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Signs of a worsening world economy

The latest price of light crude oil fell to $79.98 today (...), foretelling a worsening of the world economy right ahead. We have definitely left the eye of the hurricane and are now fast approaching the heavy gusts.


In spite of the trillions of dollars injected in western economies by central banks to jumpstart the growth engine, money supply continues to contract in those same economies. In other words, contrary to the general expectations of monetary and fiscal policy decision makers, the trillions of dollars are not generating growth. Worse, those trillions million of dollars have increased debt in those western economies to unbearable levels.


The world economy is thus in a much more dire situation than during the financial crisis of 2008-2009. More debt and yet no growth! People will make a bonfire of Keynes and all temples of Keynesianism by the time this crisis is over!


We have every reason – theoretical and practical – to hold the view that so long as the massive quantitative easing fails to trigger growth, the beast of inflation will remain dormant. We form part of that tiny minority of observers who believe that it is not inflation but deflation that is lying right ahead. In such a scenario, asset prices cannot but depreciate faster than money creation. Debt and Deflation rhyme with Depression... the 3D’s most feared by central banks and bankers.


This double dip of the world’s economy, which the economic commission of the MMM forecasted in early 2010, is materialising. We have been unfortunately right on all counts since 2005 – we say unfortunately because rather than taking our reasoned and well-thought out proposals seriously, government, all the way through, taxed us with silly remarks dismissing us as “prophètes de malheur”. Measures which could have spared the country a lot of suffering have been disdainfully rejected.


Instead, the government has been kicking the proverbial can down the road. The whole population and especially the most vulnerable section of our society, will finally bear the brunt of this gross mismanagement of our economy.


Most economists worldwide lacked the foresight to see the coming financial crisis in 2007. They are the same bunch of economists who did not expect the double dip presently crystalizing in the major world economies. We still do maintain that the deep recession the world economy is in, is not a textbook case.


This could be a reason why so many economists are in disarray.


We are dealing with a crisis of monumental proportion that seriously challenges the very survival of a western paradigm – a paradigm that has flourished on slavery, colonisation, the abuse of life, the abuse of mother earth and a total disregard for the environment.


A paradigm twisted in favour of the exclusive 1% on the back of the 99% of the world population. This game of utter greed and total control has run its course.


This crisis will eventually and hopefully give birth to a new world – more equitable, more humane, more respectful of life, more respectful of the environment and of planet earth.


In the short and medium term however, we need to prepare for the worst and hope for the best. This is not doomsday mongering – this is what government is all about. “Gouverner, c’est prévoir.”


It’s darkest before dawn and we know dawn will ultimately come. This is where lies our deep faith and optimism – surviving the coming tsunami to co-create the new Mauritius later.


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Vishnu LUTCHMEENARAIDOO

Commentaires

Ramdho | 06/25/12

M. Lutchmeenaraidoo finn enn dan bann rar obzervateur ki ti dir ki sivilizasion kouma nou kon dan dif. Enn sivilizasion ki koumans so dekadans ek kolonizasion eropein ek zenosid bann lepep otoktonn. 500-600 lane apre, fri-la fini pouri. Lanons enn nouvo sivilizasion marke partou, pa zis dan lekonomi, pou saki anvi trouv enn sel planet ek ena enn ti konpreansion ki pe arive.

MBCTV | 06/26/12

Vishnu Lutchmeenaraidoo and the Economic Committe have right all along with their analysis of the world economic situation and particularly so with their forecasts!One would have wished though,that Mr Lutchmeenaraidoo had elaborated a bit more about the 'dawn' that will follow the darkest hour.Are we talking solely about a new global financial system or a world order that will cater for humanity as a whole?Above all what / who is delaying that change?Are the BRICS countries part of the main engine that will bring about the solution?

Ahmad Rafick C... | 06/26/12

Vishnu is right and has always been. I have gone through many of his observations and recommendations. Only Ramgoolam and Duval have not seen them. Even that they have gone through them an analysed all the recommendations, they have ignored them, simply because they came from Vishnu. They are not caring about the people and the economic growth of the country, but how to lure the mauritian public and stay in power, ZISE POU JOUIR. I'm in Europe these days and in the richest european economy, Germany. I've been here since three weeks now and i can see how the people and the government are struggling to make both ends meet. We depend on these economies to survive. Our industries, tourism,sugar and manufacturing all depend on European economies. If there is no growth in these economies,how ours will grow. I was in England a few days back and have seen so many strikes and so many people losing heir jobs. If Europe cannot buy our products, for which market will we produce ? Duval has come to Europe for a promotion program just to invite investers to Mauritius. If there are no markets to sell the products, who will come to invest ?He wanted to cme and have a bouillabaisse in Marseille and invented a mission. We are just witnesing about the frauds in the BOI. DUVAL DANS SES OEUVRES. The trillions of euros invested in countries like, Spain, Portugal,Italy ,Spain, Greece, Ireland and others will not help the economic growth.As Vishnu has pointed out, it will make heavier the debt billamd the countries will go bankrupt.The leaders are having no visions to where they are heading those countries,it is only their ego and pride to stay on the top and fuck the economy and the people. Greece is an example of how the people got angry ahd general election had to repeat so that a government could be formed. Mauritius also is in the same situation.The more Ramgoolam and his Duval will have their grip on power,he more they will screw the country, its economy and after all the whole population. I really pity my country.Fortunately we have some people who have the will totake the country out of the crisis. But for the moment CRY MY BELOVED COUNTRY. CRY

