Obsession with recession
Sunday, 19 April 2009
Air Commodore Muhammad Zakiul Islam ndu acsc (Retd)
SOME witty cynics have postulated two main principles of Economics. The First principle says: For every economist, there is an equal and opposite economist. Sounds familiar. But whatever be their level and intensity of agreements and dissentions, all of them seem to converge on a unanimous verdict on the present global economic situation although their idea about the mode and methodology of combating it varies. Faced with a crisis of an unprecedented dimension(?), the champions of the current euphoria have christened it by various titles -- recession, depression, melt-down, slowdown, down-turn and what not.
Again, there are two kinds of people in the present-day world: First, those who do not understand Recession and the second, the others who definitely comprehend and clearly see it all. I belong to the first kind. My editor is a learned Economist. Yet, with great trepidations in my heart and even with a greater personal ignorance and inability of understanding the subject, which is both heavy and complex, I dare say that much hullabaloo had been created in the name of recession.
Being an agro-based economy and with a modest life style of our people, I always thought that our impoverished (developing) economy was somewhat lucky to remain insulated from all such speculations and upheavals. The last one in the name of Asian Economic Crisis came and passed by as close as Thailand. But that is not to say that since I don't understand the problem, it does not exist. Times have changed. Thanks to globalization, ripples of world economic tidal waves are being felt here as well.
The simple minded folks of the world's greatest and mightiest nation have been scared beyond imagination by relentless narration of the facts or fictions of an event that is some eight decades old when their grand fathers and great- grand fathers had to face financial hardship and at the possibility of that history repeating itself. And all of them have somehow been convinced that they are perfectly justified to feel threatened at the prospect of such a devastating consequence. To the enthusiastic doomsday-sayers, time and situational realities are of no relevance -- only history is. So scared and terrified have the otherwise enlightened populace become that many have taken to Yoga to beat the tension rather than following the proceedings of the Wall Street.
Some Economists are saying that the present humanity has seen only the tip of the iceberg and the worst is yet to come. Others are declaring that we have already passed the threshold, common people like us without realising either its coming or going. Some are even claiming victory by saying that they have already won the bout against the worst economic enemy of the mankind. But there is no scope of rejoicing even at such a win -- it is like winning in a heavyweight championship -- you are victorious but not without pain, cuts and bruises. One thing is clear, all these experts love and relish problems. Just give them one and they would solve it with great care and enthusiasm till they come out with a new problem or invent a new one.
I personally think that even such a dreadful thing as economic recession could be good for some. If the price of per barrel of crude has come down by more than USD 50.00 and the price of per kilo of coarse rice or flour by two third, we in the Third World would welcome such downturn. Who cares about the temporary glut of commodity goods and high value shelves at the super markets!
Actually, all it boils down to is the basics -- how one conducts one's business and maintains one's account. If the corporate bosses of the mighty Multi-National Companies (MNCs) create artificial bubble of their growth, albeit their ability as managers and spend more than what they earn, such disasters will revisit us every once in a while. Indeed, there are already loud whispers around suggesting that the proponents of socialism are having the last laugh as the so-called free and deregulated market forces are now being reined by imposition of tighter state control and enforced financial discipline. Let me paraphrase a famous saying: Absolute freedom will ruin you absolutely.
Every aviator is familiar with the term bailout. It is a question of life and death for him. In olden days, whenever faced with an emergency, the pilot would un-strap himself from the seat, climb over the wing of his aircraft and jump down while pulling the 'D Ring' for his parachute to deploy. That was bailout. Notice that while the pilot is bailed out, the mother vessel is abandoned to its peril.
With the advancement in technology, the system of pilot egress system has undergone tremendous development and perfection. Nowadays, the seat along with the pilot are catapulted or ejected out by use of powerful seat cartridges or rocket motors with various sophisticated automatic sensors and control system coming into action, ultimately saving the life of the pilot. In fact, so precise and reliable has the system become that the pilot of a fighter aircraft or the entire crew capsule of a modern bomber aircraft can be ejected or egressed even at Zero height and Zero altitude. But here is the dichotomy: in aviation you bailout a pilot, in economics you bailout a company or a financial system.
But, but -- whether you are bailed out and egressed, you do so at the abandonment of the mother ship. Critics are upbeat with arguments that the present fad and fashion of bailout are more for the crew than the economy itself. See how the corporate bosses of a well known insurance company were over powered by their convoluted logic and greed and the bail-out money was spent for payment of increased bonuses and incentives to their managers for enhancing their efficiency thereby win over the crisis! And the top man of a famous auto manufacturing giant was ushered to the door as he could not abandon the idea of flying in his executive jet even in these difficult times.
Sarcasms apart, we are faced with a problem which calls for real and physical solution and not obsession. But the experts are widely divided along imaginary fault lines. Pump in billions, provide stimulus, increase government spending and allow whitening of all black to catapult investment and recycling of hidden money into the system. Here is the complex matrix: among other things, can there be a solution which is economically feasible, morally right and politically correct, all at the same time.
