Inigo Montoya was right and C. Fred Bergsten was wrong about global recession
Here's a little something I wrote last January on the way home from the World Economic Forum in Davos:
After hearing various gloomy pronouncements from members of TIME's Board of Economists, audience member C. Fred Bergsten of the Peterson Institute for International Economics grabbed a mike, stood up and declared that growth in emerging markets is so strong that "a global recession is inconceivable." Now, highly unlikely would have been fine. Or even hard to imagine. But inconceivable? As Mandy Patinkin's Inigo Montoya tells Wallace Shawn's Vizzini in The Princess Bride: "You keep using that word. I do not think it means what you think it means."
Sure enough, we now seem to be nearing a consensus that the world is now headed for, if not already in, a recession. Morgan Stanley has a report out today projecting -0.9% growth in the developed world next year, and 1.7% for the world as a whole. And yeah, 1.7% global growth counts as a recession. Anything under about 2.5% does.
Update: So I turn on the NewsHour With Jim Lehrer tonight (long story), and there's C. Fred Bergsten, explaining that big-time fiscal stimulus is needed in China to combat a global recession. A recession of which he is apparently now capable of conceiving.
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1
Indeed the world is already in recession, hasn't that been confirmed months ago and predicted a couple of years before?
The upbeat and the euphoric feelings of the election die fast, virtually clouded and encapsulated by the downbeat of a weakening market. Dow dipped some 900 points to dive below the 9000 level immediately after the election result. It is now more like a deflating balloon, too weak to turn real bullish in the near future.
Does the ushering in of a new president matter? Will the change come any sooner? He would only make a mark in history if he could revive the US economy in the shortest possible time.
(Tan Boon Tee) -
2
As I recall, wasn't Bergsten's point precisely that it was negative global nominal growth which was "inconceivable", rather than growth of less than 3% or whatever? After all, as the Economist article points out, "Using the IMF's definition (ie, growth below 3%), the world economy has been in recession for no fewer than 11 out of the past 28 years." Which I'm sure Bergsten is aware of.
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3
You must have been paying closer attention than I was. I just caught the 'global recession is inconceivable' line.
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