The crisis takes a much longer time coming than you think and then it happens much faster than you would have thought.
– Rudiger Dornbusch
Conclusions
Rudiger Dornbusch (1942‑ 2002) was a renowned international macroeconomist, a demanding teacher at MIT, an intimidating public speaker (I hear), and one of the world’s leading experts on crisis management. One of his most famous quotes, in addition to this essay’s epigraph, considers the handling of the 1998 Brazilian economic crisis in Brazil: “When they [the Brazilians] call 1‑800‑BAILOUT, just let it ring. Say our operators are busy.”
Dornbusch was an unyielding opponent of governments meddling with the economy, but he did support the establishment of supranational entities to handle crises. I have become rather skeptical towards global governance organizations of late, and have recommended that countries stay out of IMF programs, and so on. However, this would require that a country’s economy be made “crisis proof” before the crisis hits. Essentially, this implies low indebtedness of households, corporations, and the government, limited foreign financial exposure, sufficient gold reserves in the central bank, and prudent oversight of the banking sector. Many countries have not done this, which means that they are likely to be forced to ask for IMF support in the near future.
The coming, or, more precisely, the ongoing crisis that will most likely re‑appear shortly in a more destructive form is likely to reshape the global economic structures in a dramatic way. The biggest losers are likely to be some of the world’s largest economies: the U.S., the EU, and possibly also China. Their economic “engines” have been pushed to their respective limits, and some form of breaking up is inevitable. However, what they may lose will become available for other countries to gain.
When a financial system crumbles, people and countries resort to necessities. Survival, quite naturally, becomes the main issue. In such a situation, resource rich nations like Azerbaijan have a natural upper hand. Playing it correctly requires that such countries take measures to prevent their economies from being The coming, or, more precisely, the ongoing crisis that will most likely re‑appear shortly in a more destructive form is likely to reshape the global economic structures in a dramatic way. pulled under by those that are in the process of failing. Thus, when the crisis re‑emerges, it will be imperative for such countries to cut without hesitation the toxic aspects of financial ties with the U.S., the EU, and possibly even China.
This will require the formulation of prudent national strategies to manage, first, the possible outflow of “hot money” (mostly through capital controls), second, currency and foreign exchange issues (especially if the EU is sucked into an epic currency crisis), and third, the country’s positioning in the context of the re‑forming of global economic structures. Grouping with like‑minded countries would be likely to establish important synergies, particularly if the Western bloc took what would likely represent a Dystopian turn through the issuance of CBDCs.
Major crises have always represented opportunities for the brave‑hearted, the prudent, and the prepared. If the ongoing banking crisis takes the sort of sinister turn outlined in this essay, then it will come to be seen as biggest reshuffling of the global economic and political order since the ‘Great War’ and the 1930s. This would, in turn, form the basis for the execution of a truly strategic opportunity for those states that provide global economic necessities like energy, minerals, and food to fill in the void, become economic safe havens, and secure sustainable prosperity for their respective populations. The time to start planning for such a contingency is now.
#CUANDO LA #RUTAECONÓMICA #FINALIZA: ¿OTRA GRAN DEPRESIÓN EN EL HORIZONTE? (#TUOMASMALINEN, #BAKUDIALOGUES (II)) https://t.co/zxgRwtZWLQ
— Guillermo Ruiz Zapatero (@ruiz_zapatero) July 26, 2023
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ESTE ANÁLISIS DE MALINEN PUEDE CONSIDERARSE COMPLEMENTARIO DEL DE ORBÁN Y OPUESTO A LA VISIÓN DE LOS "LÍDERES EUROPEOS"@mtmalinen
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— Guillermo Ruiz Zapatero (@ruiz_zapatero) July 26, 2023
The formulation of prudent national strategies to manage: 1) the possible outflow of hot money; 2) currency and foreign exchange issues (especially if the EU is sucked into an epic currency crisis), and 3), the country’s positioning in the global economic structures https://t.co/EMOuPicuDA
