Transcript DEVELOPMENT AND CRISIS MANAGEMENT A CASE STUDY ON

UNPREPAREDNESS IN THE
GREAT RECESSION
By
LIM Chong Yah
Albert Winsemius Chair Professor of Economics
Director, Economic Growth Centre
School of Humanities and Social Sciences
Nanyang Technological University
SINGAPORE
SNG Hui Ying
Lecturer (Economics)
Fellow, Economic Growth Centre
School of Humanities and Social Sciences
Nanyang Technological University
SINGAPORE
(copyright © August 2009 by Lim Chong Yah)
1
(I)
Unpreparedness In The Great Recession
(1)
Pre-recession huge budget deficit
(2)
Market failure Unanticipated
(3)
Monetary Policy Only
(4)
Luke-warm Fiscal Policy
(5)
No Foreign Exchange Reserves
(6)
Insufficient Income-Generating Investment
(7)
Legal State Budget Balance
2
(II)
No Learning From Japanese Experience
(1)
Property Bubble
(2)
Budget Deficit
(3)
Monetarism, Liquidity Trap
(4)
Luke-warm Fiscal Policy
(5)
Fear of Inflation Without Inflation Targeting
(6)
The S Curve Theory
3
(III)
American Dilemma and Vicissitude
(1)
Paradoxical Fear of Inflation in a Great Recession
(2)
Unsure of Creative Destruction Policy,
Schumpeterianism
(Reversed Perestroika)
(3)
Equivocation on Fiscal and Monetary
Co-ordination
(Independence of Central Bank)
4
(IV)
Why Great Recession is Short-lived
(H208 through H109)
(1)
Global Cheap Money Policy (Monetarism)
(2)
Global Fiscal Stimulus (Keynesianism)
(3)
China, India, Indonesia etc. No Recession 2009
5
Global Interest Rates
(3-month latest)
United States
Japan
China
Britain
Canada
Euro Area
Austria
Belgium
France
Germany
Greece
Italy
Netherlands
Spain
Sweden
Switzerland
Hong Kong
India
Singapore
South Korea
Taiwan
Israel
Saudi Arabia
Source: The Economist, July 4th 2009, p 82.
0.34
0.43
1.32
1.20
0.23
1.09
1.09
1.10
1.09
1.09
1.09
1.09
1.09
1.09
0.28
0.40
0.36
3.31
0.50
2.41
0.85
0.33
0.65
6
Global Budget Balances
% of GDP 2009
Country
%
Country
%
United States
-13.2
Turkey
-5.6
Japan
-6.8
Australia
-4.2
China
-3.8
Hong Kong
-4.1
Britain
-13.9
India
-7.7
Canada
-2.1
Indonesia
-3.0
Austria
-4.6
Malaysia
-7.8
Belgium
-4.8
Pakistan
-5.0
France
-6.6
Singapore
-4.1
Germany
-4.6
South Korea
-5.7
Greece
-6.5
Taiwan
-5.2
Italy
-5.2
Thailand
-5.6
Netherlands
-4.1
Argentina
-1.2
Spain
-9.6
Chile
-3.3
Czech Republic
-4.0
Colombia
-3.4
Denmark
-2.5
Mexico
-5.4
Hungary
-3.9
Venezuela
-4.7
Poland
-4.0
Egypt
-7.1
Russia
-8.0
Israel
-6.2
Sweden
-4.7
Saudi Arabia
-5.1
Switzerland
-3.1
South Africa
-4.1
Source: The Economist, July 4th 2009, p 82 (based on The Economist poll or Economist Intelligent Unit forecast).
7
Global Stock Market Indices
% Change from Dec 31st, 2008
(In US $ terms, July 1st, 2009)
United States (DJIA)
United States (S&P 500)
Japan (Nikkei 225)
-3.1
+2.2
+5.2
China (SSEA)
Britain (FTSE 100)
Canada (S&P TSX)
Austria (ATX)
Greece (Athex Comp)
Denmark (OMXCB)
Hungary (BUX)
Norway (OSEAX)
Russia (RTS, $ terms)
Sweden (OMXS30)
Turkey (ISE)
Australia (ALL Ord)
Hong Kong (Hang Seng)
India (BSE)
Indonesia (JSX)
Malaysia (KLSE)
Singapore (STI)
South Korea (KOSPI)
Taiwan (TWI)
Thailand (SET)
Argentina (MERV)
Brazil (BVSP)
Chile (IGPA)
Egypt (Case 30)
Israel (TA-100)
Emerging Market (MSCI)
+64.9
+12.2
+24.1
+24.2
+27.3
+23.7
+26.4
+38.1
+54.8
+28.2
+40.4
+21.3
+27.7
+54.4
+62.6
+21.0
+33.3
+24.7
+43.5
+35.6
+35.6
+65.8
+56.1
+22.2
+40.9
+36.3
Source: The Economist, July 4th 2009, p 82.
8
(V)
Post-Aberration Prognostication
(1)
The S Curve Hypothesis
(2)
US$ Threatened
(3)
Acceleration of Convergence Process
9
Have A Good Day
THE END
Cheers and God Bless
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