As if fears for the global economy weren’t bad enough, they are now soaring as the head of the World Bank, Robert Zoellick, warned that the world is entering into what he calls a “new danger zone.” Around the world confidence is plunging, nations are bogged down in debt and global growth as all but stalled.
Although the sovereign debt crisis in Europe is bad, it is only the tip of the iceberg when it comes to the global economy. In Europe there are serious ramifications for the banks, monetary union and of course this all impacts on some EU countries competitiveness.
However, in a statement released by Zoellick, he states that debt issues, tax reform to initiate growth in the private sector, out of control spending and a stagnant trade policy must all be addressed in the United States. As one of the globes leading economies, there isn’t much hope for the rest of the world if the leading economies can’t bring it all together.
Mr. Zoellick doesn’t stop with the United States, however. He contends that investors around the world have lost confidence in several key countries due to a severe lack of economic leadership. He did however note that the leader of the pack was the US in their stalled debates in Congress over whether or not to lift the debt ceiling in order to avoid default.
As well, employment data coming from the US is further grounds for concern. The picture is grim as it is showing that new jobs have just not been created. In fact, none at all were added in the US in the month of August after 10 months of increases.
The leader of the World Bank did voice concern that China might fall into the mid income trap but further added that he felt they were positioned will to become one of the globes “high income” economies.
