G20 utters, All izz not well!!

Born out of necessity in the dark hours of 2008, to bolster global economy, the G20 summit in Toronto on Sunday gave a whiff of irrefutable crises with majority of the nations fighting against their plummeting GDPs. A double dip recession is inevitable as Europe appeared edgy with France and Spain facing unstoppable strikes against the adoption of austerity measures, and the futile efforts of the European leaders to restore confidence in the Euro dented by the Greece crises. A double dip recession, also called a W-shaped recession, occurs when an economy goes into recession, comes out of it shortly afterwards, and then, before the recovery can stabilize, falls back into recession. In this scenario, GDP growth rates, charted on a graph, resemble a W.

World’s influential leaders took different paths towards assuring lasting growth and making their banking systems safer, a reflection of the uneven and fragile economic recovery in countries.The Group of 20 rich and developing nations tried to balance their contrasting priorities by pledging to halve budget deficits by 2013 without stunting growth. They left room for countries to move at their own pace and adopt “differentiated and tailored” policies that match national economic or political priorities, a reversal from the unity of the previous three summits.

According to a recent news, the message from the weekend’s G20 summit can be easily summed up as “Do your ownthing.” The cracks are beginning to show in the G20. Developed and developing nations were united when confronted with the collapse of world trade and the shriveling of industrial output. But they are finding it harder to keep the unity intact now that the immediate crisis is over. The Americans cannot persuade the Europeans to hold off from fiscal tightening until the recovery is assured; the Germans and the British think the risks of a sovereign debt crisis are far more serious than the possibility of a double-dip recession. Then, the summit revolved around a long-standing cause of friction–China’s unwillingness to allow its currency, the Yuan, to appreciate to a level that might help reduce its trade surplus with the US.
The G20 was meant to be rather more than a crisis-resolution body. It was meant to be an institution that, through the inclusion of China, India and Saudi Arabia, could better deal with the chronic imbalances in the global economy that caused the crisis in the first place.

According to GUARDIAN NEWS SERVICE : DANGER IS CLEAR
Some of the bullets they have pointed out :
■ Even before the sovereign debt crisis erupted this spring, there were some tentative signs that the recovery that began in the spring of 2009 was losing momentum.
■ The US has just revised down its growth for the first quarter and has yet to see the pick-up in the labor market that it enjoyed in previous recoveries.
■ Europe’s expansion over the winter was barely perceptible.
■ China and India have been chugging along, but may lack the heft, by them- selves, to pull the world out of trouble.
■ The sluggish recovery has meant that core inflation in the US and eurozone is already below1%.
■ That, in the absence of any sign of a robust recovery, is close to deflation.
■ Central banks are terrified by the prospect of deflation because it raises the real level of debt, it would hurt consumers, businesses and –crucially, the banks.
■ It could lead to panic, political pressure to ease fiscal restrictions and, ironically, hyper-inflation.
■ Pressure on heavily-indebted banks intensifies as deflation becomes a reality in the US and Europe in first half of 2011.
■ Second leg of the financial and economic crisis pans out in the second half of 2011.
■ G20 gets serious in early 2012.

HOW INDIA HAS FARED TILL NOW
When the global financial crisis first broke out in September 2008, the developed world’s response was to pump billions of dollars into the system. India applauded. This would mean the West would continue to buy its exports, foreign capital would keep flowing in and allow the Indian economy to chug along. At the Toronto G20 summit, the world addressed the global financial crisis 2.0. Parts of the world economy are now drowning in the money pumped into the system. The euro-zone crisis and Japan’s “forever recession” were the best known. Prime Minister Manmohan Singh said that India agrees to the fact that some of this money needs to be pulled back. But if too much is done too quickly, the economic free-fall, that the world saw right after Lehman Brothers collapse, could return. Ultimately, India’s goal is to ensure that the earlier G20 consensus, under stress, did not fall apart. Without coordination, the world economy would go from bad to worse. “To meet our ambitious development targets, it is necessary that the global economy continue to recover in a stable and predictable manner,” said Singh.

Are we going to face a recession shortly??Will the dark clouds of unemployment revisit??Well, a lot depends on emerging economies and developing nations like India and China now!!Hope we don’t face the crises again, that we witnessed a few months back in 2008....