IMF chief warns of dangerous new phase

‘Debt woes made worse by feeble political leadership’:

US: The head of the International Monetary Fund has warned that the economic crisis gripping Europe is entering a dangerous new phase.

Christine Legarde says Europe’s sovereign debt woes have been made worse by what she’s described as “feeble political leadership”.

“Weak growth and weak balance sheets of government financial institutions, households, are feeding negatively on each other, fuelling a crisis of confidence and holding back demand, holding back investments and job creation”.

“This vicious cycle is gaining momentum. And frankly it has been exacerbated by policy uncertainty and political lack of resolve and collective determination.

“Commercial banks in the past used to be able to access the markets themselves and borrow money but because nobody really trusts them that much because they don’t really know which one is going to go bush or which one is solvent, nobody wants to lend to them”.

“Now the good news is that these banks have actually got some money now to last them until the end of the year.The bad news is who let it get so bad in the first place?”

It’s a clear indication from them who are the two clear leaders from an economy point of view in that euro zone of 17 members, that the future of Greece is within the euro zone”, she said. The World Today