In last 6 months as new data are coming out across USA, China, EU, Asia etc., discussions in Boardrooms, Central Banks, Economist, Policy Commentators, Business news channels has veered from whether recession is coming to when is it coming? And Is it structural / cyclic or man-made (read: US – China trade conflict). Judgment is still out but Isn’t right time to remember 2008.
2008 i.e. “Great Recession” will always be remembered as how few mighty financial institutions for their greed brought down nations to their knees, impact of which can still be seen across some of the European nations and emerging markets. Nevertheless. we will be doing injustice to 2008 if we don’t recall what was done post crisis as it is this learning which will probably help in 2019 or beyond. The 2008 crisis was the first such event after rapid growth of emerging economies which helped to integrate large part of global economy then anytime before that. The 1930s “Great depression” in USA though impacted large number of countries, 2 large populations have minimal impact i.e. China and India and there was time-lag as it unfolded in 1929 in USA to its impact in say France. This was the first time when its impact can be seen simultaneously from America to Greece to Columbia to India to South Africa. Anything like great depression of 1930s could have rattled and undermine all the progress made during first 7-8 years of new millennia.
Better sense prevailed and in an unprecedented coordinated action from political class and Central Bankers from USA, EU, Japan, China etc.; what could have been otherwise certain death was avoided through practical solutions, some sacrifices / compromises, give & take and so on. There are point of view if these actions will actually be detrimental in long term, but no one can deny the intentions of political leadership to come together for larger cause which is to not let common man suffer.
Today, as world enters another uncertainty and likelihood of 2008 part 2 (form and nature may be different), Can we depend on world leadership to sail us through. Instead there is high probability that they will be taking us to abyss. To the Central bank credit, they are trying to do everything possible; fact is they have already used most of the ammunitions in last 10 years managing the fall out of 2008 bailout. They will need the might of Politicians and nations they lead to put some kind of defence.
In 11 years since, economy landscape has changed as well. There is new power and only a fool could ignore it and find a solution. The dragon is critical and has to be part of the high table running the show i.e. FED and EU Central Bank. China can no longer shirk its responsibility, it need to adhere to global rule and be ready to share pain. Stakes are far higher than before for the world and any set-back can now undo 20 years of hard work which has helped to pull out a large world population from poverty.
If there is going to 2008 like crisis in 2019, lets our response also be like 2008 in 2019.