Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
Internet Technology has impacted our day to day life beyond imagination. It has changed the way we make purchase decisions, the process by which we compare products and finally buy the product. All this has been enabled instantly by the click of a mouse, sitting in the comfortable environs of your home. Lets take the […]
Types of Foreign Investment and its Implications for Developing Countries With the opening of the economies of the world, there has been a concomitant increase in the flow of investment from the west to the east. As capital from the west started flowing into the developing countries in search of better yields, these countries are […]
The movement to ensure the legalization of cannabis has been going on in many parts of the globe. Even in the United States, many states have legalized cannabis. This means that it is legal to possess cannabis for the purpose of sale in these states. However, this rule has not been formed on a national […]
The Recently Published Ease of Business Rankings The news that India jumped 30 places in the Ease of Business Rankings as published by the World Bank and which covers 190 countries worldwide was met with jubilation and chest thumping by the Indian Government, which promptly announced that the Indian Economy was on a path to […]
Why Printing Money is Leading us Nowhere We discussed how central banks around the world are printing money and pumping in liquidity into the global economy. This has the result of creating asset bubbles and equity bubbles wherein the hot money flows into real estate and stock markets leading to speculative frenzies instead of real […]
According to many respected commentators like Nouriel Roubini and Joseph Stiglitz, the Global Economy is facing severe headwinds which can culminate in a “Global Perfect Storm” in beginning 2013. The term perfect storm refers to the coming together of extreme weather conditions that culminate to produce a storm of such a magnitude as never seen before.
When applied to the global economy, the term denotes the simultaneous impact of the United States facing a “fiscal cliff”, the Eurozone breaking up and China deleveraging which spells trouble for the economies of the world. Though this has been predicted before, what makes the situation different this time is that the conditions for these events have been set in motion and are accelerating towards a finale.
The combination of falling tax revenues, increased debt and cuts to wages and benefits including layoffs of workers in the government sector means that conditions are ripe for a prolonged recession. And when these portend gloomy days for the US, the world economy is bound to be effected since the global economy is heavily dependent on the US for support and sustenance.
The point here is that till now Germany and France have been resisting the breakup of the Eurozone which many say is inevitable. Hence, it remains to be seen how long this situation can persist given the rather humungous debt that the countries of the Eurozone hold.
Further, the US economy is no longer importing that much from the Chinese and hence, the time for China to consume more domestically and export less is coming into play. This means that stimulus packages aimed at the export sector must now be oriented towards domestic consumption and the excess inventory of goods that have piled up have to be sold off.
In conclusion, these trends are slowly rubbing against each other and the global economy is moving towards a situation where they all impact at the same time leading to conditions that have been described as a perfect storm. Hence, policymakers in all countries including India have to assess the impact of the coming storm and plan accordingly. After all, being forewarned is being forearmed.
Your email address will not be published. Required fields are marked *