The upheaval in the global economy does not seem to be anywhere near its end: Just as the global financial markets began to show some signs of stability, they were once again hit, not by greedy hedge fund managers or investment bankers, but by the deceitful practices of the very governments that are supposed to be open and accountable.
It has now become household information that the downward spiral of the single currency unit of the European Union, the Euro, started with the revelations of massive debts incurred but hidden in the books by the Greek government. Once the dirty linen in one cupboard came to light, others followed suit, with mostly the Mediterranean economies being hit and financial support packages worth billions of dollars of being announced, to no avail.
Last week the Euro broke the psychological barrier and fell below the US $1.20 mark, creating a lot of confusion among economists, investors and bureaucrats, among others and turbulence in the markets.
Euro was initially created to challenge the dominance of the US dollar as the single currency of international trade. That challenge now seems to have been laid to rest, probably for a very long time, if not for good.
As the world economy reels from the jolt suffered at the financial markets, there are signs that the capitalist economic system is undergoing through some fundamental changes: Banks, traders and managers of financial instruments will be much more closely watched in the years ahead while the supply side economy, and consequently trade, gradually but surely takes back its prominence.
In that environment, the recent joint trip of the premieres of Alberta, British Columbia and Saskatchewan to Japan and China seems to be a well-thought strategic move by provincial governments in western Canada to position themselves in a privileged position to access markets in the world’s second and third largest economies.
Being the neighbour to the world’s largest economy and grabbing trading opportunities in the next two is not a feat that many governments can enjoy.
Now that the groundwork has been laid for western Canada to raise its profile in the Pacific basin as a major economic powerhouse, one would wish that governments would keep up the momentum to guide diversified economic growth at home with legislative and practical steps to ensure that the hopes are realized and not discarded, like the attempt to promote the Euro.
Keynesian principles still have a lot of value and validity in today’s world.
— Mustafa Eric