International Monetary Fund meeting dominated by fears that US job crisis will add to currency tensions with China
Larry Elliot
Guardian
The International Monetary Fund was seeking to defuse growing tensions over global currencies yesterday amid fears that the US will respond to its stubbornly high unemployment figures by slapping tariffs on Chinese goods.
With China refusing to bow to pressure from the US and Europe to revalue its currency, the annual meeting of the IMF was dominated by concerns that Washington is on the point of losing patience with Beijing. Finance ministers and central bank governors gathered in a gloomy mood, expecting no quick fix to the problem – despite a warning from the IMF that failure to tackle the global jobs crisis could threaten democracy.
Latest figures for the American labour market, released on Friday, showed 95,000 jobs were shed in September, adding to the problems of the Obama administration ahead of next month’s mid-term elections.
The poor outlook for jobs in the US has alarmed the Federal Reserve, which is expected to announce a fresh wave of quantitative easing next month, and added extra spice to the row between Washington and Beijing.
Dominique Strauss-Kahn, the IMF’s managing director, warned that “we face the risk of a lost generation”, adding: “When you lose your job, your health is likely to be worse. When you lose your job, the education of your children is likely to be worse. When you lose your job, social stability is likely to be worse – which threatens democracy and even peace. So we shouldn’t fool ourselves. We are not out of the woods yet. And for the man in the street, a recovery without jobs doesn’t mean much.”
Tim Geithner, Obama’s treasury secretary, said: “The United States believes that global rebalancing is not progressing as well as needed to avoid threats to the global economic recovery.
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