Global Financial Crisis and Economic Recession were in full grip by December 2008, keeping the Governments anxious, tense and busy struggling. Prolonged State interventions in the financial, commodities, trade and foreign exchange markets by various countries including the US and China had ultimately caused the crisis and the deep recession to set in.
Now is period of bailing out the credibility of the political institutions called Legislature and Government through massive Quantitative Easing, fiscal stimulus and near-zero interest rate policy to revive, of all things, the market mechanism that was earlier grossly distorted and manipulated by State prodding of imprudent behavior of the sake of homeownership to all, through producing and selling cheaper goods sold abroad on easy credit (massive trade surpluses and arbitrarily fixed exchange rates) in the name of high growth and employment of the poor in Asia and low inflation for the West and piling up petro-dollar in State coffers through production controls that would jack up the oil prices three-fold in about a year's time.
Reacting to these growing imbalances that State intervention regimes brought about, markets seem to take revenge as credit system came to a grinding halt, demand slowed down, outputs fell, jobs got lost and bankruptcies threatened firms. It would probably take the entire 2009 before the efforts of different governments lure markets to return to normalcy. There is every possibility, however, that the States (Governments) will soon get into another sort of intervention in the form of protectionism. And, this would only delay the return of normal market operations, obstruct the much needed development of properly regulated, transparent markets for contracts against contingencies to enhance the efficiency and effectiveness of market mechanism, and weaken the process of economic recovery. Riding on export demand to promote economic growth with a policy of virtually fixed exchange rate, keeping imports by domestic consumers under control, carrying huge trade surpluses (as had been done by China, Germany and Japan) to pile up foreign exchange reserves would not pay any more; rather, such policies would hurt those who pursue them more - they would be better of buying imported goods as well and letting their currencies to float.
Meanwhile, cross-border terrorism, effectively driven out from the West, is spreading fast in some countries in the East (Pakistan, India) that chose to remain backward on terrorism-control technology and management, as part of their soft stance that encouraged the terrorists. Economic growth is adversely affected by incidents of terrorist’s attacks on civilians and commercial business operations but is positively affected by high technology counter-terrorism management.
Hopefully, more determined efforts to eliminate terrorism from the Planet will get momentum in the East. That will augur well for early economic revival and eradication of poverty. Corporate managements may find challenging opportunities to add value to 'terrorism-control' economic activities and help protect and create wealth for the human civilization.
Huge investment in introducing mass scale use of non-conventional energy technologies and energy materials- not merely to protect global ecology and climate, may help speed up economic revival and growth in the West even as the Millennium Project creates sustainable new source of demand for increased economic activity.
Fiscal stimulus and deficits may be better used for such longer-term economic goals rather than trade protectionist measures to bail-out domestic industries. Subsidizing electric cars could create as much employment as the subsidizing extant petrol/diesel car making operations.
If 2008 had been a year of distress, 2009 may ultimately bring the signs of economic revival and peace throughout the World. How much peace, happiness and upswing in prosperity 2009 will lay the foundations for will be known as the year progresses.
Now is period of bailing out the credibility of the political institutions called Legislature and Government through massive Quantitative Easing, fiscal stimulus and near-zero interest rate policy to revive, of all things, the market mechanism that was earlier grossly distorted and manipulated by State prodding of imprudent behavior of the sake of homeownership to all, through producing and selling cheaper goods sold abroad on easy credit (massive trade surpluses and arbitrarily fixed exchange rates) in the name of high growth and employment of the poor in Asia and low inflation for the West and piling up petro-dollar in State coffers through production controls that would jack up the oil prices three-fold in about a year's time.
Reacting to these growing imbalances that State intervention regimes brought about, markets seem to take revenge as credit system came to a grinding halt, demand slowed down, outputs fell, jobs got lost and bankruptcies threatened firms. It would probably take the entire 2009 before the efforts of different governments lure markets to return to normalcy. There is every possibility, however, that the States (Governments) will soon get into another sort of intervention in the form of protectionism. And, this would only delay the return of normal market operations, obstruct the much needed development of properly regulated, transparent markets for contracts against contingencies to enhance the efficiency and effectiveness of market mechanism, and weaken the process of economic recovery. Riding on export demand to promote economic growth with a policy of virtually fixed exchange rate, keeping imports by domestic consumers under control, carrying huge trade surpluses (as had been done by China, Germany and Japan) to pile up foreign exchange reserves would not pay any more; rather, such policies would hurt those who pursue them more - they would be better of buying imported goods as well and letting their currencies to float.
Meanwhile, cross-border terrorism, effectively driven out from the West, is spreading fast in some countries in the East (Pakistan, India) that chose to remain backward on terrorism-control technology and management, as part of their soft stance that encouraged the terrorists. Economic growth is adversely affected by incidents of terrorist’s attacks on civilians and commercial business operations but is positively affected by high technology counter-terrorism management.
Hopefully, more determined efforts to eliminate terrorism from the Planet will get momentum in the East. That will augur well for early economic revival and eradication of poverty. Corporate managements may find challenging opportunities to add value to 'terrorism-control' economic activities and help protect and create wealth for the human civilization.
Huge investment in introducing mass scale use of non-conventional energy technologies and energy materials- not merely to protect global ecology and climate, may help speed up economic revival and growth in the West even as the Millennium Project creates sustainable new source of demand for increased economic activity.
Fiscal stimulus and deficits may be better used for such longer-term economic goals rather than trade protectionist measures to bail-out domestic industries. Subsidizing electric cars could create as much employment as the subsidizing extant petrol/diesel car making operations.
If 2008 had been a year of distress, 2009 may ultimately bring the signs of economic revival and peace throughout the World. How much peace, happiness and upswing in prosperity 2009 will lay the foundations for will be known as the year progresses.
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