Ambrose Evans-Pritchard
London Telegraph
October 3, 2011
The International Monetary Fund (IMF) expects the savings mountain to rise yet further next year as the governments of Europe, Britain, and the US tighten belts, in unison, by up to 2pc of GDP.
This is double the intensity of the last big synchronized squeeze in 1980.
They will do so before the private sector is ready to grasp the baton, and without stimulus from the trade surplus states (Germany, China, Japan) to offset the contraction in demand.
Put another way, there is a chronic lack of consumption in the world. “This probably comes as a surprise to most people, gorged on propaganda about excessive debt and the need for retrenchment,” said Charles Dumas from Lombard Street Research.
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