The Second Principle: They are almost always off the track!
SOME witty cynics have postulated two main principles of Economics. The First principle says: For every economist, there is an equal and opposite economist. Sounds familiar. But whatever be their level and intensity of agreements and dissentions, all of them seem to converge on a unanimous verdict on the present global economic situation although their idea about the mode and methodology of combating it varies. Faced with a crisis of an unprecedented dimension(?), the champions of the current euphoria have christened it by various titles -- recession, depression, melt-down, slowdown, down-turn and what not.
Again, there are two kinds of people in the present-day world: First, those who do not understand Recession and the second, the others who definitely comprehend and clearly see it all. I belong to the first kind. My editor is a learned Economist. Yet, with great trepidations in my heart and even with a greater personal ignorance and inability of understanding the subject, which is both heavy and complex, I dare say that much hullabaloo had been created in the name of recession.
Being an agro-based economy and with a modest life style of our people, I always thought that our impoverished (developing) economy was somewhat lucky to remain insulated from all such speculations and upheavals. The last one in the name of Asian Economic Crisis came and passed by as close as Thailand. But that is not to say that since I don't understand the problem, it does not exist. Times have changed. Thanks to globalization, ripples of world economic tidal waves are being felt here as well.
The simple minded folks of the world's greatest and mightiest nation have been scared beyond imagination by relentless narration of the facts or fictions of an event that is some eight decades old when their grand fathers and great- grand fathers had to face financial hardship and at the possibility of that history repeating itself. And all of them have somehow been convinced that they are perfectly justified to feel threatened at the prospect of such a devastating consequence. To the enthusiastic doomsday-sayers, time and situational realities are of no relevance -- only history is. So scared and terrified have the otherwise enlightened populace become that many have taken to Yoga to beat the tension rather than following the proceedings of the Wall Street.
Some Economists are saying that the present humanity has seen only the tip of the iceberg and the worst is yet to come. Others are declaring that we have already passed the threshold, common people like us without realising either its coming or going. Some are even claiming victory by saying that they have already won the bout against the worst economic enemy of the mankind. But there is no scope of rejoicing even at such a win -- it is like winning in a heavyweight championship -- you are victorious but not without pain, cuts and bruises. One thing is clear, all these experts love and relish problems. Just give them one and they would solve it with great care and enthusiasm till they come out with a new problem or invent a new one.
I personally think that even such a dreadful thing as economic recession could be good for some. If the price of per barrel of crude has come down by more than USD 50.00 and the price of per kilo of coarse rice or flour by two third, we in the Third World would welcome such downturn. Who cares about the temporary glut of commodity goods and high value shelves at the super markets!
Actually, all it boils down to is the basics -- how one conducts one's business and maintains one's account. If the corporate bosses of the mighty Multi-National Companies (MNCs) create artificial bubble of their growth, albeit their ability as managers and spend more than what they earn, such disasters will revisit us every once in a while. Indeed, there are already loud whispers around suggesting that the proponents of socialism are having the last laugh as the so-called free and deregulated market forces are now being reined by imposition of tighter state control and enforced financial discipline. Let me paraphrase a famous saying: Absolute freedom will ruin you absolutely.
Every aviator is familiar with the term bailout. It is a question of life and death for him. In olden days, whenever faced with an emergency, the pilot would un-strap himself from the seat, climb over the wing of his aircraft and jump down while pulling the 'D Ring' for his parachute to deploy. That was bailout. Notice that while the pilot is bailed out, the mother vessel is abandoned to its peril.
With the advancement in technology, the system of pilot egress system has undergone tremendous development and perfection. Nowadays, the seat along with the pilot are catapulted or ejected out by use of powerful seat cartridges or rocket motors with various sophisticated automatic sensors and control system coming into action, ultimately saving the life of the pilot. In fact, so precise and reliable has the system become that the pilot of a fighter aircraft or the entire crew capsule of a modern bomber aircraft can be ejected or egressed even at Zero height and Zero altitude. But here is the dichotomy: in aviation you bailout a pilot, in economics you bailout a company or a financial system.
But, but -- whether you are bailed out and egressed, you do so at the abandonment of the mother ship. Critics are upbeat with arguments that the present fad and fashion of bailout are more for the crew than the economy itself. See how the corporate bosses of a well known insurance company were over powered by their convoluted logic and greed and the bail-out money was spent for payment of increased bonuses and incentives to their managers for enhancing their efficiency thereby win over the crisis! And the top man of a famous auto manufacturing giant was ushered to the door as he could not abandon the idea of flying in his executive jet even in these difficult times.
Sarcasms apart, we are faced with a problem which calls for real and physical solution and not obsession. But the experts are widely divided along imaginary fault lines. Pump in billions, provide stimulus, increase government spending and allow whitening of all black to catapult investment and recycling of hidden money into the system. Here is the complex matrix: among other things, can there be a solution which is economically feasible, morally right and politically correct, all at the same time.
The Second Principle: They are almost always off the track!