Page 2. October 15- November 27, 2008. The Times of India. The Hindustan Times. Headlines are headlines. But yesterday I went to school and found out that a junior’s father committed suicide because of his slumped business. Only when a global tragedy touches you so closely can you understand.
One can only imagine what Paul Krugman might have been thinking when he predicted the nightmare the world lives in today. Just last week Arcelor Mittal announced a slash of 9000 jobs. Back home, the situation is as dismal. After Naresh Goyal was criticized for ousting 3000 employees from his airline, other companies are slowly coming out in the open about their misfortunes. The dollar has lost its sheen, and the effect has rippled throughout the world. The New York Times, on October , highlighted this by quoting MIT economist, Simon Johnson, “It looks pretty ugly down the road. Everybody is going to get caught up in this.” Goldman Sachs, Merrill Lynch and now Citigroup. This is not the 1920’s- the prospects are so much worse.”
From Russia to Dubai, from Korea to Japan, Britain to Australia, former American president Harry S Truman rightly said, “Recession is when a neighbor loses his job. Depression is when you lose yours.” Only this time, it’s a ghastly combination of the two, taking the world by storm. A storm so big, that we all might get washed away without a trace.
In the future, we might face food shortages, global pandemics, and acute shortage of resources. And the worst part is that the problem is chronic. It is a result that has developed over a period of time and cannot be reversed in an instant. Robert Reich, author of “Supercapitalism: The Transformation of Business, Democracy, and Everyday Life” opines, “I think the reports we’ve been hearing that the United States will rebound in the second half of this year are overoptimistic. I don’t know where the demand to create economic growth will come from. Exports can’t fill the gap, and I worry that the perfect storm of rising fuel and food prices and declining home prices has put consumers in a bind. Real median incomes are lower than they were in 2000, and consumer debt is higher. People can’t get money out of their homes anymore.”
If that wasn’t scary enough, there’s more:
“Consumer confidence is dropping, and the concern has been growing for years. It’s a deeper phenomenon than the short-term issues. Americans work more hours than the Europeans or the Japanese, and have gone deep into debt. I don’t think recovery from this recession will be vigorous.”
The solution is elusive and difficult. It’s like the global economy is stuck in a deep well, trying to clamber out, but falling back in. It’s not a job especially cut out for the youth, or for a particular age or sector. We can only depend on the entire globe working twice as hard and ten times as humbly to get the demand back to where it, was by producing a large number of goods at low prices. With hundreds of billions of dollars in bailout, experts say the end is in sight for Uncle Sam. Only time will decide whether the ‘World’s Most Powerful Country’ in the world would bail on the world.