Ethan | 06/26/12

...mais un brutal retour la normale suite aux excs de ces dernires annes. Je suis loin d'tre expert en conomie ou en finance mais, ds mon enfance, mes parents m'avaient appris que "l'argent pas pousse lors pieds". Nous avons vcu avec la facilit du crdit pendant trop longtemps. Il est temps de quitter le virtuel et de revenir la ralit.

Goldfinger | 06/26/12

I just hope that Mauritius bought solid gold, took delivery, and arranged for storage as a segregated entity in a vault outside the banking system. Paper gold holders are just going to find the hard way that there is virtually no physical gold backing their paper. Buyer beware!

Bellountally | 06/26/12

Vishnu, si to ene (...)rasseur meme, ki to pe faire Maurice? Vine dans l'Europe, ena mari crise, to capav donne to l'ide pou rsourdre problme Europe...lere-la mo tire chapeau are toi. To pou etre pay en Euros. Paraitre to reste Maurice, faire tapaz, veille sk et attann pou gagne ene place ministre (...) car lepep so la langue pe touche coaltar!!!!

Ramenn- Perth | 06/26/12

Vishnu you are always right in your analysis especially in regard to economy , you were the first economist who predicted the effect of Global Financial crisis 2008/2009 , years before, but unfortunately due to the ego of certain politicians in Mauritius at that time did not take your alert into due consideration. Yet Mauritian need people like you to recreate the economic boom through modernisation focusing on new technology to drive the mauritian economy towards employment creation, withstand any financial crisis and promote new opportunities for investors.

Saud Qadir | 06/27/12

To >...Vishnu said so in 1982, too. But politicians live in their own planets..... By the way what is the MMM saying now: close the hotels and return the beaches to the people? Land reform, to allow the common people access to agricultural land? Reform of education to focus more on survival techniques? Publication of politicians' wealth records? Transparent publication of Corporation Tax revenue? Please spell out how the society and our psychy will be transformed through political action!!!

jimmy | 06/27/12

pas biin ene malin pou comprend l economie mondiale en berne.....mais quand Vishnu pe coze banne causes sa crise al la nu pe nage en plein demagogie car probleme ene probleme financier

Alcazar | 06/27/12

Projets,developements,malls etc c;est du tape a loeuil
Pendant ce temps dans l'ile maurice moderne ena zenfants pe partege ene di pain maison en deux pour dejeuner.ceux qui ena bizin ena plis ceux ki pena bizin reste pena meme

Arti Pandreah | 06/27/12

Congratulations Mr Vishnu. In 1983, you had the famous report written by Michel devaux and his team from the World Bank which visited Mauritius end 1981 and submitted its report in 1982. The MMM-PSm government of 60-0 started applying all the report's recommendations. And in 1983 when you took the Ministry of Finance, all you did was to continue its implementation. After that the IMF and Workd Bank published another report called 'Managing Success' and again you implemented all its recommendations. Yet the whole of Mauritius has never known where all the magical competency come from. Its'a pity that these two institutions do not issue any report of the type you benifitted. They ave their own men at the Finance now. The job is easier for them. And nobody to 'tap l'estomac' unfortunately !!!

Lélio Wong | 06/27/12

After the Sithanen's era, its stimulous effect, Vishnu's predictions have been more than accurate in exposing his ideas without any personal ego or ambition i.e in securing a major part of the reserve in gold which needs no commonsense of a finance jongleur in not avoiding a crash but make profit of it. Unfortunately Mauritians did not find the need of a real reformer but were more concerned to keep " pouvoir dan zot lamain" when Navin Ramgoolam exposed proudly his 5 years assessment not giving price to the one who performed it but instead kicked him in his ass to replace him with an empty barrel. How many have been shocked of such a reaction during a period prevailing other worse situations. The after story of deficits accompanied with " rempli vente" affairs during PJ's era, followed by XLD navigating without compass is a visible sign of a sinking ship. Should we cherish hope of survival till 2015 while others prefer to keep " pouvoir" ? If no one cares or expect for a change, the countdown has long begun.