Myanmar Spring Chronicle – September 21 Scenes
MoeMaKa, September 22 2022
In an interview with a world-renowned Columbia University economist, Jeffrey Sach, by the Czech Republic’s Prague Finance Institute (PFI) Think Tank Talk about the depth of the economic problems the world is currently facing, Jeffrey Sach said, “We are in crisis, it will get worse in the coming months”, and predicted that it will only get worse in the coming months.
Now in 2022, he said that the global economic crisis such as rises in fuel prices, inflation, disruption of production chains, a decline in manufacturing, and the rise in basic food prices as a result of the COVID-19 disaster, war and economic sanctions, will only be comparable to the global economic crisis of more than 40 years ago.
At that time, inflation in the United States rose to 14.8 percent, and the US central bank’s mismanagement of policy made the problem worse, and as a result, it affected the debt repayment plans of many countries in the world, and many countries defaulted, leading to a global economic downturn, according to Jeffrey Sach.
According to his analysis, the president of the central bank at that time said that the policy mistake that the central bank tried to control by raising interest rates was the culprit. It is said that the United States central bank raised the interest rate step by step. The first step was 11.2 percent, and then the highest rate was 20 percent in 1981. Due to high bank interest rates, businesses were suspended and the unemployment rate in the United States rose to 10 percent.
The rise in inflation and unemployment started by the United States affected many countries, and at that time, inflation in Turkey was 100 percent and inflation in Argentina also increased to 100 percent.
On reviewing the past decade, he said that there were examples of nearly bankrupt situations in Greece and financial crises in Ireland, Spain and Italy as a result of the failure of the European Central Bank to establish a good policy. He never encouraged printing money as a policy. However, in order to prevent a country from falling into debt, being unable to repay it and declaring bankruptcy, he sees that it is important for the world’s major economic institutions, large organizations and countries with the same ideological path to come together and rescue that country. He believed that a country facing difficulties in paying its debts and going bankrupt is not its own country’s problem, but a situation that can impact other countries as well.
He said that if you look at the current events in the world, there is a high possibility of falling into an economic downturn. And if there is no cooperation and negotiation between countries with major economic powers, a situation of global economic downturn will definitely arrive.
If you look at the world, the European zone is heading downwards, the United States is in the highest inflation position in 40 years, and China, the second largest economic country in the world, is facing many problems with COVID lockdown, disruption of production chains and a decline in manufacturing. Looking at this data evidence, it is certain that the global economy is headed for a downturn.
He said that “geopolitics” is important to get out of this situation. He analyzed that instead of considering the economic consequences that might arise, countries with the world’s major powers are more interested in gaining political power and advantage for themselves or their party, gaining influence in the entire region, and cornering countries they consider to be their political enemies. So, they are not able to talk and discuss, and the world is heading towards a situation where it will be economically destroyed. Here, there is a question as to whether the countries and leaders are doing it for economic interests. Yes, it is true. Although it is true that they are working for economic interests, there are also those who think that they can do it for their own interests if they gain political power or the leadership positions of organized groups in the world.
Jeffrey Sach commented that the economic crisis facing Western Europe is leading to an economic downturn. At present, Western Europe is in a difficult position to avoid an economic downturn due to the unprecedented rise in natural gas prices and inflation rates. As for him, he said that this economic crisis should not be seen as a crisis of a country or a region or a group with the same political ideology. If it happens in one country (especially one with a powerful economy), the consequences will affect the rest of the country and lead to a global economic downturn and, at the worst, an economic disaster. So, he advocated for international financial institutions to adopt the right policy to prevent an economic downturn rather than playing geopolitics, just as it is advised to put out a fire without looking at whose house or where it is and not allowing it to spread to the rest of the place.
His view is that, without giving any political perspective, he pointed out the quick and easy nature of the spark of a problem in one place to spread to other places in an era where the world is like a village with many connections.
As for Myanmar, it is currently still falling into the abyss of political problems and crisis, and if you look at the economy, we are in a situation where there is a possibility to face famine due to man-made causes, famine due to wars and a social catastrophe. And we see that the hopes of a quick escape from this crisis are still dim.