Despite talk of recoveries and reforms, little has actually changed. As long as the root causes remain unaddressed, don’t expect a miracle
The year 2013 saw two anniversaries: The 50th anniversary of the assassination of President John F Kennedy and the 5th anniversary of the global financial crisis (GFC) and the collapse of Lehman Brothers. Both events continue to cause controversy. Theories about the presidential killing are still debated. There are still disputes about the causes and cures of the GFC.
Despite some views to the contrary, the GFC was the result of high debt levels, global imbalances, excessive financialisation of economies and an entitlement society, based around borrowing-driven consumption and unfunded social entitlement programmes in developed countries.
Interestingly, despite talk of recoveries and reforms, little has actually changed. The root causes remain substantially unaddressed.
Unfortunately, these policies have not created the strong economic growth or inflation needed to address the problems exposed by the crisis. Instead, the policies intended to deal with the issues have spawned toxic problems of their own.
(This story appears in the 10 January, 2014 issue of Forbes India. To visit our Archives, click here.)