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Flap’s Links and Comments for August 18th on 08:57

These are my links for August 18th from 08:57 to 09:01:

  • Morgan Stanley Cuts 2011 Global Growth Forecast – US and EU Close to Recession – Morgan Stanley slashed its global growth forecast for 2011 and 2012, saying the U.S. and the euro zone were "dangerously close to a recession", and criticized policymakers in Washington and Europe for not acting more decisively to contain the sovereign debt crisis.

    The bank cut its global gross domestic product growth forecast to 3.9 percent from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.

    "Our revised forecasts show the US and the euro area hovering dangerously close to a recession — defined as two consecutive quarters of contraction — over the next 6-12 months," Joachim Fels, who co-heads Morgan Stanley's global economics team, said in a research note dated Wednesday.

    That was not the bank's base case scenario, he said, noting the corporate sector still looked healthy and lower inflation will ease pressure on consumers' pocketbooks, while central banks such as the Federal Reserve and European Central Bank could try to loosen policy further.

    Still, "it won't take much in the form of additional shocks to tip the balance," he added.

    "A negative feedback loop between weak growth and soggy asset markets now appears to be in the making in Europe and the US."

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  • If Only Improving the Economy Was Like Playing Space Invaders – I'm sure the economic benefits of faking an alien invasion will inspire a few PhD. dissertations, but let's be serious and do something to actually improve economic growth like reforming the regulatory system which, according to the Wall Street Journal, cost the Ruby liquefied natural gas pipeline to be only 23% over budget, or taking Sen. Rob Portman's advice and passing the pending free trade agreements with South Korea, Colombia, and Panama.

    Let's walk away slowly before Krugman starts speculating about how random X-Files episodes could fix the European Union's debt problems.

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