Monday, 8 February 2010

Fixing the Global Economy

From a superficial glance, the global economy is looking much better. World leaders have given the economy a big boost with massive stimulus packages. Shares prices have recovered and if the size of bank bonuses is an indicator then the banking system is back in good health.

A quick fix was needed to prevent economic meltdown. Now that apparent stability has returned we need to take a long hard look at the economy - and society. People are starting to question capitalism and so they should. There are fundamental problems that can only be fixed by a major overhaul.

When the economy was booming people were reluctant to look beneath the figures. Now that the gearbox of the global economy has started to make some ugly noises we need to look deep inside at the mechanics. The return to stability may be little more than the actions of a bent second-hand car salesmen who has tipped sawdust in the gearbox to dull the noise. Such a short-term fix leads to a massive bill in the future.

We need to examine the purpose of finance and bring it back to support the real economy and society. This may mean taking apart the gearbox, cleaning it, fixing it where necessary and reassembling the pieces.

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