Snappy newsletters. Simple Facebook sharing. Spirited comments. Sweet features are waiting… GET THEM NOW!

IMF: Blame Europe for Longer Recession

EU policy blunders likely to result in longer slowdown for rest of world

By Rob Quinn, Newser Staff

Posted Apr 23, 2009 5:41 AM CDT

(Newser) – The European economy will sink deepest out of all global economies, bounce back slowest—and delay recovery for the rest of the world to boot, according to the IMF's latest forecast. The agency predicts the EU's economy—at $18 trillion, nearly a third of the world's total—will shrink 4% this year and contribute to a longer slowdown in the US and Asia, reports the Wall Street Journal.

The bleak prediction is likely to come as a blow to many of the EU's 27 governments, whose leaders have blamed slowdowns at home on the US. The IMF, however, says that more than half of European banks losses are homemade. Some analysts say Europe's less aggressive stimulus measures are to blame, and note that having 27 different sets of banking regulations will make it tough for Europe to take unified action to fix its banking system and boost lending.

[Images (3)]

[Quotes (1)]

Construction worker Antonio Montoya, 54, stands in line at the employment office in Almeria, southern Spain. (AP Photo/Sergio Torres)

A man exits an employment agency in Madrid, Spain. (AP Photo/Victor R. Caivano)

A worker in a mail-order house demonstrates against job cuts in Roubaix, northern France, last month. (AP Photo/Michel Spingler)

« Prev« Prev | Next »Next » Slideshow

At some deep level the European banks and policy makers don't get it: that they helped cause the crisis, that their slow response is part of the reason that the economy is bad, and that more is
on the way.
- Ex IMF chief economist Simon Johnson

« Prev« Prev | Next »Next » Slideshow

To report an error on this story, notify our editors.

More Newser Stories

Greece Hires Out Ancient Ruins to Raise Cash

The Acropolis, the temple of Delphi, and Parthenon going for $2,070 a day

(NEWSER) - Debt-stricken Greece is taking an unprecedented step and exploiting its own magnificent history to raise cash and help its crippled economy. The Guardian reports that Greece is offering up its architectural masterpieces, including the Acropolis, the temple of Delphi, and the Parthenon, as backdrops for movies, commercials, and photo shoots—for $2,070 a day. The culture minister promises to be selective, but the plan is still controversial as the sites are considered sacred cultural landmarks. More»

Berlusconi Quits; Hecklers Shout, 'Buffoon!'

Musicians perform chorus of Handel's 'Alleluia'

(AP) - Italian Premier Silvio Berlusconi resigned today after parliament's lower chamber passed European-demanded reforms, ending a 17-year political era and setting in motion a transition aimed at bringing the country back from the brink of economic crisis. A chorus of Handel's "Alleluia," performed by a few dozen singers and classical musicians, rang out in front of the president's palace as thousands of Italians poured into downtown Rome to rejoice at the end of Berlusconi's scandal-marred reign . More»

Greece Passes 2nd Austerity Bill

Final hurdle before receiving bailout funds now cleared

(AP) - Greece has bought itself some time to deal with its crippling debt crisis after lawmakers cleared the final hurdle for crucial bailout funds to be released, which will prevent the country from defaulting next month. The EU and IMF had demanded Parliament pass two bills— an austerity law and a second bill detailing how it will be implemented—before they approve a $17.3 billion installment from the country's $159 billion package of rescue loans. Parliament passed the second law by majority vote today. More»

Portugal Reaches Bailout Deal

Will be worth about $116 billion over three years

(NEWSER) - Portugal pleaded for a bailout , and now it's got one. The hard-up nation has negotiated a bailout from the EU and IMF worth about $116 billion. The three-year loan is a "good agreement that defends Portugal," according to caretaker PM Jose Socrates, who added that Portugal would receive an extra year—until 2013—to cut its government deficit below the EU's 3% ceiling. But the AP notes that the extension was necessary after the country disclosed a much larger than expected budget shortfall for last year. More»

Did Bankers Go to Jail for Causing Great Depression?

No, although a couple were charged and some were embarrassed

(NEWSER) - The government could soon prosecute a few Wall Streeters who allegedly played a role in the financial crisis, and the commission that uncovered those at fault was modeled on a similar probe after the Great Depression. So did anyone who precipitated that collapse ever go to jail? Nope, writes Brian Palmer in Slate ’s Explainer column: “The rampant speculation and eventual crash of 1929 weren't caused by fraud or illegality, but by unreasonable optimism and loose financial regulation.” More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website

IMF: Blame Europe for Longer Recession