Robert Zoellick Is Unsatisfied with the Global Economy
World Bank chief warns we're going into a "danger zone"
No one is looking forward to the market's opening bell on Monday. After the Dow's insane behavior last week saw it finish down by only 1.5 percent, we hoped things might calm down this week and the markets wouldn't be so volatile. Some, it seems, aren't so optimistic. Robert Zoellick, president of the World Bank, spoke at the Asia Society's annual dinner in Australia on the weekend and said world markets are heading into "a new danger zone," BBC News reports. "What's happened in the past couple of weeks is there is a convergence of some events in Europe and the United States that has led many market participants to lose confidence in economic leadership of some of the key countries," Zoellick told attendees.
Zoellick said American and European leaders weren't acting quickly enough to resolve major economic problems. He said the global economy was going through a "multi-speed recovery" and Western countries weren't moving fast enough. The Guardian notes Zoellick's views on the States and Europe:
Zoellick said that problems related to sovereign debts and uncompetitive economies in the 17-state eurozone had often been dealt with "a day late", stoking investor concerns that governments and central banks were not getting on top of multiple crises or even approaching them in the right way. "That [worry] has accumulated and so we're moving from drama to trauma for a lot of the eurozone countries," he said.
On the US, Zoellick said the fundamental strengths of the American economy were not the main concern, but "frankly that markets are used to the United States playing a key role in the economic system and leadership".
He also said Americans were focusing too much on discretionary spending cuts, instead paying more attention to sexier, much larger line items like Social Security. "Until they make an effort on those programmes, there is going to be continued scepticism about dealing with long-term spending," he said. Zoellick said the recent economic turmoil in the States and in Europe has pushed the global economy into a "new danger zone," words he "doesn't use lightly."