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By Youri Kemp
I had tuned in to one of the local talk shows in The Bahamas, and the host was on about the economic crisis and why hadn’t anyone seen it coming — particularly the economists and business persons. It wasn’t the main focus of the show that day — from what I heard — but it was a side remark to the main point of why persons can still start up their businesses, even in these challenging times.
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| Educated at the Bahamas Baptist Community College; St Thomas University and The London School of Economics and Political Science, Youri Kemp is a Management and Development Consultant |
I would like to work with the first assertion and state that, yes, people did see the crisis coming. The question to be asked, rather than why didn’t anyone see it coming, is why did folks not listen to the people who had something to say on the matter?
I can remember about four years back, sitting in a discussion seminar with my very distinguished professor at the time, Dr Jonathan Hopkin. We were discussing the global economy and how he was in the process of selling his house, after we had reviewed literature two days in advance on economic and welfare regulation. During that same period, I was reviewing Central Bank policy in conjunction with financial deregulation — in particular regard to US Federal Reserve rate policy and the Securities and Exchange Commission’s financial deregulation policies in the mid 1990s — for another distinguished professor of mine, Dr David Woodruff, and then it all clicked!
The global economy was out of whack and in disarray. I knew then that the financial services sector was way more advanced and out of control than anyone without the training had anticipated. It was that awesome. While creating money out of thin air was bad enough, abusing the money multiplier theory by loose lending policies with adjustable rates (e.g. housing market adjustable rates) and the expansion of sophisticated financial products that weren’t ever attached to the products or services that financial peddlers promoted them as. In addition to the loss of structural employment, due to advanced technologies making the worker obsolete and a shift in production to Asia and to some extent Latin America, all of this signified that North American and Western European economies were on non-productive, welfare spend to consumption foundations that were bound to collapse.
My eyes were opened, so to speak. I never saw the economy or the world the same way I had before that epiphany, ever again. I went on every rooftop, to every kitten and Rastafarian and every website that dared to broach the topic about the state of the economy, proclaiming, “Repent, for the end is near!”
So too were other, more notable and respected voices asking for structural economic reform in the domestic and global economy, for example, Nobel Laureates Paul Krugman and Joseph Stiglitz, as well as Dr Nouriel Roubini, aka “Dr. Doom”, for his incessant ranting on the collapse that nobody saw coming.
Nobody listened. Nobody wanted to listen. Persons were labelled as out of the loop, troublemakers and/or smart lipped naysayers that always fussed a lot about nothing. It was all bad news, you see.
In addition, the money created during the boom was lucrative — even after the crisis, to hear of investment bank CEO’s spending $15,000 on a wall sconce and $10,000 on wastepaper baskets, apiece, to adorn their multi-million dollar offices, is enough to make you think of the type of money that bought influence and the thinking behind the people who were spending that money.
I admit one thing: I didn’t see the crisis’s contagion being so severe. The subsequent ripple effect around the globe in non-financial services sectors, yes. But, the ironic circumstance was having the leader of free-market capitalism, the United States of America, having its credit markets frozen due to the fear of risk of exposure to complex financial products, is something no one could have predicted — who would have thought it could happen?
Another thing was that not only were investment banks in North America and Europe using the same financial products, but they were also globalising them — e.g. the sale and re-sale of credit default swaps and derivatives from North America to Russia, from Russia to Spain, etc.
More importantly, as the crisis got bigger, credit dried up because no one — post Lehman Brothers’ collapse — was willing to risk exposure to people and institutions that were involved in risky trading. Then the market went into a panic — exacerbated by the US political cycle — and wealthy consumers in North America and Western Europe, started spending less because they held back consumption and the home equity market began to collapse (good move, Dr Hopkin), coupled with larger losses in employment, which caused manufacturing in Asia and Latin America to decline, causing more job losses in the other respective regions.
