World Bank cuts forecast for 2009 growth

[Hannah Bell]

A new World Bank report, Prospects for the Global Economy, refutes recent claims of an incipient economic recovery. The report predicts that the world economy will shrink by 2.9 percent in 2009, a significant downward revision from an estimate the bank made in March, when it anticipated a 1.7 percent decline. It also revised downward its growth estimate for 2010, to 2 percent from 2.3 percent, predicting “a much more subdued recovery than during a normal recession.”

The World Bank said US gross domestic product (GDP) will end the year 3 percent smaller, Japan’s will fall by 6.8 percent, and the eurozone’s will decrease by 4.5 percent. Global trade will fall by close to 10 percent. All of these estimates represent negative revisions from projections made in March...

In early March, President Barack Obama appealed to working Americans to invest in the stock market. “What you’re now seeing is... profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it,” he said.

But an article in Tuesday’s Financial Times, “Pessimistic Executive Cash Out of Shares,” explains that over the past month — just as the propaganda about “green shoots” in the economy was reaching its crescendo — top executives and company insiders sold off massive amounts of their stocks.

According to data from the US Securities and Exchange Commission, the sell-off of shares “by so-called company insiders” exceeded their purchases by a multiple of 22. Insiders at companies listed on the S&P 500 Index sold $2.6 billion worth of stock in June, while they purchased only $120 million, according to TrimTabs, an investment research company.

“The smartest players in the US stock market—the top insiders who run public companies—are not betting their own money on an economic recovery,” said Charles Biderman, chief executive of TrimTabs.

http://www.wsws.org/articles/2009/jun2009/bank-j24.shtml