The last few weeks have been exhausting. But even before that, we were all wondering when will we see the "bottom" of the financial sector problems.
Well to me, the "bottom" has come:
- Governments have recognized the magnitude of the problems - especially the interconnected cross-border nature.
- Governments recognize they have the power to solve problems.
- Governments have agreed to coordinate, and are coordinating.
- Governments have agreed on principles and priorities.
- Governments have developed measures to be implemented urgently.
- Governments have acted to solve problems, and promised even more action.
What are some especially positive indicators?
- There is so much global coordination I cannot write enough posts to keep up with the meetings, press conferences, communiques and news releases.
- There are so many countries that have agreed on common principles, that I stopped counting after the G7, G20, European Union, Countries of the IMF etc. Because that's almost everybody if I am not mistaken
- The measures are tangible - such as government guarantees for interbank lending.
- There are so many measures. A variety of measures are really a toolkit for countries to pick and choose to strengthen national financial systems without sacrificing the global financial system, or the welfare of other countries.
- World leaders are learning to communicate in ways that offend neither the people NOR the markets. Their words are decisive, urgent and solutions oriented, and quite frankly refreshingly different from the usual bickering over who caused what to whom.
- The world governments are committed to it. They send signal after signal that they are willing to exercise their immense powers for the good of the people, and the resuscitation of the system.
- I have noted the voiced concerns for the developing world. And I can only hope that that will be backed up with some action, and that the developing world will assert itself so that the replacement financial architecture is not worse than the previous dysfunctional financial architecture. I must admit I remain concerned about the leadership role of the IMF. However, the IMF said it was going to design new instruments and learn from the past. I am hopeful, only hopeful, that the instruments do not create more problems. But I must admit, I was pleasantly shocked to hear the IMF plead for aid for poor countries.
Now it is time to rebuild, because even though the banking system is so immensely critical, it is not the be all and end all.
Look at history: We had people before we had banks, and we had people before we even had money.
The rebuilding of the social fabric must be addressed.
- People have been shocked, frightened, and have suffered significant loss financially.
- People have lost their homes and their jobs
- People are still likely to lose their homes and job, even if the banking system is fixed.
- Where are the social safety net measures?
- Where are the measures to ensure people can afford medicine, heating oil and food?
- Where are the temporary jobs?
- Where are the temporary measures to keep people in their homes?
Back to a little more Bob Marley 101
In the song Jamming, Bob Marley said: "We're jamming" - which could be taken to mean in this context that progress is being made: The financial sector is on the way to reform.
But in the same song, Bob also said: "Life is worth much more than gold".
So bring on even more global coordination - careful, considered and constructive global coordination that the people actually feel, and feel quickly.