Despite warnings from US President, Barack Obama, many G20 nations have elected to embark on fiscal tightening policies designed to reduce budget deficits that have reached bursting point. These so-called austerity measures, believes Mr. Obama, are being introduced by too many countries at the same time and pose a significant threat to the global economic recovery.
Analysts at "Sovereign-International" suggest that he may well be right but add that, if markets had been allowed to function as capitalism intended, there would be no debt crisis. They maintain that, from their perspective, the global financial crisis and the subsequent recession that engulfed the world was the solution and not the problem. Government interference in the markets prevented the much-needed clear out of banks, insurers, manufacturers and others that had made poor investment decisions or failed to spot which way the wind was blowing.
"Sovereign-International" analysts say that the discomfort that will be endured by so many in the G20 nations should be old news by now. They argue that if the worst run companies had been allowed to go to the wall, the global economic recovery would currently be on a far more sustainable footing. Of course, the consequences of allowing the offending institutions to fail would undoubtedly have been catastrophic and could have meant severe hardship for many for a short time but instead, for millions of ordinary people in developed economies, the pain is set to be felt far more acutely and for far longer than was really necessary.
The efforts of the worlds major central banks have largely been in vain. The stimulus trillions have been spent but all they have succeeded in doing is buying us all a little time. Even now, dire economic data from the US has confirmed that the recovery is stalling. Fast. The housing market is turning downwards again, more newly-unemployed people are filing claims for jobless benefits, consumer sentiment is moribund and it is likely that earnings reports from the major US bellwethers will confirm what we all already knew that shaving costs and improving efficiency are no substitute for revenue growth.
Like the sovereign wealth funds that fell for the slick presentations and profit forecasts of the capital-hungry executives at Merrill Lynch, Lehman Brothers, UBS, Morgan Stanley and countless other dark lords of the banking industry in 2008, weve all been dazzled by smoke and mirrors. Like those sovereign wealth funds who, relieved of their billions of dollars in capital injections, promptly saw their investments obliterated, weve seen trillions of our tax money used to fund stimulus, save banks, automakers, insurers but weve received nothing in the way of a return. Instead, we just have more liabilities.
At least we can take some cold comfort from the fact that many of the G20 nations have decided that enough is enough even if thats only because the markets simply wont lend them cheap money any longer. How long before they decide that President Obamas credit score is a little . . . subprime?
Analysts at "Sovereign-International" suggest that he may well be right but add that, if markets had been allowed to function as capitalism intended, there would be no debt crisis. They maintain that, from their perspective, the global financial crisis and the subsequent recession that engulfed the world was the solution and not the problem. Government interference in the markets prevented the much-needed clear out of banks, insurers, manufacturers and others that had made poor investment decisions or failed to spot which way the wind was blowing.
"Sovereign-International" analysts say that the discomfort that will be endured by so many in the G20 nations should be old news by now. They argue that if the worst run companies had been allowed to go to the wall, the global economic recovery would currently be on a far more sustainable footing. Of course, the consequences of allowing the offending institutions to fail would undoubtedly have been catastrophic and could have meant severe hardship for many for a short time but instead, for millions of ordinary people in developed economies, the pain is set to be felt far more acutely and for far longer than was really necessary.
The efforts of the worlds major central banks have largely been in vain. The stimulus trillions have been spent but all they have succeeded in doing is buying us all a little time. Even now, dire economic data from the US has confirmed that the recovery is stalling. Fast. The housing market is turning downwards again, more newly-unemployed people are filing claims for jobless benefits, consumer sentiment is moribund and it is likely that earnings reports from the major US bellwethers will confirm what we all already knew that shaving costs and improving efficiency are no substitute for revenue growth.
Like the sovereign wealth funds that fell for the slick presentations and profit forecasts of the capital-hungry executives at Merrill Lynch, Lehman Brothers, UBS, Morgan Stanley and countless other dark lords of the banking industry in 2008, weve all been dazzled by smoke and mirrors. Like those sovereign wealth funds who, relieved of their billions of dollars in capital injections, promptly saw their investments obliterated, weve seen trillions of our tax money used to fund stimulus, save banks, automakers, insurers but weve received nothing in the way of a return. Instead, we just have more liabilities.
At least we can take some cold comfort from the fact that many of the G20 nations have decided that enough is enough even if thats only because the markets simply wont lend them cheap money any longer. How long before they decide that President Obamas credit score is a little . . . subprime?
SHARE
