The World Crisis Monitoring No.20

The Institute for Energy and Finance presents the 20th edition of the World Crisis Monitoring.

In the modern economy, it is private consumption that determines the dynamics of growth; therefore, significant resources of state stimulus programs around the world were directed to support consumption. However, as Sergei Kondratiev shows in the section «Private consumption: no drive», this did not lead to a serious increase in consumer activity. Due to the continuing high level of unemployment, the population spent the money, received from the state, to reduce the debt burden and increase savings, and did not spend on new purchases. Both in the US and in the EU-27 — in the world’s largest consumer markets — key indicators of consumer activity continue to remain significantly below pre-crisis levels. In developing countries, its own problems, inflation, coupled with a high level of budget deficits, is forcing the authorities of the key developing countries to move to curtailing anti-crisis programs and tightening monetary policy.

The debt crisis of the euro zone flares up with renewed vigor. The need for government injections into the banking system led to a record budget deficit in Ireland of 32% of GDP and caused panic in the markets. While Irish emergency lending relieves short-term difficulties, financial markets remain doubtful about the long-term effectiveness of decisions taken to stabilize the euro area’s financial position. The latest innovations in the field of financial regulation in the eurozone indicate the inevitability of the restructuring the public debt of the weakest countries in the eurozone, and the countries that received assistance will be the first applicants. Read more about this in Marcel Salikhov’s section «Debt problems of the eurozone: will there be restructuring in 2013?».

20th edition of World Crisis Monitoring (pdf).