Category: Global Economic Crisis

Global Developments: Green Shoots?

In the last couple of months, we have seen the stock market rise,
together with the increase in prices of commodities (including oil).
Meantime, the forecast is that the US dollar, the world’s reserve
currency, will go on a downward trend in light of a still faltering US
economy, increasing unemployment, and the surge in the US budget
deficit due to the US$800B allocation for TARP (Troubled Asset Reform

…So the signs are not as encouraging as the stock market would like us
to believe. But these stock market investors still hope that everything
will be fine soon. They interpret events and financial reports here
and there as “green shoots.” I say brown for now.

Investor confidence, as you see, is tied up to the stock market, and as
they say, reflects the economy of the country. Caveat emptor: This
incremental rise in prices is not tied to fundamentals. It is going to
be the same traditional adage: P/E [price-to-earnings] ratios, my
friend, will be the rule from now on. We wait till the market gets its
bull market run, maybe in a couple of years. Then we’ll be back to the
same good old days of venture capitalists and future earnings
speculation—and a lot of moolah to make everybody smile once again…

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A-once-in-a-century tsunami and the US financial crisis of 2007-08

On 23 October 2008, in his testimony to the United States House of
Representatives Oversight Committee, Alan Greenspan called the banking and housing chaos a “once-in-a-century credit tsunami.” Interestingly and figuratively speaking, a once-in-a-century tsunami was happening in the population of those aged 60 to 65. The reason had to do with three particular birth spurts in the US. The first and second batches were born in 1942 and 1943 or during pre-deployment to Europe and Asia .(The invasion of Normandy was June 1944, and Leyte Day was October 1944.) The third was the first born “baby boomers” in 1947 immediately after World War II. (V-day in Europe was May 1945 and V-day in Japan was August 1945.)

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Global Collective Action

Leaders of developed and developing countries all recognize the need for collective action to tame the worldwide recession.

But collective action is easier said than done. Protectionism is tempting as jobs and incomes at home are vanishing.

Topnotch economists, including Federal Reserve chair Ben Bernanke and Barry Eichengreen (University of California, Berkeley), say that mercantilist policies during times of world recession did work. See for example Bernanke’s Essays on the Great Depression (2000) and Eichengreen’s Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (1992).

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Focus on development, not just staying afloat

MEASURES TAKEN by the Philippines to keep the economy afloat amid the
global slowdown — more public spending and wider access to credit — are
correct but policy makers should particularly devote resources to
achieving economic development in the medium to long term, a United
Nations (UN) official said.

Jomo Kwame Sundaram, UN assistant secretary-general for economic
development, said developing countries such as the Philippines should
increase investments toward the development of industries.

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The Global Financial Crisis and Asia

Developing countries will “bear the brunt of the financial crisis
originating in the US and other developed countries.” All
economies will in fact be affected by the crisis, albeit differently, contrary
to the view that emerging markets are “decoupled” from the US economy.

United Nations Assistant Secretary-General for Economic Development
Jomo K. Sundaram gave this assessment in a public lecture on the
Global Financial Crisis and Asia held at the Ateneo de Manila
University on February 23, 2009. It is interesting to note that the UN was the only multilateral
institution that warned of an impending financial crisis as early as

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Fiscal Stimulus and Global Collective Action

Let’s face it: The Barack Obama stimulus plan by itself will not lift
the US from the recession in the quickest and most decisive manner.

Some quarters—Paul Krugman, for example—have doubts about the
effectiveness of the stimulus plan. Krugman criticizes the stimulus
plan for lacking boldness as well as for being incomplete and

But let us assume that the Obama administration will take heed of
Krugman’s advice and adopt his more aggressive proposals. Will that
lead to the definitive stimulus?

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US economic crisis: What solutions?

You have heard this before: Economies are like people. People make up
economies, and economics is about people working, having a good time,
saving, or borrowing.When we realize this to be true, then we find
economics not just in business pages but in people’s hearts.

If we understand the root causes of the economic crisis, then we are
closer to knowing the medicine to cure it. But if we disregard the need
to understand the real cause of the ailment, then plainly any medicine
will do.

In this article, we will go into problem-solving on the crisis. It is
very complicated as the crisis changes in form and scale every day.

Let us review the major solutions advanced these past months.

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The Global Crisis: Its Implications on the Work of Development NGOs

This briefing paper about the global crisis and its consequences is mainly intended for the use of non-government development organizations (NGDOs), especially those working in East Asia. The paper intends to help public policy reformers, writers and researchers, educators and trainers, and grassroots cadres or activists have a better grasp of the nature of the crisis and its implications on their work. The paper also hopes to facilitate public discussion and debate especially involving civil society organizations.

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