The economic crisis is worldwide and requires international cooperation to deal with. So why are U.S. politicians acting like its just a domestic issue that requires domestic governmental action. The global markets have become bigger than any one governments ability to regulate. In other words, America no longer controls it's economic destiny:
The world economy will slow sharply this year, according to an International Monetary Fund forecast, with the United States sliding into a recession amid housing, credit and financial slumps.
The International Monetary Fund, in a World Economic Outlook released Wednesday, slashed growth projections for the United States - the epicenter of the woes - and the global economy as a whole. Even so, growth in China and India will remain strong, even as the two nations are expected to post lower growth rates in 2009.
Economic growth in the United States is expected to slow to a crawl of just 0.5 percent this year, which would mark the worst pace in 17 years, when the country last suffered through a recession, the global finance body said. The United States will not fare much better next year; the IMF projected the U.S. economy will grow by a feeble 0.6 percent in 2009, when measured by an annual average.
"The U.S. economy will tip into a mild recession in 2008 as the result of mutually reinforcing cycles in the housing and financial markets," the IMF said.
Looking at other countries, the IMF trimmed its projection for Germany, with economic growth slowing to 1.4 percent this year and weakening to 1 percent in 2009. In Britain, growth will slow to 1.6 percent this year and next. France also will see growth decelerate to 1.4 percent this year and 1.2 percent next year.
Japan's economy will expand by 1.4 percent this year and 1.5 percent next year, which would mark a loss of momentum from last year. Canada's growth would slow to 1.3 percent this year and pick up slightly to 1.9 percent next year.
Global powerhouse China, which barreled ahead at an 11.4 percent pace last year, would see growth moderate to 9.3 percent this year and then strengthen a bit to 9.5 percent next year. India, which grew by a blistering 9.2 percent last year, is expected to grow by 7.9 percent this year and 8 percent next year. Russia, which logged growth of 8.1 percent last year, will see growth moderate to 6.8 percent this year and then 6.3 percent next year.
While the IMF is worried about the dangers of weakening global economic growth, it also expressed concern about the potential for inflation to heat up around the world, given sharp increases in energy and other commodity prices. "Risks related to inflationary pressures have risen," the fund said.
Many private economists and members of the U.S. public believe the country has already fallen into its first recession since 2001. For the first time, Federal Reserve Chairman Ben Bernanke acknowledged last week that a recession was possible.
And it doesn't help that oil prices keep setting new record highs:
The upward trend in energy prices showed no sign of abating Wednesday as gasoline set yet another record at the pump and crude oil topped $112 a barrel for the first time in the futures market.
The national average price of a gallon of regular unleaded gas rose 1.2 cents to a record $3.343 a gallon, according to a survey of gas stations by AAA and the Oil Price Information Service. With the peak summer driving season still to come and gas following crude higher, the fuel may well reach the retail price of $4 a gallon that the Energy Department has been forecasting.
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