NO BLUEPRINT FOR RECOVERY

NO BLUEPRINT FOR ECONOMIC RECOVERY

The world economy has had exponential growth since WW2. This was a period of relative calm. With the demise of communism in Russian, Europe and China in Asia, the focus has shifted from political philosophy to economic growth especially after the fall of the Berlin Wall. With the European espousing free market economy and the US embraced unfettered capitalism, wealth creation has been phenomenal. The ill of capitalism, ‘greed’ has reared its ugly head. This had led to excessive production and unsustainable development especially in real estates. There is just too much inventories from houses to consumer goods. The relentless effort to pursue profit had driven the financial world to be over leveraged. Now is a period of financial deleveraging and digestion of excessive inventories of commodities, industrial products, to household goods. All these will take some time.

This week world leaders, think tanks, academics, entrepreneurs, economists are gathered at Davos for the World Economic Forum to understand and attempt to formulate strategies to avert this economic calamity. On hindsight, it is now easier to pinpoint the root cause of this economic mess. And there will of course be no shortage of ideas and solutions. But the problem is always in implementation and whether the politicians and its citizen are willing to take the strong dose of medication to cure this economic illness. Some need stronger medicine than others. Does politician has the courage to face the truth and convey the message to its people, without to worry about their political costs.

The democratic world of one man one vote may find itself disadvantage against the Chinese where the central government can unilaterally make the tough and necessary decisions. The free world might find itself bogged down my domestic politics to take the most appropriate but painful resolution to address this financial mess.

The world also needs a new financial architecture and a new social contract with its people. But each country has its own unique idiocy and circumstances. So it is impossible to have a global or universal standard to get the entire world out of this economic mayhem. Inadvertently, a universal policy or action may hurt one country more than the others and politician may not have the political will to implement it. At the end of the day, each country had to move on its own pace it is comfortable with. No government will want to solve this problem by having to default on its power to govern.

So the world will never be able to come up with universal economic blueprint to weather this storm.



--------------------------Living to see the world------------------