IMF wisdom, or how Aristotle came to predict a W-shaped global recovery

Sometimes I just have to wonder about macroeconomics and macroeconomists, the latter being aplenty in Washington, DC where the IMF has its main office.

In effect, Anoop Singh is saying that the global recovery is not yet there.  But it’s an Either Way I Win Story.  If it’s not there, it’s the fault of all these officials who don’t believe in Keynesian economics.  If it’s there, it’s because they followed IMF staff advice on the “zombie” state of many industrial-country banks. But doesn’t That take a long while?  So it isn’t really a W but more like half a W, with a horizontal.

Of course, the lead story is how Japan is way ahead in solving bank crises.  If so, why is Japan not the main engine of recovery at least in Asia?

Claus Vistesen gives an example of the sober (or sobering) outlook on the Japanese economy. Even the IMF staff cannot disagree because they also claim that Asia will go nowhere until it can export its way out, and that applies as well to Japan (less so to China and India, of course).

Moral of the story:  If the IMF staff is right, don’t bet your bottom investment dollar on Asian emerging markets.  But seriously, where else would an investor go?  T-bills?  Sounds like (good old) Taleb advice!  I’d say (with a little tongue in cheek) that the Buffett-PIMCO US dollar story is perhaps on its last legs.

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