Pamiętamy mapę z zieloną Polską na tle czerwonej Europy, którą kilkakrotnie z dumą prezentowali premier i minister finansów. Mniejsza z tym, że u nas wzrost był rok do roku, a w pozostałych krajach kwartał do kwartału, wyglądało pięknie.

Ja chciałbym przedstawić nieco inną mapę, z ostatniego World Economic Outlook Międzynarodowego Funduszu Walutowego, która pokazuje prognozy wzrostu dla krajów w latach 2010-2011, niebieskie rosną szybko, a czerwone wolno. Jak to możliwe, że pomimo miliardów środków unijnych Polska ma rosnąć wolno. Od dwóch lat ekonomiści w tym autor bloga ostrzegają, że bez reform nie będzie wzrostu. Jeszcze nie jest za późno, trzeba się wziąć do roboty, samo masowanie słupka popularności nie wystarczy.

Kilkukrotne prezentowanie zielonej mapy to jak megafony w piosence Jacka Kaczmarskiego “Poczekalnia”. W najnowszym Forbs-ie jest mój felieton, w którym przypominam refren tej piosenki:

“Uwierzyliśmy megafonom

Uprzejmie wszak ostrzegły nas

Po co stać w deszczu na peronie

Skoro przed nami jeszcze czas?”

Gdyby nieodżałowany Kaczmarski jeszcze żył, być może zaśpiewałby tak

“Nie wierzcie megafonom

Ich wrzask mugoli czyni z nas

W polskiej historii panteonie

Dziś czarodziejów nadszedł czas”

New IMF global outlook has been released. IMF predicts almost 4% global growth in 2010.  It will attract media attention as the key message from the IMF. But there is one paragraph that should have attracted even more attention, a quote:

“Due to the still-fragile nature of the recovery, fiscal policies need to remain supportive of economic activity in the near term. The fiscal stimulus planned for 2010 should be fully implemented”.

IMF repeats the policy consensus, that we should continue to print money, run huge fiscal deficits as long as necessary, i.e.  as long as private demand remains weak.  Such policy recommendation is no surprise, after all anything against the policy consensus would be blocked by the board. So why bother, lets flock together around the wrong recipe, again.

IMF did not learn much during the crisis. US universities’ mafia that rules IMF cannot do any better. To see this clearly let me repeat the key paragraph from the IMF article IV consultation with the United States in 2003, it read:

“While monetary policy has responded aggressively to the economic slowdown, further easing may still be required if the recovery does not regain momentum. With inflation having fallen to near post-war lows and interest rates close to the zero bound, the appropriate bias is toward aggressive and preemptive action to support a healthy recovery. Although deflation risks in the United States appear modest, the FOMC’s strong signal of its readiness to act, and its willingness to use a broader range of policy instruments should deflationary pressures intensify, is welcome”

Yes. Exactly when the biggest asset bubble in the history was buiding at the light-speed, IMF was worried about deflation, hailed US zero interest rates and advocated that US should consider adopting other measures, such as quantitative easing. There could be no worse policy recommendation at that time.

It is high time that IMF does change. That it provides solid policy advice instead of flumsy policy consensus, which led to massive crisis of 2008, and will likely lead to another big crisis in the coming years, the crisis of developed countries sovereign debt. Recently CDS market priced in higher risk of sovereign default in rich countries that the risk fo corporate default of some large corporates located in these countries. Before IMF publishes its WEO and GFSR in Spring 2010, it should rethink its mission. We need policies that prevent crises, not ones that avoid one crisis at the price of creating another one.

IMF has released its World Economic Outlook and Global Financial Stability Report (nice titles: Financial stress, downturns, deleveraging).

One interesting chart showing asset allocations to risk assets is below:

I now see markets that have zero losses related to subprime/credit derivatives and good growth prospects “infected” by the fact that healthy daughter banks are forced by mother banks to tighten credit conditions and to stop lending to other banks. This is wrong, it has nothing to do with local fundamentals and as such should be prevented by local authorities.

I am not suggesting anything yet, but I do recall a letter that Paul Krugman wrote to Malaysian PM Dr Mahatir when he introduced temporary currency controls, as recommended by Krugman. It did pay off. This is not a currency crisis, this is liquidity and confidence crisis. Now the question.  What should be done by authorities in a healthy country with healthy banks that suffers from contagion from failing parent banks? Any thoughts?

IMF has just released excellent (as always) World Economic Outlook. You can find a chapter on inflation here and on financial distress and recessions here .

The main conclusions are (briefly) as follows:

• Inflation risks remain elevated, especially in EM, policy failure to address this risk may worsen inflation output trade-off in the future
• Banking sector crises tend to produce recessions. They are deeper when households are highly leveraged, when prior to shock housing prices were going sharply up and with growing arms-length financing. Conclusions: US is facing recession, Europe will do better. Another conclusion: recapitalize banks and avoid moral hazard. I wish Mr Paulson and Senate read WEO before they did what they did.

• Swedish study says that despite enlargement big EU states are gaining power, see EUobserver article . It also says that because of personality Luxemburg leader weighs probably more than a country of 12-14 million population.
• Bloomberg article commenting on US deicsion to put tariffs on imports of coated paper from China. Quotes: ” Figures last week showed the world’s central banks have the lowest level of U.S. currency in their foreign-exchange reserves since at least 1999. Dollar holdings dropped to 64.7 percent in the fourth quarter, according to the International Monetary Fund, down from 65.8 percent in the previous quarter and from as high as 72.6 percent in mid-2001. The euro is at its most popular since its 1999 introduction, with a share of 25.8 percent.” [...] ” The U.S. can hardly claim to be a paragon of free trade. In his book “Making Globalization Work,” for example, Nobel Prize- winning economist Joseph Stiglitz says there are 25,000 U.S. cotton farmers enjoying $4 billion of annual subsidies. Without those government payments, “it would not pay for the United States to produce cotton; with them, the United States is the world’s largest cotton exporter,” he writes.” [...] ““We see U.S. protectionism as a key long-term risk,” T.J. Bond, Hong Kong-based chief Asia economist for Merrill Lynch and Co., said in a research note today. “The economics aren’t going to change. If it interferes with the global flow of goods and capital, protectionism could raise global inflation as well as U.S. bond yields.”

  “Do Not Meddle in the Affairs of Dragons, For You Are Crunchy and Taste Good With Ketchup,” is a slogan available on T-shirts and bumper stickers. Maybe some champion of free trade could buy a box of each and send them to the gaggle of short- sighted, crowd-pleasing U.S. politicians as a warning that if you pull the tail of the Chinese dragon, you might be devoured.”