The Next Global Economic Crisis

Source: Pak Alerts Press

Date: November 2, 2010

Will the world experience a new economic crisis that will be even more serious that the one that we have just been through or enter a period of sustained economic growth?

It is now becoming clear that the Anglo-Saxon and some European nations have not recovered from the recent economic crisis as was expected a year ago, and will slide back into a double-dip recession. What has gone wrong? Why has not the economic stimulus packages worked? Many economists had expected that by now that the USA would be in economic recovery, not facing high unemployment and a faltering economy. Now, out of desperation the USA and UK are planning to print even more money in an effort to revive their faltering economies.

Meanwhile many other economies have recovered strongly from the recent recession. In Europe the Germany economy is recovering strongly, as have most of the Asian economies. Why have the Anglo-Saxon and some European nations not been able to do likewise?

The reasons are simple. It does not require an economist with a PhD to figure out that if a country spends more than it earns year after year, eventually they will be in trouble. While often economists disagree with one another on the causes and solutions, the fundamental problem why the English speaking nations are in the mess they are today is because for years they have lived beyond their means on borrowed money. Sadly, nothing has been done to correct this, which was the cause of the recent recession; rather the current economic policies of the Anglo-Saxon nations are only made the situation worse.

The reasons for the economic crisis were:

1.      Large trade deficits  the Anglo-Saxon nations have been importing far more than they export.

2.      To finance their imports they have borrowed money from creditor nations with trade surpluses, which they now need to repay along with the interest.

3.      Much of the GNP growth up to 2007 in these nations was in consummation of imported goods, housing and the service sector, while manufacturing declined.

4. The cost of servicing this debt has escalated while government revenues have declined.

      5. Over generous welfare programs which have drained financial resources from the productive sectors of the economy.
      6. A break-down on the moral fabric of society and poor work ethics

      7. Costly wars and expensive defense budgets.

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