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April 22, 2009
If the global financial system is stabilising, then the world economy is in the midst of its deepest and most synchronised recession in our lifetimes,; a recession caused by a global financial crisis and deepened by a collapse in world trade. Yet in the IMF's latest Global Financial Stability Report, it is estimated that potential writedowns (of toxic debt) including about $1 trillion already taken, could be nearly $4.1 trillion.
Ingram Pinn
The implication is that neither short-term macroeconomic stimulus nor restructuring of balance sheets of financial institutions will generate sustained and healthy global growth.Those who are trying to convince us that the world things are soon going to be the way they were before---the credit party---are whistling in the wind.
This is pretty much the same crowd who failed to see the financial crisis, and then consistently downplayed its significance. The same crowd includes the media, who fell down on the job of speaking truth to power' and informing us what was happening. And the economists, who pride themselves on their rigor and analytical deductions from their axioms of instrumental rationality and market efficiency mostly failed to point out fundamental weaknesses of financial markets and they did not foresee the crisis.
No credible response to the crisis has come from the right. They say why worry about the past? Global capitalism has experienced similar crises and, up until now, has always recovered and proceeded to achieve ever higher levels of material prosperity. It is fear that is holding things back. A reflexive, conservative ideology -- support for tax cuts, no matter the facts and circumstances; a preference for policies that favor the well-off; a bias against the use of public institutions and public regulation---functions to delay, water down, and obstruct the kind of coherent and capable action needed to address the crisis.
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The green shoots lie in the information revolution. The new technology would bring "creative destruction" -- making old industries obsolete, while opening up new ones .
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Some industries are now facing a double whammy from the recession and long-term structural change eroding their businesses. Newspapers and other media are in this position.
Broadband can transmit any medium, and universal broadband service (wireless as well as wireline) could therefore make obsolete all the other major electronic media -- over-the-air broadcasting, cable television, and landline phones.