Strauss Kahn IMFAP

IMF Chief Dominique Strauss-Kahn has warned that the currently unstable and varied nature of the global recovery could lead to civil war within countries (via Ambrose Evans-Pritchard and @alea_).

The potential for conflict stems from high levels of unemployment around the world, and a sudden surge in workers entering the workforce.

From the speech:

The sharp rise in global unemployment is a major social problem. If you lose your job, you are likely to suffer from poorer health and shorter life expectancy, and your children are likely to perform worse in school. And where people are without hope of finding a job, society as a whole suffers—which in turn can threaten political stability.

But it also has to do with the structure of the global economy, with the U.S. being relied on for consumption, and China and Germany exporting their way to success.

From the speech:

Looking more closely, we see a worrying development: the pre-crisis pattern of global imbalances is re-emerging. Growth in economies with large external deficits, like the U.S., is still being driven by domestic demand. And growth in economies with large external surpluses, like China and Germany, is still being powered by exports. As the IMF warned in the years leading up to the crisis—and as the G-20 has emphasized—these global imbalances put the sustainability of the recovery at risk.

Strauss-Kahn's conclusion is that, if these global imbalances in the economy aren't addressed, and we don't see structural changes within economies to create more job opportunities, then war may result.

From the speech:


Stark warnings from the IMF chief, suggesting the instability in Egypt and Tunisia may just be the beginning.

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