Christine Lagarde, the former French finance minister and new managing director of the IMF has presented a bold list of to-do-things to the gathering of central banks including a warning, “The world economy, she said, was entering a “dangerous new phase” driven by a sense that “policymakers do not have the conviction” to take decisions that are needed. " The Economist has a report on it (http://www.economist.com/blogs/freeexchange/2011/08/world-economy).....
I am like majority of people is not sophisticated enough to fully understand what it really means to live in “dangerous new phase” except fearing the worst but I can recall what happened after 9/11 terrorist attack. Before 9/11, Hazara Town was not as “glamorous” (Some like to call it this way) as it is today. It was a place that was offering affordable housing for people with lower incomes. Carpet weaving became very popular especially among women and children that were trying to have a hand in supporting their families. A lot of shops and houses turned into mini-factories of carpet-weaving. These hardworking children and women who were dreaming to weave their future beautiful just like those beautiful carpets, never thought that the threads of the lives are woven somewhere else in the world. They couldn’t think that they are part of global economy.
The 9/11 terrorist attack was a shock to the whole world but it was a double shock for those women and children. Soon after 9/11 attack, the carpet industry collapsed. A lot of these carpet weavers lost their jobs and the rest were forced to work on unthinkably lower wages. Nobody in the rest of world has heard of the economic shocks to these children and women. Who would care for these voiceless children and women in a changed world (Of course, the world had entered into “dangerous new phase”)?
When I read the warning of Christine that the world would economically enter into a new dangerous phase, I am not sure what it means to the rest of world except of increasing taxes and lesser benefits in social services and increasing cost of living but of course people who are sophisticated enough to understand all these would prepare themselves for worst (In case it happens). What I am sure that majority of people who are connected to world economy but don’t realize it will suffer most…
I am not offering any solution. Whether economists warn us or not, we tend to prepare ourselves for unexpected challenges in life and one common thing that we do, is saving. I come across an interesting classification by John Fenton (How to sell against competition, P.130-140) in saving behavior. It is amusing to learn it,
“ You know, going through life and meeting as many people as I do, I have found that when it comes to saving money, there are only two kinds of people.
One kind of people tend to spend their income on whatever they need or want to buy, and if they any left over after that, they might think about saving it, or investing it (illustrated in by left circle, the red part showing saving)
The other kind of people tends to put some money aside before they start spending, to save or invest. (Illustrated by right circle, saving is illustrated by red part)
And the funny thing is – these kind of people (the left-hand circle) always seem to finish up working for these kind (the right hand circle.”…………………
I don’t exactly remember where I read this but a woman in her article was advising that “the first bill that one has to pay is saving”. That is the one of the option that is within our reach to give ourselves a little comfort in economic meltdowns……..
No comments:
Post a Comment