Global economies 'far off from recovery'
Manama, February 7, 2013
The global financial crisis is either a result of the inefficiency of markets or has been caused by government interfering in market and was likely to take a long time to recover, said an expert.
"On the one hand you can look at what happened as a major market failure because it was not efficient. You had a position where the market was not being monitored and where people were greedy and that makes for inefficiency," remarked Dr Thomas Jeanjean, the associate dean of the faculty at the ESSEC Business School in France.
Dr Jeanjean's remarks came ahead of his speech at the Arabian Gulf University's Alliance Francaise Auditorium in Bahrain this evening.
"It is something we have seen before in the 2000 dot-com crash and the Asian financial crisis," he told the Gulf Daily News, our sister publication .
"On the other hand, you can argue that the crisis was caused because governments did not allow the market to function," he stated.
"You had a situation where the US government created low interest rates which created a housing bubble while in Europe you had a single currency that suggested the economics of Germany and Greece were the same," explained Dr Jeanjean.
"We do not see these things coming because people are not able to process the information available and there is a general herd instinct," he added.
Dr Jeanjean pointed out that he remained pessimistic about the future and expected the recovery to take a long time.
"Consider this," he said. "I am 39 years old and in my lifetime France has managed to balance its budget just twice in all those years. That is just not supportable. In Greece and Italy public debt is more than 100 per cent of gross domestic product and that is not sustainable," he stated.
"Ten years after the creation of the euro it is still not being managed efficiently and this at a time when it has the opportunity to replace the US dollar as the dominant global currency," he said.
"With the crisis something has changed in the world," he added.
"Europe could solve some of its problems with inflation but Germany is not going to let that happen," observed Dr Jeanjean.
"In a global world, perhaps it is time to look locally again and accept that countries will have to balance budgets and investors will have to accept a positive takeaway and return to understanding geography," he added.-TradeArabia News Service
More Finance & Capital Market Stories
- Bahrain firms plan IPOs
- Serbia wins $1bn Abu Dhabi loan
- Key equity banker resigns from Saudi Fransi
- DMCC to boost Islamic commodity trade with tie-ups
- IDB, KIA units to invest in Morocco
- First Gulf to set up $1bn sukuk in Malaysia
- Singapore’s UOB Bullion and Futures joins DGCX
- Infrastructure investment ‘key to growth’
- BKIC declares 30pc dividend
- StanChart profit falls 16pc in 2013
- Veteran Saudi banker to head AMF
- Dubai World prepays $284m to creditors
- EFG-Hermes sells Damas stake to Mannai
- Ultra rich number to grow 35pc in Mideast
- Saudi IPO market 'set for big year'
- RAK 'exploring' ceramics unit stake sale
- Bahrain Bourse wins key UK award
- Alba backs Euromoney forum
- URC bond rating upgraded to stable outlook
- GCC urged to set up onshore financial centres
- Consolidation push paying off for Bahrain banks
- Mubadala to focus more on US, Europe
- Six banks join plan for shared customer data register
- UAE economy grows 4pc in 2013
- Egypt foreign reserves up to $17.3bn
- StanChart opens second branch in Iraq
- Oil below $90 to hit GCC economies
- Payfort offers zero deposit scheme to SMEs
- In a first, NCB Capital names female CEO
- Du enters $1.17 billion financing deals