IMF Chairman: 2010 Could Be End of Recession

Jonathan Bronstein, Talk Radio News Service

Since the economic crisis began in 2008, many people have been clinging to the hope of hearing positive news regarding to the economy. Recently, Dominique Strauss-Kahn, the current chairman of the International Monetary Fund (IMF), delivered some optimistic news, as he believes that 2010 could be end of recession.

“The free-fall in the global economy is beginning to abate,” said Strauss-Kahn in an optimistic tone.

But Strauss-Kahn believes that the governments must take three steps in order to bring this current recession to a close. 

Firstly, financial sector reform, as “it is essential there is no way in the global economy without this,” said Strauss-Kahn. Governments must work to cleanse the banks balance sheets and attempt to re-capitalize the banks in order to prevent “zombie banks,” banks that keep “toxic” assets on their bank sheets, from taking hold and keeping nations in a prolonged recession.

Secondly, the need for a global and coordinated fiscal stimulus, and the IMF asked for a 2 percent global stimulus, and “I must say that globally the government delivered at the global level,” said Strauss-Kahn, who continued to say, “and for 2009 we [the world] has what it needs.” Not only was Strauss-Kahn pleased that the world heeded the warnings of the IMF, but also implemented them at a similar time, which marked a more unified response.

Thirdly, Strauss-Kahn wanted urgent action taken by the national governments on the financial front in order to keep the banks solvent, and to alleviate any pressure in emerging markets. “This is the area where the G-20 was boldest in tripling the resources of the IMF, its lending capacity, to an unprecedented $750 billion,” said Strauss-Kahn.

However, Strauss-Kahn had sobering news regarding the present, as he believes that no matter how much stimulus is placed into the economy this year, 2009 will be seen by future generations as a lost year of economic growth.

“2009 will almost certainly be an awful year; we expect global growth to enter deeply negative territory,” said Dominique Strauss-Kahn, the current chairman of the International Monetary Fund.

While 2009 may be a bleak year; one must not overlook the positive indicators in the economy, like the NASDAQ recently reaching its 5-month high, which illustrate the resilience and strength of the economy. 

Strauss-Kahn continued to outline the 4 desires of the IMF in order to prevent another economic crisis, they are: better regulation of financial markets, civilian watchdogs on the “corner between main street and Wall Street,” international cooperation and financial arrangements between nations in economic troubles and the IMF so the stipulations that accompany the loan are not too stringent.

“In future time people do believe the United States economy will get better and is most secure,” said Strauss-Kahn, and for this reason the dollar will continue to be seen as the last bastion of security, even during the most tumultuous times. 

In fact, the dollar has continued to appreciate against competing currencies, like the Euro and Yen, even during this crisis, which according to Strauss-Kahn illustrates how at the end of this recession, “the dollar will still be supreme.”

Strauss-Kahn concluded by harkening back to his prediction that the crisis would ease in 2010, when he said “it is time to move forward and if we do move forward in the correct way than the recovery of the global economy in the first-half of 2010 will be a correct forecast.”