Tags: fiscal | monetary | stimulus | central bank

NYT: More Fiscal, Monetary Stimulus Needed to Avoid Global Recession

By    |   Friday, 10 October 2014 01:07 PM

Fiscal and monetary policymakers must step up to the plate with more stimulus to avoid a global recession, according to The New York Times editorial board.

"In many countries in Europe, Asia and Latin America, economic growth has already stalled," Times editors write. "Yet many finance ministers and central bankers who are meeting in Washington this week are unwilling or ill prepared to respond."

The editorial takes Germany to task for advocating fiscal austerity and trying to prevent the European Central Bank from buying government bonds. And The Times editorial board criticizes Japan for its sales tax increase earlier this year.

"There is a lot governments and central banks could do to avoid another recession," the editorial board writes.

"For example, a recent IMF [International Monetary Fund] report showed that increasing government spending on public investments like roads, ports and railways can help stimulate the economy immediately and for several more years," they note.

"Some countries, including the United States and Britain, are growing modestly, for now. But even these economies are not enjoying the kind of robust recovery that creates millions of jobs for the unemployed. And growth in the United States and Britain could slow down, too, if a lot of their major trading partners in Europe and Asia fall into a recession."

While the U.S. economy grew a robust 4.6 percent in the second quarter, the eurozone registered zero growth, and Japan's economy shrank 7.1 percent.

Investors too are concerned about sluggish global growth. That worry played a major role in the plunge of world stock markets Thursday and Friday.

"Risks to global growth are at the center of all concerns right now,” Alessandro Bee, a strategist at Bank J Safra Sarasin, tells Bloomberg.

"Investors are paying more attention to what is going on outside America, because if a slowdown in the global economy drags the U.S. economy down, that really does not bode well for equities."

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Fiscal and monetary policymakers must step up to the plate with more stimulus to avoid a global recession, according to The New York Times editorial board.
fiscal, monetary, stimulus, central bank
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2014-07-10
Friday, 10 October 2014 01:07 PM
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