The world economy is still struggling, with Japan trying to put more stimulus out and thereby, becoming even more dangerously indebted. President Obama finally realized that Wall Street does not care about jobs and decided to do something direct, which means more debts.
This is a strange world in a way, America can keep on borrowing at a very low rate because those who have the money believes in the 'resilience' of the American economy/ government. The borrowed money then goes into the banks because they are mostly 'too big to fail'. But, that's the big hole - money goes there, it stays there - the banks use the money to repair their balance sheets, as no one still knows how badly affected they really were with all the gambling they did. But, in the process, the banks, the same institutions which were meant to supply capital, siphon capital out of the economy, leaving careers and families destroyed.
Besides, the Americans [and of course there are others too] are today siphoning out the world's savings. So, if a poor farmer in China saved some money in the bank account after years of toil, that money is being lent to America at a low interest rate and that value, if it could be frozen and seen as the product of labour not consumed, is being siphoned out to the American banks. It is not just morally wrong; it is unsustainable. We are now increasingly creating the world's biggest subprime lenders, the governments, and the banks, the credit rating agencies, the international institutions and the heads of states are so cosy that we will not know till the disaster strikes us.
So, as one looks ahead to 2010, it is difficult to agree to the optimistism in the media that we shall be out of the woods. Yes, 2010 is expected to be better than 2009, but that is sort of a self-fulfilling statement. But, this thought of returning to business-as-usual is troubling, because that surely was not a good thing. The banks as black-hole can not create value, they will just destroy value. The governments are at ransom, because democracies bind them to middle classes and middle classes judge the world by their retirement savings and their houses, both of which banks control.
In a way, it sounds like a big steal and it is. It is a cascaded system of stealing, so the theft is difficult to detect. Also, it is indeed not as straightforward as I am making it sound. The bankers look exactly like you and us, with exactly the same ideosyncracies, families and all that. Their bonuses are just as hard-earned or immoral as our bonuses are. I know lots of people object to the amount they earn, but given that an average CEO earns more than 40 times of a front line worker, such quantitative theories may not lead to sound moral argument. But, it is a steal anyway - because we believe that the creation of value should be linked to rewards some way, and it is not.
So, 2010 can go either way. We can continue to try to return to business as usual. This will lead us father into the crisis, and set ourselves up for a mega-crisis few years on. Financial crisis, after a certain point, become war, as nations are pushed around too far for too long. There is already talk of Climate Wars, and it will soon become all too plausible as water becomes a commodity to fight for in South and Central Asia. Add financial turmoil to that, which will push a few nutheads into positions of power as the last Great Depression did [and the current one has started doing, in Latin America and Eastern Europe] - and you have the mix necessary to start another global war in a few years time.
Or, we can be optimitic and say that 2010 is the year we shall regain sense. We shall know what we are facing, and questioning conventional wisdom will become more common. We shall go deeper in reforming the financial system, and make sure that international aid works to make fragile nations survive. We shall see some leadership in the climate front but don't know yet how far they would go. Businesses will continue to innovate, and we shall see sustainable innovation coming to the market at a furious pace. The business climate will discourage speculation and be biased towards value-creating businesses, thereby shifting the balance, though slowly, away from rent earnings to real enterprise profits.
Like all things, I know we shall settle somewhat in the middle of the two. I know that my extreme wish that since South Asian nations will not remain viable as independent nations in the post-climate change world, they would recognize the fact now and move towards unification, is bunk: That's never going to happen before Pakistan turns into a semi-desert in 25 years time and comes very close to fire a nuclear missile to resolve a water dispute. On the other, the doom-and-gloom is not irreversible, there are people in the world who are aware of the issues and working tirelessly to promote an alternate way of thinking. But, whatever happens, 2010 will be the start - a sort of watershed year - which will decide where we go as a species and as a civilization, in the next 100 years and beyond.
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