GLOBAL ECONOMIC CRISIS 101
The World Economic Summit ended in Davos last Sunday with no concrete solution to devise a multilateral approach to the global economic downturn. A gathering of rich men comprising of world leaders, top banks and blue chip executives, human rights leaders, journalists converged at the Swiss Mount to discuss how to reduce the impact of the global recession. The blame game was passed across stakeholders and various propositions which include diversified global reserve currency, global economic stimulus plan, reduced protectionist measures, Bretton Wood Institutions reform and so on. The intelligence and charisma of the world leaders could not in precise terms think up a solution but gave assumptions based on uncertainties of global market trends.
The effect of globalization has been evidently seen in positive angles especially with the emerging economies benefiting from the hi-tech technologies of the West, Europe and Japan, massive industrialization of the BRIC (Brazil, Russia, India and China) territories, foreign direct investments in African potentials, transatlantic mergers and offshore investments and so on. The globalization concept became a poisoned chalice as even the talented economists and big players in the global markets cannot fathom that the US subprime mortgage crisis would lead to a national credit crunch, global financial crisis and finally economic recession. The financial downturn has crashed the global stocks, frozen consumer spending, liquidity crisis weakening global currencies, mortgage foreclosures, big banks failure, manufacturing bankruptcy, unemployment and so on. Banks and automobiles are begging for bailouts to compensate for their huge losses and save thousands of jobs. Stock markets across the world have taken a dip and the oil market prices have hit with its all time $147 per barrel record going down to $48.
The question we ask ourselves is how has an American problem become a painful global headache if not the economic globalization and principle of free trade. The free trade principles exported religiously globally by Americans has backfired due to improper regulation which gave opportunism to greedy Wall Street CEOs who gave loans at excessive rates for high risk individuals. The bad loans have since been defaulted turning into bad debts and making credit facilities not available for global entrepreneurs and projects. The principles of free trade and capitalism are now gradually diluted with the government buying up bad investments in exchange for shares and dividends. Countries like China who have married the strange bedfellows of communism and capitalism now have a strong level of justification that unbridled capitalism could be cancerous. The bailout has sounded like a death kneel for capitalism but it only affords various government especially the US to reevaluate its strategies for regulation of private sector companies. The fact is that throwing more money at companies and banks is corrective mechanism but to create a preemptive solution is to start a rigorous regulation and scrutiny with a modal format of communism. Nigeria’s oil revenue has gradually reduced, cutting government revenues, soaring budget deficits and devaluing the national currency.
As Christians there are critical lessons to be learnt from the global market downturn. Greedy and sleazy bank managers according to Barack Obama spun the market out of control and we need to evaluate our place in world economy. South African revered Bishop, Desmond Tutu at Davos described the crisis as “We worshipped in the temple of cutthroat competition, and so some cooked the books, because the treasure is so great”. We need to start to take ownership of world economy markets and policies to influence globe for a safer and prosperous world. Greedy bank managers wanted get big bonuses and executive payouts and gave loans to high risk individuals at abnormal rates throwing ethics and best practices to the wind. America poor savings culture and excessive dependence on credit through credit cards, mortgage loans and other variants has exposed its citizens to the downturn. We need to follow the kingdom principles in investment and savings as enumerated by Jesus in his parables and not to excessively rely on credit facility. We need to start through our daily actions and inactions to live worthy lives which set example in business outfits, public places and other secular environments. The world awaits the manifestation of the sons of God to fix the global economy, politics and set ethical trends that will allow total effective regulation. The world markets have been driven in reckless fashion, its time for us to take responsibility and re-read the Highway Code to them.