World Bank Says Fighting Poverty is an Investment
"We don't see the focus on poverty as about charity, but rather about investment in future growth."
World Bank President Jim Yong Kim outlined his vision of what the multilateral lender should do, focusing sharply on cases of significant poverty. Dr. Kim said economic-growth expectations were being scaled back everywhere but that he was determined to prevent the substantial gains made by emerging economies over the past decade from being wiped out. "Every country has to look at its public spending and see what works," he said.
The World Bank had their annual meeting in conjunction with the IMF in Tokyo this week and Dr. Young's message is no longer the opposite of Christine LaGaurd's, who has essentially come around to thinking that austerity is no longer the answer – pushing for debt write-downs for Greece, Portugal and Spain as well as backing Greece's request for two more years to meet its fiscal targets. “We will spare no time, no effort to actually do as much as we can in order to help Greece,” Lagarde said. The fund's purpose is “to make sure that Greece is back on its feet, that it can one day return to markets, that it doesn't have the need for constant support.”
Meanwhile, Spain was downgraded to one notch over junk (BBB-) with a negative credit watch by S&P last night but it was more of a "buy on the news" event this morning as it's certainly not a shocker that Spain's paper is worthless without the ESM backing. Yields on 10-year Spanish bonds shot up 9bps to 5.89% but stopping short of 6% was considered a positive. Spain is the poster child for the idiocy of using austerity to combat debt (ie. the Romney plan) as squeezing the economy by cutting Government spending has actually worsened the country's fiscal position, which has led to calls for greater austerity but these calls come from bankers and bondholders – who just want to get paid, no matter the long-term damage done to the borrowers.
“There is no chance that Spain will hit its targets,” said Megan Greene, director of European economics at Roubini Global Economics LLC, “The deficit targets are economic suicide.' “Even as you cut, the gap between spending and revenue collection keeps getting larger,” said Jonathan Tepper, a partner at research firm Variant Perception. “We're…
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