The economic dimension of the crisis
is huge. That’s now obvious to everyone, as the figures about unemployment and
temporary layoffs become known. And that explains the gigantic size of the
recovery programmes that have been announced. The amounts are just mind-boggling,
difficult to imagine, because of the large number of zeros that follow the
initial figure. Hundreds of billions, many of them close to trillion figures, or
even above, as it is the case in the US. We are talking about funds that are
simply not available. They will have to be printed.
It is a dramatic situation to many
families and a move to extraordinary levels of indebtment by the States, the
corporations and firms, and the families. Large amounts of debt, both public
and private, were already a key feature in many countries. Our economies have
been in the red for several years. But the previous debt levels will look as
small fish when compared with the numbers in the next phase, the recovery
phase. Most of that debt will be untenable and will have to be write off,
sooner or later. That will cause major changes in wealth ownership. The point
will be to manage such transition in a way that would avoid the ruin of key
sectors of the economy, including the pension mechanisms, the banking and
insurance systems, the bond and the property markets.
It is indeed a completely new ball
game. We will have to play it and keep defining the rules as we move on. It
will require an extraordinary level of international cooperation. That means
wise leadership, plenty of foresight and political courage. Unfortunately, wise
leadership seems to be a dimension that is seriously absent in the current
international relations scenario. In my opinion, that’s one of the key risks
that can seriously disrupt the next stage of our life in this small planet. These
will be exceptional times.
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