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Friday, October 11, 2013

Financial Leaders Gather for IMF and World Bank Meetings in Washington

This week, finance ministers, central bankers, scholars and industry leaders are arriving for the annual meetings of the International Monetary Fund and the World Bank.

But instead of being welcomed into the straightened-up home of the world’s superpower, guests are finding a capital in disarray: the federal government is partly shut down, and a debt default seems imminent.

Assuming the IMF and World Bank guests can look past the local mess, what will they be seeing out on the horizon for the global economy?

Guest

Transcript

MEGHNA CHAKRABARTI, HOST:

From NPR and WBUR Boston, I'm Meghna Chakrabarti, in for Jeremy Hobson. It's HERE AND NOW.

When you invite some guests over, you want to make a good impression, right? You tidy up. You put out your best flatware. Well, this week, the nation's capital is welcoming some special guests. Finance ministers, central bankers and industry leaders are in Washington for annual meetings of the International Monetary Fund and the World Bank. But instead of being impressed by a clean and polished Washington, the guests are finding the capital in disarray, with the federal government partly shut down and no agreement yet to avoid a debt default. So what are our foreign guests saying about us?

Joining us from Washington with more is Marilyn Geewax, senior business editor for NPR. Hi there, Marilyn.

MARILYN GEEWAX, BYLINE: Hey. Hi. How are you doing?

CHAKRABARTI: I'm doing well. So you went over to the IMF and World Bank meetings. What are people saying?

GEEWAX: Oh, it's not pretty. The - I heard an awful lot of worry, dismay. You know, people really are just shaking their heads. They can't believe that the world's greatest economy, this example of democracy, would be doing this. They look to the United States, really, to provide stability, safety for global markets. They all invest in our treasury, securities. And they really need the U.S. dollar to serve as a kind of world reserve currency so - that helps smooth out international transactions. It really matters to them.

So these foreign ministers look at the United States and they can't believe that we're creating this kind of uncertainty. You know, they don't forget that five years ago - exactly five years ago, in the fall of 2008, a global financial crisis began basically because of U.S. mortgage debt. American homeowners were defaulting on their house payments, that was making their mortgage-back securities fall apart, and that caused a change reaction all over the world.

We're finally getting back on track with some growth. And here we are, threatening global stability again. This time, instead of not paying our mortgage debt, we're looking at government debt. And really, I would say, 99 percent of economists would say that if that happened - if it were to happen - that we defaulted on the debt, it would make the 2008 recession look very mild.

CHAKRABARTI: Right. I mean, and then...

GEEWAX: So people are angry. They're nervous.

ROBIN YOUNG, HOST:

I can only imagine because when we say that a debt ceiling default would cause a global financial catastrophe, that's them. That's these people that we're talking about.

GEEWAX: Right, right.

CHAKRABARTI: So what do they want to see happen?

GEEWAX: Well, number one, they just want this debt default issue off the table. And, obviously, there are all sorts of negotiations going on in Congress right now. But our guests are here. They're watching right this minute. And so far, it isn't resolved. So their main message was not only, get your house in order right now, but, please, do something so that we don't keep facing this. We don't want to ever hear about this again.

CHAKRABARTI: Now, I understand that there has also been a global economic forecast released? What is - what does it say?

GEEWAX: Yes, the IMF - their main goal, you know, of course, is eradication of poverty. And they want to encourage economic growth around the world. So they study this very carefully. They collect numbers from around the world. And just a few months ago, they were saying that this year looked like global growth was around 3.2 percent. But in the recent months, things have been slowing down a little bit. And now, they're saying, this year, it's only 2.9 percent. So we're sliding back.

And then, again, their forecast for 2014 was supposed to be fairly good at 3.6 percent growth - rather 3.8. And now, they ratcheted it back down a couple of notches, down to 3.6. So that's disappointing. You don't want to see the numbers easing down. You want to see growth increasing. So there's - there were only a few things, so there was a bright spot out there.

CHAKRABARTI: OK. So, Marilyn, in the last, like, 15 seconds we have, help me out here. Give me some bright notes.

GEEWAX: Well, the bright thing is Europe is a little better. It's not great but, you know, it was in such terrible shape because of the Greek debt crisis. And now, it looks like growth next will be, maybe, 1 percent. So better growth than recession.

CHAKRABARTI: Oh, it's interesting times when Greece is looking good in the world economy.

(LAUGHTER)

GEEWAX: Right, right.

CHAKRABARTI: Marilyn Geewax, senior business editor at NPR. Thank you so much.

GEEWAX: Oh, you're welcome.

CHAKRABARTI: Back in a minute. HERE AND NOW. Transcript provided by NPR, Copyright NPR.


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