Count on the IMF to get things wrong

Here's a blurb from the WSJ that summarizes a gloom-and-doom pronouncement from the IMF today:

WASHINGTON—Global growth will slow more sharply than expected in 2011 as advanced economies slash their budgets amid the continuing sovereign debt crisis, the International Monetary Fund said Wednesday.

The downside risks remain elevated in the face of a fragile economic recovery, the IMF said in its World Economic Outlook. "The financial sector is still vulnerable to shocks and growth appears to be slowing as policy stimulus wanes," predominantly in advanced economies, the IMF said. 

"Simultaneously addressing both budgetary and competitiveness problems in a deteriorating external environment is likely to take a heavy toll on growth," the IMF said.

In short, the IMF is saying that efforts to restore fiscal discipline will undermine global growth prospects. Which is funny, because here I have been thinking that it was fiscal profligacy that got us into so much trouble to begin with. How is it that doing the wrong thing—spending way more than you have on non-productive things—can be good for your economy, but doing the right thing—spending within your means and reducing tax burdens—can be bad?

Here's how I would rewrite this:

Global growth will pick up more than expected in 2011, as advanced economies cut back on wasteful "stimulus" spending and the sovereign debt crisis recedes.

Downside risks are likely to decline, as reduced financing demands by major governments will leave more funds available for use by the private sector to create jobs.

Simultaneously addressing competitiveness problems by reducing wasteful government spending and reducing tax burdens will boost global growth prospects.