In light of all of this, the good news is that this certainly is a time for planning and for innovative, strategic thinking for new and existing businesses as the rebound happens. The morning after is always the best and brightest time for a fresh, new start. Busts are followed by booms, spurred by innovation, imagination and creativity. While money is still hard to come by, thinking about what you can do when things get better, isn’t.
However, while some would sell you a pipe dream on the idea that a recession does not have to mean a recession for you, reality states that the odds that the recession would not be for you are very slim.
Moving forward, after we have made note that some aren’t prepared to listen to people who have a penchant for being right too soon, I still would encourage them to consider all factors on the table, because lives are depending on it. Lives have been lost already, and in my humble submission, lost unnecessarily and neglectfully so.
When we speak in terms of the Caribbean, with lobbying for a risk sharing mechanism for foreign reserves in order to smooth government revenue in the event a crisis happens again, it’s serious. When we speak of a plan to contain and fight inflation, based on US dollar interest rate movements and the impact it has on oil and other minerals, it’s serious. When we speak of flexible, coordinated and responsive Central Bank policy throughout the region, it’s serious.
In terms of The Bahamas, when we speak of tax reform as a way to create sustainable, supplemental industries that would make The Bahamas less dependent on American consumers that are themselves dependent on a falsely inflated economy, in addition to tax and other reforms that fortifies the middle class, gives support to small and medium sized businesses while strengthening employment, it’s serious.
So, here we have it again, people — of even a small voice like this humble author — are speaking for identifying reform and change. Will the people who have the power to do something act in a meaningful way?
I pray to God that they consider even the most marginal scenarios and set personalities aside, for the common good. (Caribnet) |
The delivery of news is rapidly changing
Winners will be honoured at a ceremony in New York in JuneThe BBC News website has won two People’s Voice gongs for its news website and mobile site in the ever-popular Webby Awards, designed to reward excellence on the net.
There are reports Dell, Nokia and Toshiba are also planning tablet PCsJust four weeks after release Apple has announced it has sold one million iPads.
German company Neofonie has unveiled an early version of its WePad”With that in mind, we believe there is still a gap to be filled between smartphones with screens around 10cm and notebooks.
May 10, 2010
Commentary: Why didn’t anyone see this economic crisis coming?
Posted by pbspublicrelations under Uncategorized | Tags: caribbean net news, commentary, communications firm in barbados, communications specialist, economic crisis, PBS Communications Inc, Petal Barclay-Smith, public relations in barbados, start up businesss, youri kemp |Leave a Comment
I had tuned in to one of the local talk shows in The Bahamas, and the host was on about the economic crisis and why hadn’t anyone seen it coming — particularly the economists and business persons. It wasn’t the main focus of the show that day — from what I heard — but it was a side remark to the main point of why persons can still start up their businesses, even in these challenging times.
I would like to work with the first assertion and state that, yes, people did see the crisis coming. The question to be asked, rather than why didn’t anyone see it coming, is why did folks not listen to the people who had something to say on the matter?
I can remember about four years back, sitting in a discussion seminar with my very distinguished professor at the time, Dr Jonathan Hopkin. We were discussing the global economy and how he was in the process of selling his house, after we had reviewed literature two days in advance on economic and welfare regulation. During that same period, I was reviewing Central Bank policy in conjunction with financial deregulation — in particular regard to US Federal Reserve rate policy and the Securities and Exchange Commission’s financial deregulation policies in the mid 1990s — for another distinguished professor of mine, Dr David Woodruff, and then it all clicked!
The global economy was out of whack and in disarray. I knew then that the financial services sector was way more advanced and out of control than anyone without the training had anticipated. It was that awesome. While creating money out of thin air was bad enough, abusing the money multiplier theory by loose lending policies with adjustable rates (e.g. housing market adjustable rates) and the expansion of sophisticated financial products that weren’t ever attached to the products or services that financial peddlers promoted them as. In addition to the loss of structural employment, due to advanced technologies making the worker obsolete and a shift in production to Asia and to some extent Latin America, all of this signified that North American and Western European economies were on non-productive, welfare spend to consumption foundations that were bound to collapse.
