Preventive Global Economic Crisis Measures
It was bad enough that we had to endure the worst global economic crisis since the Second World War, but what would be even worse would be not learning from it. So what can be done today? Measures need to be taken now to ensure a continual “tracking of economic health.”
This perhaps is not news. There have indeed been attempts to keep tabs on global (as well as regional) economic health in the past. But what is different now is the agreement set by global financial leaders on exactly how this will happen in an attempt to “short-circuit the kinds of problems” that resulted in 2008’s heaviest economic crisis.
New Economic Tracking Methods
The plan as set out in Friday’s deal is – according to G20 officials – that such new tracking will “closely follow indicators such as governments’ budget and trade deficits, personal savings levels and investment flows between nations.” What this means is that there will be an attempt to predict problems before they occur as a preventive measure against rocking the world economy.
This is all very well and good but there are some skeptics. It is still unclear as to exactly how this will happen. But there is hope and there was much discussion on this matter two days ago at the IMF, World Bank and policy setting committees meeting involving US representatives, European officials and more. The hope is that Europe will finally come out of this mess smelling of roses, or at least making significant inroads into clearing its debt issues, while America will work hard to deal with its deficit and public finances.
But it’s not just the US and Europe that need work. China is not exactly innocent either with its tight currency grip. It needs to become more flexible, enabling their “exchange rates to adjust in response to market forces.”
One Step at a Time
Still, the achievements that were made on Friday shouldn’t be sniffed at. Indeed, Christine Lagarde (Finance Minister for France) said that this “monitoring agreement” marked a “significant achievement” in a move towards greater confidence in the world economy and preventive measures for the future of global financial issues.
While all members of the G20 will partake in these efforts in the long-term, in the shorter term, it will be the seven largest economies (which is expected to be: Britain, China, France, Germany, India and Japan). Perhaps what will also happen is that there will be a public noise about country’s individual issues which will prevent for example, China, which has in the past remain secretive of its issues, from keeping anything from the IMF. This is one such example of economic health tracking.
So there is still work to be done, lots of it in fact. But there is also hope. Since Friday’s meeting it looks like at least there will be huge efforts in place to try to prevent another disastrous global economic crisis. It is going to be a step-by-step process, but at least the process is actually in place now.
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