Must read this, hate for this to go back to $1 and lose 47%IMF...

Must read this, hate for this to go back to $1 and lose 47%


IMF Meetings Should Target Double-Dip Risk: Mohamed A. El-Erian

By Mohamed A. El-Erian - Sep 15, 2010 Bloomberg Opinion

Many topics are being teed up for next months annual meetings of the International Monetary Fund and World Bank in Washington, a gathering that will draw about 190 country representatives. There is a substantial risk of disappointment, one that would be detrimental to the welfare of billions around the world over time.

This risk can and should be minimized. To do so, the natural inclination for complexity must urgently be replaced by focused simplicity. This can be achieved by placing just one question on the agenda:

Why are economic policies in industrial countries proving so frustratingly ineffective?

Already, there are too many examples of policy outcomes that have fallen well short of expectations.

In the U.S. alone, just look at the high unemployment rate that persists in the face of unprecedented fiscal stimulus and the extended use of unconventional monetary policy. Witness the de-risking of household investment portfolios as individuals sell equities in favor of cash and bonds. Consider the massive cash balances being hoarded by large companies and banks.

Normally, cash burns a hole in the pockets of Americans, especially when the Federal Reserve is aggressively using low interest rates to push us all to assume more risk. Not today.

In Europe, dramatic policy actions have failed to calm concerns about solvency risk in peripheral countries such as Greece, Ireland, Portugal and Spain. Risk spreads in these countries are worse than they were a few months ago, even after the much-heralded stress tests of banks, previously unthinkable support from the European Central Bank and exceptional funding from other governments and the IMF.