My eyes were opened, so to speak. I never saw the economy or the world the same way I had before that epiphany, ever again. I went on every rooftop, to every kitten and Rastafarian and every website that dared to broach the topic about the state of the economy, proclaiming, “Repent, for the end is near!”
So too were other, more notable and respected voices asking for structural economic reform in the domestic and global economy, for example, Nobel Laureates Paul Krugman and Joseph Stiglitz, as well as Dr Nouriel Roubini, aka “Dr. Doom”, for his incessant ranting on the collapse that nobody saw coming.
Nobody listened. Nobody wanted to listen. Persons were labelled as out of the loop, troublemakers and/or smart lipped naysayers that always fussed a lot about nothing. It was all bad news, you see.
In addition, the money created during the boom was lucrative — even after the crisis, to hear of investment bank CEO’s spending $15,000 on a wall sconce and $10,000 on wastepaper baskets, apiece, to adorn their multi-million dollar offices, is enough to make you think of the type of money that bought influence and the thinking behind the people who were spending that money.
I admit one thing: I didn’t see the crisis’s contagion being so severe. The subsequent ripple effect around the globe in non-financial services sectors, yes. But, the ironic circumstance was having the leader of free-market capitalism, the United States of America, having its credit markets frozen due to the fear of risk of exposure to complex financial products, is something no one could have predicted — who would have thought it could happen?
Another thing was that not only were investment banks in North America and Europe using the same financial products, but they were also globalising them — e.g. the sale and re-sale of credit default swaps and derivatives from North America to Russia, from Russia to Spain, etc.
More importantly, as the crisis got bigger, credit dried up because no one — post Lehman Brothers’ collapse — was willing to risk exposure to people and institutions that were involved in risky trading. Then the market went into a panic — exacerbated by the US political cycle — and wealthy consumers in North America and Western Europe, started spending less because they held back consumption and the home equity market began to collapse (good move, Dr Hopkin), coupled with larger losses in employment, which caused manufacturing in Asia and Latin America to decline, causing more job losses in the other respective regions.
In light of all of this, the good news is that this certainly is a time for planning and for innovative, strategic thinking for new and existing businesses as the rebound happens. The morning after is always the best and brightest time for a fresh, new start. Busts are followed by booms, spurred by innovation, imagination and creativity. While money is still hard to come by, thinking about what you can do when things get better, isn’t.
However, while some would sell you a pipe dream on the idea that a recession does not have to mean a recession for you, reality states that the odds that the recession would not be for you are very slim.
Moving forward, after we have made note that some aren’t prepared to listen to people who have a penchant for being right too soon, I still would encourage them to consider all factors on the table, because lives are depending on it. Lives have been lost already, and in my humble submission, lost unnecessarily and neglectfully so.
When we speak in terms of the Caribbean, with lobbying for a risk sharing mechanism for foreign reserves in order to smooth government revenue in the event a crisis happens again, it’s serious. When we speak of a plan to contain and fight inflation, based on US dollar interest rate movements and the impact it has on oil and other minerals, it’s serious. When we speak of flexible, coordinated and responsive Central Bank policy throughout the region, it’s serious.
In terms of The Bahamas, when we speak of tax reform as a way to create sustainable, supplemental industries that would make The Bahamas less dependent on American consumers that are themselves dependent on a falsely inflated economy, in addition to tax and other reforms that fortifies the middle class, gives support to small and medium sized businesses while strengthening employment, it’s serious.
So, here we have it again, people — of even a small voice like this humble author — are speaking for identifying reform and change. Will the people who have the power to do something act in a meaningful way?
I pray to God that they consider even the most marginal scenarios and set personalities aside, for the common good. (Caribnet)