- Fed Hike Will Unleash “Panic And Turmoil” And A New Emerging Market Crisis, Warns World Bank Chief Economist
by Tyler Durden, www.zerohedge.com
If it was the Fed’s intention to make the upcoming rate hike seem like a welcome event, one that presaged a new Golden Age in the US (and global) economy because, lo and behold, the wise Fed would never hike unless the economy is flourishing and thus create a self-fulfilling prophecy in which the rate hike itself – an event of tightening financial conditions even when inflation expectations are the lowest they have been in years – becomes a catalyst for growth, then it has failed spectacularly.
First, it was the IMF warning a rate hike would be a big mistake, then Larry Summer (who for some reason progressives thought was hawkish when it was a choice between him and Aunt Janet), then even China got into the fray saying the Fed should delay its rate hike as it could push emerging markets (such as China) into crisis.
But it wasn’t until today that we got the most glaring confirmation there had been absolutely zero coordination at the highest levels of authority and “responsibility”, when the World Bank’s current chief economist (a position previously held by such ‘luminaries’ as Larry Summers, Joseph Stiglitz and Stanley Fischer), Kaushik Basu warned that the Fed risks, and we quote, triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing, the World Bank’s chief economist has warned.