Guardian
September 25, 2011
Parker's Piece is an open space that separates town and gown in Cambridge. Colleges sit on one side of the green, residential streets on the other. There is a lamp-post in the middle, which in the 1970s had a message scrawled on it for the benefit of students entering the real world: reality checkpoint.
The global economic community arrived at its own reality checkpoint late last week. Against a backdrop of falling financial markets and rapidly cooling activity, there was a sense of urgency at the annual meeting of the International Monetary Fund (IMF). "Fear is a great motivator," one participant said. "And there is much to be frightened about."
Recovery from a crisis that exploded deep within the financial systems of the most advanced countries and left an overhang of indebtedness was always going to be long and difficult.
But the situation has been made far worse by blundering policymakers who have made a series of mistakes. The list includes, in no particular order, the failure to resolve the Greek debt crisis, the infantile squabbling on Capitol Hill over the US budget, the two hikes in interest rates by the European Central Bank this year, China's refusal to allow the yuan to be revalued to an appropriate level on the foreign exchanges, allowing the benefits of quantitative easing to be squandered on speculation, the German reluctance to expand domestic demand, and George Osborne's deficit-reduction zeal.
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