help prevent, rather than address, crises. "Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises," IMF Managing Director Dominique Strauss-Kahn told the Financial Times. "Just because the financing role decreases, doesn't mean we don't need to have huge firepower... a 1,000 billion dollar fund is a correct forecast," he said. The Financial Times said the IMF wants to agree financing deals in advance that will be specially tailored to individual countries, rather than respond to crises with conditional loan packages. The aim would be to cool market nervousness over any nation facing an imminent liquidity crunch, the paper said. Strauss-Kahn was in South Korea -- which chairs the Group of 20 leading economies this year -- last week to attend a conference. South Korea's presidential panel for the Group of 20 leading economies, confirmed it was cooperating with the IMF to work out a better safety net. 4. The fed will prevent economic collapse Washington Post 7/21/2010: Bernanke says Fed would act if necessary to boost economy. http://voices.washingtonpost.com/political-economy/2010/07/bernanke_says_fed_would_act_if.html The Federal Reserve would take action if necessary to keep the economic recovery on track, its chairman, Ben S. Bernanke, said Wednesday. Yet he expressed confidence that the expansion continues. It was the first public acknowledgment by Bernanke that the agency could take more policy steps if the economic recovery continues to disappoint. In his semi-annual testimony on monetary policy to the Senate Banking Committee, he gave a dual message: cautious optimism about growth and recognition that risks that the recovery will falter have risen in recent months. Even as the Fed continues "prudent planning" for how to exit its steps to support the economy, "we also recognize that the economic outlook remains unusually uncertain," Bernanke said in prepared testimony. "We remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability." Bernanke did not say what policy actions he had in mind, but potential steps include cutting the interest rate paid on bank reserves, reaffirming the Fed's promise to keep short-term interest rates low for the foreseeable future, or buying enough mortgage securities to replace those that are paid off. If the economy appeared at serious risk of returning to a recession, the Fed would consider large-scale purchases of Treasury bonds or mortgage-related securities to try to head off another crisis. 5. American economic slowdown won’t bring down the rest of the globeThe Economist, February 4, 2006 “Testing all engines,” p. http://www-personal.umich.edu/~kathrynd/WorldEconomy.Feb06.pdf Alongside stronger domestic demand in Europe and Japan, emerging economies are also tipped to remain robust. These economies are popularly perceived as excessively export-dependent, flooding the world with cheap goods, but doing little to boost demand. Yet calculations by Goldman Sachs show that Brazil, Russia, India and China combined have in recent years contributed more to the world’s domestic demand than to its GDP growth. They have chipped in almost as much to global domestic demand as America has. If this picture endures, a moderate slowdown in America need not halt the expansion in the rest of the world. Europe and Japan together account for a bigger slice of global GDP than the United States, so faster growth there will help to keep the global economy flying. A rebalancing of demand away from America to the rest of the world would also help to shrink its huge current-account deficit. This all assumes that America’s economy slows, rather than sinks into recession. The world is undoubtedly better placed to cope with a slowdown in the United States than it was a few years ago. That said, in those same few years America’s imbalances have become larger, with the risk that the eventual correction will be more painful. A deep downturn in America would be felt all around the globe. Directory: files -> documents documents -> North Mankato Taylor Library documents -> In the Red and Brown Water documents -> - documents -> I. Disaster Summary Sheet II. 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