That's the rally cry from new IMF chief (appointed under mysterious circumstances) Lagarde gives in Berlin this morning as she warns the world faces descent into the 1930s without – among other things – greater resources being devoted to various bailout mechanisms – the EFSF, the ESM, and of course, the IMF.
As we turn the page on a turbulent year, a year in which so much of what could go wrong did go wrong, many look to the future with trepidation and foreboding. They worry about uncertain economic prospects, dwindling job opportunities, and rising inequality. About what kind of future awaits their children.
Indeed, in the economic outlook that the IMF will release tomorrow, we will lower growth forecasts for most parts of the world. Even these lower forecasts assume a constructive policy path that is by no means assured.
In too many places, uncertainty is holding back demand and the willingness to lend. A legacy of high public and private debt is hurting economic prospects. The global financial system remains fragile.
In an interconnected world like ours, these forces are feeding each other across borders. Capital flows to emerging markets have already dropped off, and growth is expected to slow even in the most vibrant parts of the world economy. Low-income countries are especially vulnerable.
This speech was, of course, delivered in German. I believe the translators at CNBC quoted Ms. Lagarde as saying "BUYBUYBUY!" I know, you were too busy focusing on the warning that the IFM will lower growth forecasts for most of the World. I believe CNBC translates that part of her speach as "record oil demand projected." It seems that if I want to get behind this market rally, I will have to give up both reading AND thinking for the New Year.
I understand the pain felt in those European countries that need to adjust, and the difficulty of sharing the burden in a way that is socially fair. But I also understand the feelings in countries that have been thrifty, asked to help those who could have managed their economies more prudently.
But what we must all understand is that this is a defining moment. It is not about saving any one country or region. It is about saving the world from a downward economic spiral. It
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