Presenters Notes For Slide 4

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Presenters Notes for Slide 4 (Continue) After the sub-prime crisis in the US and the steep fall in markets, the world has tried to solve the problem by throwing more money at the problem – money printed and lent out at near zero interest rates almost all over the developed world hasn’t worked. Why isn’t it working? and why are the markets crashing today? The answer is complex, but there are prime reasons for this failure by the world to cure itself. *Cheap money was used by companies and financial institutions not to lend to companies creating jobs, but to make money from money – which means financial investments like stocks and bonds. *When the private sector was unwilling to invest and people in excessive personal debts were trying to bring leverage levels down, the logical thing for the US to do was to invest in infrastructure – which is what India is trying to do now *The global rebalancing that should have happened after Lehman - where the strong exporting countries exported less and consumed more, and the high importers exported more and consumed less – has not happened. *The failure of this economic rebalancing is leading this time to entire countries coming close to collapse. Ie the PIIGS (Portugal, Ireland, Italy, Greece, Spain) *The Chinese are unable to grapple with the new challenges that come with becoming the world’s second largest economy and key driver of demand. India must use the opportunity provided by China’s and the World’s economic
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