Zoellick Calls Stimulus Measures `Sugar High,' Says Unemployment Will Rise

Zoellick Warns Stimulus ‘Sugar High’ Won’t Stem Unemployment
By Timothy R. Homan


May 29 (Bloomberg) -- World Bank President Robert Zoellick warned policy makers that fiscal-stimulus plans are insufficient to turn around the “real economy” and rising joblessness threatens to set off political unrest across the globe.

“While the stimulus has given an impulse, it’s like a sugar high unless you eventually get the credit system working,” Zoellick said in an interview with Bloomberg Television’s “Political Capital with Al Hunt” scheduled to air tonight and over the weekend. “When unemployment increases, that’s probably the most political combustible issue.”

Zoellick’s caution is a contrast with private economists, who are raising their outlooks for growth from India to China as stimulus measures take effect. The biggest developed and emerging nations have committed spending increases and tax cuts totaling 2 percent of their combined economies, a level the International Monetary Fund recommended to end the recession.

The World Bank is monitoring private companies’ abilities to roll over “a lot” of debt in the developing world, Zoellick said. At the same time, he played down risks to the global recovery posed by rising U.S. Treasury yields, saying that “in terms of absolute levels, rates are still pretty low for most players.”

Zoellick also said that the dollar will remain the world’s main currency “for a long time,” and noted that investors flocked to the dollar as a haven during the worst parts of the financial crisis. ...........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a5u2Edh03MQ4&refer=home

He helped start the fire that's burning down the house and now he wants to tell us how to put out the fire?

Thanks, but no thanks.

(not a bribe???)