Global Financial Stability Report published by the International Monetary Fund (IMF) makes clear that the threat of a complete meltdown of the international financial system remains. And the dangers of such an event are increasing. The International Monetary fund has reports that the global financial system is going into a state of instability. The most immediate concern is the Euro zone which is going in the opposite direction of all analyzed and projected currency flow. Instead of liquid money being recycled back into the economies of the needy “Periphery” Euro zone it is all being stored in banks in the core Euro zone economy. This is defeating the entire purpose of creating the euro which was to have a stabilizing affect across all the countries.
If this fragmentation of the Eurozone economy continues it will mean an attack on the global economy. As well as the Euro zone, The IMF has commented on Japan and The United states as two key factors towards the growing instability of the global financial system, the biggest concern being Japan because it is so close to the situation in European countries. If domestic Japanese banks keep investing in government bonds and at any point there was a fall in bond prices then the capital loss incurred by the banks would lead to another Euro zone like crisis.
Because of these perceived threats the IMF is encouraging austerity measures and putting the burden on the workers. They are framing these measures in such a way as to hide the fact that the burden will be placed on the working people.
Title: IMF report points to growing financial instability
Author: Nick Beam
Source: World socialist Website, October 12, 2012
URL: http://www.wsws.org/articles/2012/oct2012/gfsr-o12.shtml
Student Researcher: Rory Scotland, Sonoma State University
Faculty Evaluator: Peter Chamberlin, Sonoma State University