Sluggish global growth threatens to keep governments around the world from being able to pay pensions and bondholders, the chief economist of the Organization for Economic Co-operation warns.
When growth is weak, governments collect less revenue and struggle to pay pensioners and to meet all their debt payments. Are you listening USA?
“These kinds of numbers mean we are not going to make good on these commitments,” Catherine Mann, the group’s chief economist, told reporters.
This is the indicator that default looms and cannot be hidden under the balance sheets any longer.
She said that to jump-start growth, countries need continued stimulus from central banks (Printing Monopoly money and creating inflation), government spending and tax policies that encourage expansion (Spending Monopoly money) and economic reforms (Cuts, austerity and outright theft of pension money), such as making regulations more consistent from country to country. (Cherry picking rules to justify their actions. Like NZ consumers paying ‘International prices’ but getting local wages)
Since the financial crisis, the World Bank, International Monetary Fund and OECD have repeatedly over-estimated the strength of the global economic recovery. Because the politicians demanded positive news in the face of dire warnings.
Mann suggested that the economy no longer works the way most economists were taught: Low unemployment in the United States and other countries has not triggered strong pay growth, for example. (It has triggered strong pay demand but corporations refuse to grant them despite record profits and outsourcing manufacturing jobs to China)
Low interest rates have not encouraged businesses to invest. (They are up to their ears in debt and oppressive rents and see no likely increase in spending)
And easy-money policies by the world’s central banks have not ignited inflation. (Inflation is required to keep the Ponzi system alive – hence the panic. Inflation is where demand exceeds supply and prices rise – Retiring Boomers have switched to ‘Save’ instead of ‘Spend’ mode and oppressively low wages for younger workers equals less disposable income and disinterest in buying cars and houses with a lifetime of debt. If prices drop (as they should) then the property market collapses, consumer debt is not repaid and the tax take is reduced so the party ends for the politicians. Average house prices, since time began and all over the World, run at 1.5~3 times average earnings. The antipodes are at 12+)
“The relationships are broken,” she said. (Yes, the corporations and rich stole the money, outsourced every job possible and enslaved everyone in debt then wonder why the music stopped – DUH)
Mann asked her team to consider the new economic realities when it issued its lower economic growth forecast in February. She said she is confident the OECD won’t have to downgrade it’s estimates when it releases its next forecast in June. (It will – there is no good news on the horizon – Reality is coming and a reset is required. With Sweden on it’s way to third world status just when will the revolution happen or will it be a slow degrade? – The boiling frog applies I reckon. As long as it’s ‘Not me’ – until it’s too late).