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Global conomy weekahead: From a soft patch to quicksand

Global conomy weekahead: From a soft patch to quicksand
By Emily Kaiser, Asia conomics Correspondent | Reuters – 3 hrs ago

– The global conomy was supposed to be better by now.

Just a few months ago, the prevailing wisdom was that growth was going through a “soft patch” caused by a combination of Japan’s earthquake and unrest in the oil-producing Middle East. Once global supply chains got back to normal and oil prices receded, the second-half recovery could begin.

Judging from the tone among world finance leaders who gathered in Washington over the weekend, no one is buying that theory any more.

“The global conomy has entered a dangerous phase, calling for exceptional vigilance, coordination and readiness to take bold action from members and the IMF alike,” the International Monetary Fund’s steering committee warned on Saturday.

Australian Treasurer Wayne Swan spoke of a “somber mood” among policymakers. Financial markets priced in a growing risk that Greece may default, which could touch off a panic worse than what followed the Lehman Brothers bankruptcy.

“The Lehman crisis was about rescuing a company. Now it involves a country’s sovereign debt so in a sense, the situation is more severe,” said Japanese Finance Minister Jun Azumi.

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