2008 was a tumultuous year in the world history more so for the financial world. Those of us living today witnessed what will be referred to as “The great depression of ‘08” to posterity. Though depression is not declared yet by any of the government, but there is no denying the fact that the financial tsunami caused by sub-prime crisis has drowned almost every part of this globe. Its only when the final death count be completed we will accept that 2008 was the watershed year of world economy.
There have been numerous papers published on the possible causes of this crises and prescription of how this can be effectively handled. The cause is past and how it should be handled is present, what it will bring out for all of us is the future. I would like to share my views on this future with all of you out there.
I feel that 2008-09 may prove to be the turning point of global power equations. For long there have been talks of new economic power centres emerging in the form of China and India which will propel the world economy for the next century. I think the time has come. With the west – USA, UK, Japan and Germany deep into the quagmire of economic slump, it will not be possible for them to take the world economy forward. The vacuum required for China and India to come to the world stage was created by sub-prime crisis what matters now is whether these two Asian giants will be able to be on their feet at the top without faltering to their internal pulls. To argue my points further I would like to put forward a few points:
- For west to register the same recovery as witnessed after 1929, they need to have a similar demography, which unfortunately is not there. Adding to this, the western economy is raising barriers for immigrants thereby reducing the possibility of any dramatic change in their demographic setup and thus in the productivity/consumption pattern.
- The recovery of all major powers after 1929 was on the backdrop of huge investment infrastructure development which was ruined by the II world war. This time there is no such driving force, and there is no possibility of going into another war at this time. Only god knows which horse is going to pull out the western economy to the glory of past.
- I agree that western economy will recover but I am very sure that in the mean time the Asian economy has the opportunity to leapfrog to the next level. Such opportunity rarely comes; I wish it’s not lost this time.
Currently governments around the globe are doling out money to keep the ship afloat. I believe that once the situation is under control, the governments will start tightening the screws around capitalist greed. I wonder what will be the response from the keepers of capitalist ideology to the socialist / communist at that time. In a way India and china remained out of this mess because of the control mechanism which didn’t allowed their respective financial system to enter into such rough terrain. In the hindsight I think this was our luck.
This period will teach a good lesson to many of us around, at least to all those who have feel the heat this time. Money brings happiness only when earned by good means and spent wisely. The IT boom gave a lot of money to the young generation of this country, who didn’t know how to spend and hence blew it up at their will. Today when they are jobless or are facing huge salary cuts, they will realise the importance of each penny spent in the last so many years. They will realise how much one should stretch his capacity and how to prioritise between their needs and desire.
Well I am not Nostradamus nor do I have a crystal ball, but this is what I believe and I hope I will live to see how much I was right!
Will carry on this thread with new inputs and new thoughts...
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