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Mervyn King: Time is short for world economy

I’ve been keeping an eye on recent speeches and public statements by Sir Mervyn King who, as head of the Bank of England, is the UK’s equivalent to Ben Bernanke. Of late he’s been standing on stage with his hair on fire, shouting warnings to the world that the global economy is about to collapse […]

I’ve been keeping an eye on recent speeches and public statements by Sir Mervyn King who, as head of the Bank of England, is the UK’s equivalent to Ben Bernanke. Of late he’s been standing on stage with his hair on fire, shouting warnings to the world that the global economy is about to collapse absent some radical action. Here’s the latest from a speech being reported in today’s Telegraph:

In a sobering assessment of the world economy, Sir Mervyn warned that even if world leaders managed to agree on emergency moves to support the banking system and debt-stricken economies such as Greece, they would still not have averted the threat to global stability.

Unless overspending by Western economies was curbed it would bring about an ever-larger debt crisis that would mean much lower long-term growth rates, he said.

Worse, he suggested, some of the measures being deployed to counter the short-term situation could actually exacerbate fundamental economic problems, worsening the debt crisis and leaving taxpayers footing an even larger bill.

To elaborate, he said that pumping money into economies to stimulate spending has only bought us time, and that if we don’t get our debts in line with our revenues, we face catastrophe. Figures like Mervyn King aren’t supposed to say things like that, but he keeps doing it. He must be completely unnerved.

This is not going to end well, but it’s going to end soon. Can’t you feel it?

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