by Sudeep Reddy
Wall Street Journal
January 23, 2012
The International Monetary Fund is elevating its warnings about the risk of a global economic meltdown triggered by the euro-zone debt crisis. In a speech today in Berlin, IMF managing director Christine Lagarde says the world could see a repeat of the Great Depression if Europe doesn’t take stronger action.
Without proper measures, she says, “we could easily slide into a ’1930s moment.’ A moment where trust and cooperation break down and countries turn inward. A moment, ultimately, leading to a downward spiral that could engulf the entire world.”
Lagarde’s message includes appeals for more money from Europe (for its own bailout fund) and from the rest of the world (to boost the IMF’s war chest).
Her latest call to action comes as the IMF prepares to downgrade its economic outlook on Tuesday and presses European nations to put more money behind fighting the crisis. The IMF told its board members last week that the 17-nation euro zone needs to double the size of its existing firewall to at least €1 trillion to guard against spreading turmoil. Other nations, including the U.S., in recent months have offered a similar message about vastly expanding the size of the firewall.
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