The current recession being a blanket recession required blanket, across the board treatment for real results. The response of the developed world and the gig emerging economies (read: India & China) looks straight out of Keynisian economic model. However a deeper study of the problem clearly and without doubt reveals that the recession is more of a Hayekian type than Keynisian and this being so the impact of the same is deeper, more painful and needless to say will consume enough cincinnati reds black and red caps time to recover. To put the same in layman's language so that every reader can understand the density of the problem, this is very much like say Hepatits B viral infection in humans which obviously is "curable" but "will take time" to cure, that is, it cannot be cured instantly like a common cold infection. ?
Being Heyakian type the impact of cincinnati reds black and red caps this recession has changed the behavioural aspects of common man across the globe, in particular in the developed world which is worst affected and in the big emerging economies. Bringing about changes in the behavioural aspects of consuming public is a time consuming slow and steady process. Thus to make the public go out and spend their money (to create demand) will take its own sweet time and that's precisely the reason as to why Keynesian model may not bring fast results in the current scenario.
Keeping all the available statistcal figures aside, lets purely focus on fundamental causes and? its effects with our thoughts firmly grouded to the basic roots of the science of economics. Looking the things from a macro perspective, a major "cause" of this "effect" (that is recession) is the trade imbalance plus the capital flows. In a system based on sound economics, capital needs to flow from developed geographies to developing geographies due to trade surpluses enjoyed by the developed nations and capital inadequacy in developing world. However over the last few years, the direction of the trade flows (and obviously so the direction of the capital flows as well) have been reverse to this fundamental concept of economics. Result was evident in America's record trade deficits (some thing that is not a characteristic of a developed economy) and huge trade surpluses of emerging markets in Asia (again some thing that is not characteristic of a developing economy). The capital flows were also in reverse swing, as the trade surpluses of emerging markets found its way to America in the form of investments in US treasury bills and other securities. Thus from a birds eye view, we can see that the capital flow was from developing world to the developed world which is against the fundamentals of economics and thus cannot last long and the vicious cycle has to come
没有评论:
发表评论