You do know most of our economies are going nowhere, right? So to add to the rest of the tales of woe, there is this from David Uren:
Even assuming that the US overcomes its current budget crisis without wreaking too much damage, businesses in the advanced world may continue to hold back from the investment required to generate jobs and growth. The slowdown in the emerging world, the severity of which has taken the fund by surprise over the past six months, may prove intractable.
The biggest change in the IMF’s outlook in the past six months concerns China. In April, it believed the slowing of China’s growth to just below 8 per cent this year would be a passing pang, with growth returning to 8.5 per cent by 2015 and continuing at that level into the indefinite future.
But it now believes there has been a permanent reduction in China’s potential, and it sees growth slowing to 7.3 per cent next year and to just below 7 per cent beyond 2016. If the pattern of global disappointment continues, China’s long-term growth rate could be below 6 per cent, it says. For the IMF, which traditionally adjusts its forecasts in fractions of a percentage point, this is a huge downgrade.
Public spending beyond some limited amount is a long-term economic disaster. The evidence mounts. But are we learning? We shall see. I will only add that the story presumes that there is a kind of wilfulness in business not investing at the present time. They would if they could so the fact that they don’t tells you something else about how badly our capital base has been mismanaged for the past decade or so in particular.
Only the members of a government and their advisors are apt to believe that members of a government and their advisors are able to direct our resources in a value-adding direction. It is a delusion, but they’re the ones who get to decide. But what a mess their delusions cause!