The title for this blog comes from Christine Lagarde, head of the International Monetary Fund. She issued a warning about future global economic growth. Lagarde told 2,500 of the “best and brightest in business, government, academia and civic life” at the annual World Economic Forum in Davos, Switzerland that the global economy was “very fragile” because of “timid recovery.”
She reported at the conference that China, Africa and other emerging markets could see significant growth but the EuroZone nations and the United States are likely to struggle with “negative to low growth.” Lagarde cited that the economies of both were prone to “political crisis.” In addition, the debts of both the EuroZone and the United States are a factor because of overspending. The EuroZone nations, especially Germany, are bailing out Greece, Spain and Italy. Yet these nations have not taken the responsibility of solving their own financial crises by limiting spending.
This criticism also can be applied to the Obama Administrations failure to address the debt and deficit crisis. Rather than have significant cuts in spending and reform of entitlement programs, the Obama White House denies there is a crisis and continues to spend. The denial is also why the St. Louis Federal Reserve reported this past week that this is the longest recovery ever in American History.
By every economic measure, we are headed for a financial disaster that Obama will blame on the Republicans because he never accepts responsibility for anything that goes wrong. Not only has Obama and the Democrats set a new record for spending, 6 trillion dollars, he has set the United States into a downward economic spiral. The warning by Christine Lagarde should be a wakeup call the people of the United States but the new norm is to ignore or deny there is a problem.