~By P Chong
It is as though US is playing an economic game on the world stage, & all the countries are playing along dangling on the string or as cards or domino tablets falling along as “waves of tsunami” sweep over them.
Ever played Dominoes? The global economic fallout or meltdown is kind of similar to the domino effect. The economic hammer or axe knows no friends or foes. Every sphere of human endeavour is sort of interlinked or entwined in the economic meltdown. Like the newspapers, the source of news & information, if not for the bad news there would be no news. Their revenue is fast depleting with decreasing commercial advertisements & deepening deficits. They have to come out fast with a complete menu of alternatives before sinking under.
Paul Volcker, who was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan (from August 1979 to August 1987) & currently Chairma of the newly formed Economic Recovery Advisory Board under President Barack Obama, in his recent address to the Canadians in Toronto as part of the Grano Speakers series, suggested that the banking world could do with more Canadas. He pointed out that the basis of strong banks lies in the traditional commercial banking practices of “taking in money & providing credit” – unlike the high-risk financial highwire acts that brought down Wall Street. In this light, Canada is far better off then the US, Europe or UK & Japan. Trust & confidence are two key words in the world of banking & investment. Paul Volcker really hit the nail on the head.
The crux of the global problem is that US “Financial Frankensteins” spun their vast economic web enveloping & capturing their unsuspecting victims the world over, including the City State of Singapore draining off substantially a great percentage of its assets through its Tamasek’s investments. It’s likened to a worst form of financial cancer spreading without any imminent hope in sight. It’s doom that projects all the gloom without any comfortable room or garden to bloom.
In totality, all the Rescue Packages amount to more than $4 trillion, an amount nearly ten times larger than the budget deficit for all of 2008. In just 30 odd days Obama has earned the distinction of becoming the single profligate spender in history. The $4 trillion is made of $787 billion stimulus package, $3 trillion administration’s bank bailout plan & $275 billion anti-foreclosure plan.
Do you realise how immense or massive US$4 trillion dollars is? Can you visualise it? To help you see the picture here’s a couple of illustrations:
1.If you were a very rich man living at the time of Christ … and you could have started saving $1 billion per year every year thereafter, you’d still be only half way there! You’d need still another 2000 years to finance what Obama has committed to spending in just the one month since he began his presidency.
2. If you could borrow $4 trillion at 6% interest, your interest payments alone would be $240 billion per year, $548 million per day, $761,000 per second.
As can be seen, there is no quick fix solution in monetary terms or time. Of all countries in the world, China is perhaps in the best position in the face of this financial crisis. It keeps saying that it has to take care first of its own internal economy, which is suffering a slowdown in the economic fallout, before it can venture out & extend its helping hands. US however is fast to extend its hands of economic friendship & sealed its relationship with China through its State Secretary Hilary Clinton on her maiden overseas (Asian) overture.
I categorically maintain that it’s GREED that breeds the fall, & it’s GREED that’s swallowing them all!
Benjamin Franklin would say this: “He does not possess wealth; it possesses him.” People can be so materialistic and self-centered that community spirit becomes lacking. It follows that if wealth is lacking & debts are mounting, death would be sounding.
Predictably, some of their policies will help. Most will fail … backfire … and aggravate the crisis. And in the end, a whole new monetary system will be needed. It will be interesting to speculate what will the consequential world order be? Which country will ultimately emerge victoriously & powerfully on the world stage?