The world economy: Investors, beware

Posted: October 4, 2012 in economy
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UK Only Article: 
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Everything to play for

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The world economy


As long as politicians in the world’s big three economies continue to dither, another global recession is possible

FOR investors around the world, the recovery seems assured. The MSCI global share index has risen almost 10% since July. The credit for this largely goes to central bankers. In July Mario Draghi, president of the European Central Bank (ECB), said he would do whatever it takes to hold the euro together. In early September the ECB pledged to be a lender of last resort to governments, albeit under certain conditions. Soon afterwards the Federal Reserve launched a new round of quantitative easing (printing money to buy bonds) and promised to keep buying assets until American unemployment was “substantially” less awful. Other central banks followed with loosening of their own, in part to stop their currencies from rising (see article). All this activism boosted share prices.
But is it justified? The surge in shares certainly looks odd in …

via Economic Crisis


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