The head of the International Monetary Fund, Dominique Strauss-Kahn, said yesterday that the most urgent economic priority for European governments is to reduce the damage from the financial market crisis amongst fears of inflation, recession and stagflation (best word EVER). He warned that without appropriate measures, the crisis would spread from the US to developed countries with serious economic consequences.

Before I continue with the Strauss-Kahn thing, I must define my favorite word of the whole day. That’s right, stagflation. No, it isn’t the rising price of stags/stag offspring. It’s actually the combination of inflation and stagnation (stagnation being slow economic growth, the possibility of recession and increasing unemployment rates). This forces central banks to keep interest rates high to slow growth, where they would normally reduce lending costs to strengthen the economy.