I’m going to give you a brief overview of the book that I read recently, called « How to survive (outlive) crises ». The author is Jacques Attali – an economist, writer and French civil servant.
In his book along anlysing series of crisis that might happen to humankind in the close future, he gives some recommendations concerning the behaviour and the views that we should acquire or developin order to better adapt to the situation we find ourselves in times of crisis, either prosperous or difficult.
In his first 2 chapters he gives the analysis of the current situation of crisis, its reasons and its conséquences, he gives an overview of the situation in 2010, 2011 and predicts 2 possible scenarios according to which the crisis could evolve.
The first one is a U scenario (a U as agrafic), it’s an optimistic forecast meaning that the situation will gradually improve. The optimism that already exists on the stock exchange since april 2009 will lead to a progressive improvement of the real value of some compromised assets, the restoring of the banks’ equity capital, then an upturn of the commercial lending and of the private investment. Even if a U scenario takes pace, itwill be a long prosess. The américain GDP would get back to its level only by 2011, the sectors mostly concerned by a downturn like autombile or housing would regain their level of turnover in 2007 only by 2015, and the full employment will not be achieved before the year 2017.
The second, a W scenario, is a pessimistic one, meaning that even after a factual recovery of stock exchange there could bea lasting plunge back of the world economy (which is a second V of a W scenario). He gives a number of reasons of that. For instance, the lack of demand. There is no way to boost consumption for the households tending to reduce their expenditure and there’s no way to encorage demand in credits of over – indebted population. The central banks can’t lower interest rates which are already low, thegovernments can’t increase the private demand by réduction of taxes due to the level of public déficit. The consumption of western countries will shrink up to the level where it will become impossible to revive the private investment.
The supply of crédits by banks won’t increase either, due to the weakness of the banks’ equity capitals. This will block everything, bec without the banks’ability of financing there can’t be boost of investment, and without boosting investment there can’t be economic growth.
So western states will need to continue subsidising banks and companies, resulting to the soaring of public debt, the continuous growing of interest rates, and the loss of confidence of treasury bonds investors.
As a result, the stock market will fall out again and we’ll enter thesituation of a world récession for at least 10 years.
In the same chapter the author gives other examples of crisis that we risk like energy crisis, major ecological crisis, healthcare and éducation crisis, uncontrollable pandemies like mexicain flu.
He claims that the Occident is "out of stock ", crippled of debts, and that the world will go of crisis in crisis: the chinese bubble,protectionism, hyperinflation, collapse of the dollar, bankruptcy of the central banks, etc.
In the introduction the author gives his opinion on the situation saying that our socio-political systems dont’do anything serious to take away the dangers than hang over the individuals, companies, nations and humanity. The free mkt is not interested in people living too ong, companies that last and nationsthat persist. On the contrary, it’s interested in allocatating more efficiently rare resourses.
Facing the dangers of the next ten years, those who want to survive should admit that they don’t have to expect any help from anyone, and understand that every threat is an opportunity in the long run, and the challenge of surviving crisis doesn’t mean the destruction of others, but first of all the...
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