IMF: Climate crisis is driving the world toward economic meltdown

  • Published on January 20th, 2020

Kristalina Georgieva, the managing director of International Monetary Fund, warned Friday at a speech at the Peterson Institute for International Economics that rising inequality and the climate crisis have the whole planet headed toward yet another financial disaster.

Financialization money meltdown

By Meteor Blades
DailyKos

Andrea Germanos at Common Dream writes—IMF Head Gives ‘Stark Message’ of Looming Inequality-Fueled Global Financial Disaster:

The trend of rising inequality within countries, [Georgieva] said, “is reminiscent of the early part of the 20th Century, when the twin forces of technology and integration led to the first Gilded Age, the Roaring Twenties, and, ultimately, financial disaster.”

Unlike the 1920s, however, the new decade is confronted with an urgent climate crisis.

“In the 2020s,” said Georgieva, “the financial sector will have to grapple with preventing the traditional type of crisis, and handle newer ones, including climate-related shocks. Think of how stranded assets can trigger unexpected loss. Some estimates suggest the potential costs of devaluing these assets range from $4 trillion to $20 trillion.”

She also pointed to new IMF research showing rising inequality—which her institution has helped fuel by promoting neoliberal policies—is a predictor of a coming financial crisis. Staving off that threat includes increasing affordable and readily available access to financial services to address inequality, sustaining regulatory mechanisms, and ensuring more stability. Key to the latter point is addressing the climate crisis.

“The financial sector can play a crucial role in moving the world to net zero carbon emissions and reach the targets of the Paris Agreement,” said Georgieva. “To get there, firms will need to better price climate change impacts in their loans.” Institutions will also increase stability and help lessen inequality by boosting lending to smaller firms, she added.

(Crossposted with DailyKos. Image by Sodahead.c)

About the Author

Meteor Blades is a writer and contributing editor at DailyKos. He believes there is something profoundly wrong with our system. - the unchecked accumulation of wealth and power into the hands of a very small group of corporate business interests has contributed to the wholesale corruption of our political system. For an understanding about the level of corruption in our country, he encourages you to view these two PBS documentaries: (1). ,The Untouchables; (2) The United States of ALEC.
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