- Western banks have become conservative in lending to consumers
- Western consumers are have increased savings (propensity to spend has reduced)
- Western Banks are using cheap govt funds for speculating in emerging markets ( running rogue again)
- The govt. Fiscal measures have temporarily reversed the recession downslide (cash-for-clunkers, TARP etc..)
- The Western economies have no fiscal space (US national debt is 86% of its GDP) to keep up the stimulus
- Western consumers cannot pick-up the mantle of consumption (as evidenced by above points)
- The only solution is Rebalancing . (Indians and Chinese have to consume instead of Americans)
| Krishna Srinivasan Advisor and Chief Of Multilateral Surveillance Unit International Monetary Fund (IMF), USA |
Krishna Srinivasan is currently an Advisor and the Chief of the Multilateral Surveillance Unit in the research department of the International Monetary Fund (IMF), and is one of the key contributors to the IMF’s ongoing work on sovereign wealth funds (SWFs). He has been with the IMF since 1994 and has served in various capacities across many departments, including the international capital markets and the policy development and review departments. Prior to joining the IMF, he was an Assistant Professor at Indiana University, from where he secured his PHD in International Finance in 1993. He has also been a Consultant to the World Bank and the Planning Commission in India. He has published several papers both at the IMF and in academic journals.