Global Economic Crisis 101

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.

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Oil’s Prophecy of Doom

In twelve scanty minutes, Barack Obama gave a dissenting voice antithetical to the previous lameduck President about issues of renewable energy, oil independence and climatic change. A speech laden with emotions of bravery and concern was rendered to the global audience in what can be adequately termed the crossroad of history. Oil, a national resource and God given commodity extracted from the swarms and dry fields has held America hostage by other oil producing territories. Countries with counter active interests with America have suddenly discovered oil and it’s becoming gradually a political weapon. Oil had turned to a weapon of internal oppression evidenced through extreme poverty in oil rich countries such as Nigeria and Venezuela or external aggression through nuclear armament and territorial aggression of Russia and Iran. The pollution effect of oil through the release of hydrocarbons and toxic gases has been linked to melting of polar ice, wild life extinction, deforestation and other debilitating effects. As the manufacturing industry, technology and global development intensifies in the last few years, oil prices have skyrocketed with high volatility.
After a plethora of global protocols, G8 commitments, energy summits and so on Barack Obama has emerged as the glint of hope to energize action for the salvation of earth. He has now joined the cause for fuel efficiency, automobile emission standards, low carbon economy and green investment as been touted as a pathway to create millions of jobs. Barack Obama has refused to spin in circles or drag its heels like his Nigerian counterparts but strongly determined to double the harnessing energy from the sun, wind, soil and biofuels in the next three years. He has just simply rubbished his erstwhile regime incoherent and skeptical view on global warming. This has been approved with a presidential seal within his 7 days in office and already in firm practice in California. America has declared a commitment to reduction of oil consumption and it will not be held hostage by dwindling resources, hostile regimes and warming planet.
America does not walk alone in the war against the obscene revenues of oil sheiks whose treasured asset has been dubbed as a threat to a safe, sustainable and prosperous future. Other regional blocs and developing economies of the world have joined in the campaign to massively invest in renewable energy. Brazil has led the initiative with a 30 % petrol input in fuel mix and even communist China with huge emissions has taken bold steps. China is leading investment in renewable energy through i in billions of dollars for in clean technologies and its solar market industry value is worth $15bn. China, the largest emitter in the world has set a trajectory to drive innovation for low carbon growth and reduce greenhouse emissions. The European Union has decided to cut CO2 from automobiles by 25% in 2012.UK homes are expected to be powered wholly by offshore wind energy in 2020 while other countries such as Germany, Japan and Korea have predefined targets.
Oil rich countries and international companies are not taking a backseat in the green future driven by low carbon and clean technologies. Proactive oil colonies such as United Arab Emirates who own 8% of the global oil reserves have decided to commit £11bn to renewable energy by driving 7% of its internal demand from renewables. Saudi Arabia the largest oil producer in the world are developing alternative energy sources as its national oil company Aramco is a proponent of alternative fuel using solar power. Giant oil companies such as Chevron, Exxon Mobil and BP have decided to assimilate the demands of the future and forgo gradually the excessive profit of fossil fuel and accept in concise terms its pernicious damage to the atmosphere. The World future Energy Summit in Abu Dhabi was a right avenue to display modern green technologies and how to power a green energy globe that uses soil, water, wind, air pressure, carbon fitted technologies and so on. The global tone goes green and all stakeholders are seeking a strong commitment to ensure a safe future.
As other oil producing countries are seeking alternatives as the global energy demand is expected to double in 2030, the question that agitates a savvy mind is that what is the Nigerian response to the global green policy that threatens its major source of revenue? It’s of common knowledge that oil provides 90% of Nigerian revenue and current low oil prices are already creating a dysfunctional system that threatens her economic policies. Nigeria led by its weak leadership is taking a passive approach to the dwindling oil revenues and after years of waste, ceaseless squander and crude corruption, it seems a dead end for the sleaze balls. The Nigerian Central Bank has already predicted doom and budget deficit soars. The national currency has been devalued, major oil JV funding stalled, infrastructure investment delayed and a clarion call by government to cut its expenditure in ministries and other agencies. After enjoying a honeymoon of $147 in July 2008, lonely nights now looms as the price dangles below $50; a typical blow to the national revenue. Nigeria has hinged its hope on a volatile national resource when its fails to understand that the greatness of nations has been build on people and developing its human potential.
In the quandary Nigeria has found itself, its time to reevaluate our myopic view which has transcended Nigerian political leadership. The fragility and tragic risk of a nation that put its economic balance in a volatile resource such as oil have been exposed by the currency devaluation of the country. Nigerians economic fundamentals based on oil revenue and the huge returns have been stolen over the years by its inept and corrupt leaders. Nigerian leaders have benefited immensely from the lucre of oil revenue and it has not created a timeline, vision and adequate plan to foresee a low carbon future. Oil has suddenly become a tool of oppression for oil communities and economic whips for its citizens to wallow in penury. Self determination groups for environmental sustainability have been hijacked or turned to militant groups who are mostly unemployed youths. That new global economy is driven by technology and human capital is not beer parlour banter but we grope in the dark thinking the way to leap in to the top 20 economies is the sound management of the economy through bogus foreign reserves. The green initiatives across globe will definitely reduce oil dependency and even ensure use of fuel efficient cars whose manufacturers are housed in the leading green campaigners. We as a nation has failed to improve infrastructure, education, human capital development, technical skills, research institutes, technology centers and create sustainable alternative to the dwindling oil reserves. We need to diversify the economy through agriculture, solid minerals, tourism, real sector and allow a huge jump into technology savvy nations.
The obvious lesson Nigeria must learn in the long term is that improper investment in its people is a threat to the future of the unborn. Inadequate technological capacity, skilled and technical education and infrastructure especially power have gradually shaken our economic base and it now splatters in pieces. We have been doomed to be led by retroactive military regimes and now we revel in a government running on an empty tank. Hope seems forlorn and fear of the unknown perspires an informed mind as the economic recession bites hard due to falling oil revenues. Nigeria leaders have for so long refused to understand that developing the potential and human capacity coupled with sound and ethical fiscal management is the antidote to the numerous bugbears challenging its prosperity. The global consuming nations are singing a new song and its time to give up our old movements and dance to the new rhythms. We also must begin to start to plot agenda for better fiscal management, developing alternative energy sources and improve fuel combustion efficiency since our atmosphere is not immune to the pollutants.
It is obvious that the future of the nations and the chasm between will be marked by the country’s investment in its people and the use of science to actuate sophisticated post modern living. It is ample time to start as frame work as future leaders with a mindset to save this country from future economic exclusion. Eventhough, the current economic recession could hamper investment in green energy in the short term, Tony Blair stated at the World Future Energy Summit in Abu Dhabi brave leaders need to make tough choices now for a safer world. The world is ready to go green, tables are turning, oil inelastic demand is shrinking, dark gold value rusts to metallic copper, Nigeria is time to start working….If not the dead corpse covered with bronze lid will soon sprout with its decaying legs in the air and the offensive smell will be deadly for the living and unborn. Running away from these present challenges is curing our protracted madness with hemlock.