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- April 1, 2011: Vol. 5, Number 4

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This Could Get Messy: The World Economy Is Facing Challenges

by David Swan

In an article in the February 2010 edition of this publication (but written in December 2009), I suggested that a European country — either from the euro zone or the United Kingdom — might have to invite the IMF to help sort out its debt-related problems. As it turned out, it was two countries in the euro zone, Greece and Ireland, that needed help, and as we move deeper into 2011, a number of others look decidedly shaky.

There are three main concerns facing the world economy at the beginning of this new decade, namely the US budget deficit, commodity prices and (further) euro contagion. They are all interrelated and the first could end up being a bigger version of the last. The immediately pressing concern is the last, due to the very current nature of the problem and my belief that what happened in Greece and Ireland last year could be a sideshow compared to what could happen in the euro zone if the policymakers get it wrong in 2011.

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