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TO THE DECLINE OF THE GLOBAL ECONOMY

by Open-Publishing - Wednesday 21 July 2010

Economy-budget

The phenomenon of economic globalization has made all the rational elements of the economy are interrelated due to the consolidation of oligopolies, technological convergence and corporate tacit agreement so the economic crisis is global, binding, heading slowly but inexorably to its irreversible decline.

To reach the sunset (which are already outlined early sketches and finish drawing the next five years), have contributed the following:

Replacing the economic doctrine of Equilibrium States budget deficit for the endemic practice adopted by mimicry households and businesses, and public and private agencies contributing to the demise of a culture of saving, chronic indebtedness, excessive reliance on External Finance.

Establishment of compulsive consumerism in developed countries, aided by the incessant bombardment of advertising, the irrational use of plastic cards, granting instant credit with interest and bloody invasion of a flood of manufactured goods of dubious quality and prices without competition from emerging countries.

Suicidal policy of major global banks in granting credit and subprime: Immersed in the vortex of the expanding global economy of the past decade and in order to optimize their bottom line, ignoring the most basic act of prudent lending standards becoming mere speculative brokers and neglecting the allocations for the provision and Insolvency Fund.

All this combined with the lack of supervision by the monetary authorities of the credit ratings of banks originate subprime crisis of U.S., followed by a continuous drip of bank insolvencies, a severe contraction in bank lending and alarming lack of monetary liquidity and confidence in financial institutions.

Paranoid obsession of the stateless multinational or transnational corporations to maximize profits due to the insatiable appetite for its shareholders by requiring steady increases in dividends are not hesitating to go into debt for the sake of gigantism dangerously hostile takeover bids and by strengthening the policy of relocating businesses to emerging countries in order to reduce production costs (given the huge differential in wages and lack of labor rights of workers).

This will cause a severe impact on the footwear and leather goods, textiles, sports equipment, appliances low and medium range and auto ancillary industries in developed countries, resulting in labor and starvation return in the next decade unemployment rates not seen since World War II.

Brutal increased consumption of raw materials and finished products by emerging countries due to its spectacular growth of annual GDP over the past decade which together with the intervention of speculative brokers has led to a spiral of price increases unaffordable by the First World economies (unable to reverse them in the final product price, given their high production costs).

As a result of the above has led to a marked loss of competitiveness, stagnant exports, rising current account deficits and external debt and the global economic destabilization, drawings and a scenario in which the return to economic protectionism, the subsequent contraction of world trade, after settlement to economic globalization.

GORRAIZ GERMÁN- ECONOMIC ANALYST