The secret stimulus package
Even in the best of times, it is bad practice to run an economy on a political timetable. In this unprecedented global economic meltdown, it is a disastrous practice.
We have an economic crisis on a scale none of us has ever seen before. Despite being spared the first wave of financial repercussions of this crisis, we are fully exposed to the collapse of the flow of global manufacturing. The value of the retirement savings of America’s Baby Boom generation has been halved. Their demand for Asia’s manufactured goods will be drastically reduced. This disrupts the entire system of global manufacturing, whose largest consumer, and consumer of final resort, has been the US. In nett terms, Asia manufactured and America consumed. Asia lent, America borrowed. That arrangement is over. Asia’s manufacturers will have to rely more on an expanded domestic demand, overwhelmingly from China. A new global economic order will have to emerge from the destruction wrought by this crisis.
What are we doing about this crisis and opportunity?
We need to be prepared to weather this crisis, but more than that we have to be prepared to come out of it equipped for this new landscape, which will be dominated even more than it has been by the growth of the BRICs (Brazil, Russia, India and China).
