The IMF and the Bond King predict a new global crisis: there’s not much time left

Following is our translation from Ria Novosti of a keen analysis of the state of the US economy with commentary by Vince Dhimos. Almost invariably, Russian analyses of the US economy are drawn almost exclusively from reports and statements by Western experts and renowned agencies (the IMF and CFR in this case). This is a little-known fact that Western journalists and politicians will, of course, not tell you. And it is a good reason for Western news consumers to read the Russian press. When I say Russian press, I am not referring so much to Sputnik, RT or the like news agencies that publish in English. Unfortunately, the kind of analysis you will find below is rare in these news sources for popular consumption. I hasten to add that they are nonetheless valuable and deserve your time and attention. I guess what I am trying to say is that readers of our translations in New Silk Strategies are a bit better informed than readers of exclusively Western sources, or of Western and/or Russian sources written in English only. Of course, being well informed about the down side of US policies and the merits of Russian policies can have its drawbacks in an age when hatred and scorn of Russia is all the rage. But just remember, this is a manifestation of temporary collective insanity and I solemnly promise you it will pass.
 
It looks like CFR chairman Richard Haass has recently gotten religion. We had presented a translation featuring Haass’ remarkable confession that the US “cannot defeat Russia.” Now we find him in deep contrition regarding the US economy, predicting an imminent crisis made in USA.
 
QUOTE:
 
“… the chairman of the Council on Foreign Relations, Richard Haas, in his testimony given as an expert before the United States Senate, stated: "Increasing public debt will accelerate the demise of the dollar as a world currency. This will happen as a result of the loss of confidence in American financial policies, but also because of the associated fear that the actions that the US would need to take to finance its public debt would be in conflict with what the States would need to do to manage American and, indirectly, the world economy."
 
So why the sudden brutal honesty on the part of US experts – who are normally expected to present a rosy view of US policy -- regarding the soundness of the state of the Union?
 
Author Ivan Danilov may have nailed it when he said:
 
It looks like every financial market player or official from a supranational financial organization is trying to stake out the right in advance to say he warned everyone, but no one listened.
 
The IMF and the Bond King predict a new global crisis: there’s not much time left
 
Ivan Danilov
 
Every Russian who remembers the “roaring 90s” at least a little is familiar with the activities and ideology of one of the most influential international financial organizations, that is, the International Monetary Fund, on whose enslaving loans the entire Russian economy depended at one time. The terribly humiliating negotiations of the Russian authorities and the then head of the IMF, the French economist Michel Camdessus, at that time riveted the attention of Russian television viewers and occupied the place of honour in Russian newspapers, because salaries and pensions depended on the decisions of Camdessus. Decades have passed, and Russia has changed a lot, but the IMF has remained one of the main strongholds of the global financial system, its leaders and experts being something like the high priests of the economic cult of the Washington Consensus. Waiting for them to criticize the existing global financial system or present a negative outlook on the Western or specifically the American economy is about the same as waiting for sleet in the Sahara. That is, theoretically everything is possible, but such situations clearly fall in the category of natural anomalies.
 
And yet. The First Deputy Managing Director of the International Monetary Fund, David Lipton, speaking at the annual conference of the American Economic Association, made some tough statements, pointing out that the world is not ready for a new crisis, and readiness should be dramatically strengthened: "A new recession (i.e. an economic contraction. - Ed.) is somewhere beyond the horizon, and we are less ready for it than we should, be <...> and are ready even less ready than during the last crisis in 2008” (as quoted in the Financial Times).
 
Bad omens. The global crisis could begin this year
 
He also complained that under these conditions "countries should pay attention to keeping their economies on a stable trajectory, creating reserves of strength, rather than engaging in struggles with each other."
 
The British edition of The Guardian quotes several more interesting statements from Mr. Lipton: “As we have said, the roof of the house needs to be repaired while the sun shines. But, like many of you, I can see storm clouds gathering, and I’m afraid that work on preventing the crisis has not been completed. <...> We need to be worried about the potentials of monetary policy."
 
Note: the high-ranking IMF leader proceeds from the fact that “many” from his circle of contacts already know that the world is not ready for the next crisis and that storm clouds are already “gathering.” But his phrase regarding doubts about the "potentials of monetary policy" needs to be translated from the American bureaucratic to spoken Russian, and it looks something like this: "Last time we, that is, the economic and administrative elite, saved the US from a crisis by massive printing of money and giving the US government and business the opportunity to borrow money at near zero interest. But this time I have serious doubts that this trick will work." Moreover, Lipton stressed that the already achieved high levels of debt burden in various countries limit their ability to use fiscal measures to stimulate the economy.
 
 
 
Strikingly, the same thesis, only in much more blunt form, was expressed in the annual presentation of the head of the large investment fund Double Line Capital, Jeffrey Gundlach, better known by his professional nickname the Bond King, conferred upon him by American journalists for his inexplicable ability to predict price fluctuations of various debt instruments. Gundlach described the US government debt as follows: "The ratio of federal debt to the US gross domestic product is an absolutely horrible situation." As an illustration of his assessment, he cited a graph of the growth of government debt relative to GDP and asked a rhetorical question: "Do we (that is, the American economy. Ed. note) are we growing at all or is everything just debt-based?"
 
That is, top US experts from the international financial structure and the private sector indicate that the current state of the American and the global economy as a whole is what is called a "catastrophe waiting to happen." That is, they are much more pessimistic than many Russian enthusiastic supporters of the theory of the "unsinkable American economy." One of the most influential American think tanks, the Council on Foreign Relations (Council on Foreign Relations) issued a special report on the state of American public debt, which says: "There is a growing risk that Washington's creditors, many of whom are foreign creditors (this is a fat hint at China – Ed. note), may suddenly lose faith, demand greater profitability (for American debts. - Ed. note) and provoke a budget crisis. "
 
Moreover, the chairman of the Council on Foreign Relations, Richard Haas, in his testimony given as an expert before the United States Senate, stated: "Increasing public debt will accelerate the demise of the dollar as a world currency. This will happen as a result of the loss of confidence in American financial policies, but also because of the associated fear that the actions that the US would need to take to finance its public debt would be in conflict with what the States would need to do to manage American and, indirectly, the world economy. "
 
 
 
It is starting to sound like panic - especially since in recent months, representatives of various private and supranational financial structures, from billionaire Ray Dalio to the Bank for International Settlements, have managed to speak in the same vein about the American government debt or about the unpreparedness of the world system.
 
There are reasonable doubts that they all can accurately predict the exact moment of onset of the crisis, but it is already hard to suppress the notion that they consider it to be inevitable. And every financial market player or official from a supranational financial organization is trying to stake out the right in advance to say that "he warned everyone, but no one listened." It would be strange to believe in a bright future of the Western (and global) economy, when those who were supposed to be optimists no longer believe in it. Every time another American politician threatens the world, as if relying on American economic power, we must remember that this is, by and large, a performance on the captain's bridge of the Titanic, which will face a financial iceberg.