World may see 'collapse of demand': Lagarde

World may see 'collapse of demand': Lagarde
By Veronica Smith | AFP – Fri, Sep 23, 2011
http://news.yahoo.com/world-may-see-collapse-demand-lagarde-180012438.html


International Monetary Fund Managing Director Christine Lagarde arrives to speak …


International Monetary Fund chief Christine Lagarde warned Friday that the world could see demand evaporate if the United States and Europe fail to put their ailing economies back on track.

"Today, if there is no collective rapid action we run the risk of losing the battle for growth," Lagarde said in a speech at the opening session of the IMF and World Bank annual meetings in Washington.

"There are dark clouds over Europe and there is huge uncertainty in the United States and, with that, we could risk the collapse in global demand."

"Well, so what? Let's remove the clouds and remove the uncertainty! Easier said than done, and it requires clearly a collective action," she said.

Lagarde, a former French finance minister and, since her appointment in July, the first woman to head the IMF, called on the Fund's 187 member nations to put economic growth and job creation at the top of their priorities.

"What we want for our countries is inclusive, job-creating growth."

But she warned that downside risks on the horizon were "piling up."

Those risks were being driven by a negative feedback loop between weak growth, weak balance sheets of sovereigns, banks, and households and "what is very much perceived as inefficient political commitment," particularly by the markets, she said.

She recalled that the international community had acted together to face the 2008 financial crisis.

"We need to act now and we need to act together," she said. "Our problems can be largely economic, but the solutions are essentially political solutions."

Lagarde singled out the United States and Europe as primarily responsible for the current crisis.

The United States, the world's largest economy, needs to reduce its fiscal deficit, reduce high unemployment and help relieve pressure on overly indebted households, she said.

Europe, in the throes of the eurozone debt crisis, must deal urgently with the "twin problems" of sovereign debt and bank debt.

She acknowledged the delicate balance of correcting deep fiscal deficits in Europe, the United States and Japan while trying to maintain growth.

"Advanced economies need as a matter of priority to reduce their deficit," she said.

"But if they push too hard... they run the risk of harming growth and jobs."

Lagarde emphasized the role of the IMF, which provides analysis and lending to member countries, as a facilitator in the global economic dialogue.

"My hope is that on the occasion of this annual meeting... we actually come together sufficiently to establish a common diagnosis to agree on a set of priority policies that you will feel comfortable -- with the strength of us all -- taking back home, to your leaders and heads of government, to actually pave a path to decision making and a path to recovery."

Note in this clip they speak of increasing the Eurozone Relief fund from 400B to 600B! 200B is a LOT OF MONEY - where's it coming from, hmmmmm?


https://www.youtube.com/watch?v=s6MWTs2hkx8&feature=share