00:00Sean, you've been reporting on the current capacity of governments and institutions to
00:03absorb a financial shock. So let's start with the bottom line here. How ready are they?
00:09People talk about the global safety net at meetings like this. And what they're really
00:13talking about is governments' fiscal capacity to respond to whether there's money in the budget
00:20to throw some money at a problem when the problem surfaces. Monetary policy, what central banks can
00:27do, whether they can lower rates, how they can address things. And then the capacity of the IMF
00:34and the World Bank and so on. Coming out of the pandemic, governments spent a lot to respond to
00:39that emergency. They took on big debt loads to do that. They haven't repaid that debt. There is no
00:46fiscal space, to use the kind of IMF terminology, to respond there. So we're being hit by these shocks
00:56in terms of energy price. But governments don't really have any ammunition to respond or much
01:01less than they do. Then you look at the monetary policy stuff. In the past, we looked to central
01:07bankers to be the heroes in crises, right? They would rescue the global economy from things. We
01:12put them on the front page of newspapers and covers of magazines. And this time around, they're stuck
01:20because not everyone's gotten rid of the inflation from the last time around. So that kind of tells
01:26you that you still want to raise rates when gas prices go up and they feed into more inflation.
01:33But if this is going to hit growth hard, then you might want to lower rates. So this is kind
01:39of
01:40stagflationary shock is what people talk about. And that's just something that's really hard for
01:44central banks to do. The IMF and the World Bank, they still have some capacity to respond. But they
01:52also are kind of entering this crisis with less credibility than they had in the past. They're
02:00kind of trying to get back in the game. There's a more fragmented world out there.
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