Home Economy Emerging economies are ‘no panacea’

Emerging economies are ‘no panacea’

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Political and economic journalists have suggested that China and other emerging nations could be the ‘cure’ for the

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Robert Zoellick: "nations are not a panacea”

eurozone’s ills. Well, Robert Zoellick, President of the World Bank has suggested in a BBC interview recently that a cash injection from said nations are “not a panacea.”

China too, has been forthright in telling countries like Italy that they’ll buy bonds, contribute heartily to bail-out funds and invest – if this all seems to good to be true, Zoellick thinks so as well. Saying, quite curtly, in the recent BBC interview that a country with a “$4,000 per capita income (China) is not going to bail out a country with a $40,000 income,” (US) seemed to put a lid on the pipe dream of an imminent rescue. Perhaps it takes someone like Zoellick to say these things and reiterate that a bail-out is just that – it’s not a cure to the problem of debt.

In the rest of the quite concise piece, the fundamental points of the necessary change Europe need to address were neatly laid out by the World Bank head. The fundamental issues are “the sovereign debt problem, the bank problem, and for some countries the competitive problem…Europe had to decide whether to design a fiscal union to closely match the monetary union. There are lots of ways that can be done. But if you don’t face that fundamental [/fusion_builder_column][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][question], you are going to have to manage the consequences for countries that have taken on too much debt.”

What Zoellick said may seem simplistic, but when you consider the round-the-table blathering that both politicians and organizations like the IMF have been indulging in lately, it’s a refreshing outline for what needs to be done – fiscal union is the key to what politicians need to be tackling right now, not bandages for a chronic bleeder![/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

 
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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

20 COMMENTS

  1. I actually look at this situation with mixed emotions. In the first place, if China will be buying the bonds and investing heavily on foreign opportunities, eventually, the belt will tighten up on Europe. Opportunities for the locals would flee into the waiting hands of the Chinese. Bail-out is never a cure to any problem. It is a sweet candy that provides temporary solutions, but carrying with it a bigger question behind. Beside the fact that China has a lesser capita income, I think solutions like this would make it worse.

     
  2. I never thought that China economic is on critic level. Every household appliances are made of China. Well any opportunities would help ease their economy even if it means temporary or not. The important thing now is they put some solution to it…

     
  3. Well, it isn’t very unlikely that the developing countries will soon help the global economy recover. Indeed, there has been a massive surge in these economies and might be the key to the economic ills of larger, more powerful countries. This might be a slow but steady rise, but it is something that economists predict will happen very soon.

     
  4. Fiscal union would be a wonderful feat. Bandages have never worked when fixing economics, all it does it pass the problem over for a while. I would be wonderful to actually find a solution. I don’t know who the first country will be to get there, but I do have hope someone will.

     
  5. We should each other literally when someone is falling. For me, it’s a great idea so that everybody will be wealthy and nobody will suffer poverty!

     
  6. Economic problem is the big issue in all over the world. Economically well settled countries must come forward to help the countries which is struggling to improve their economic state. Hope all the countries will solve their economical problem in the near soon

     
  7. With the continued recession European and including those living in Western countries need to maintain an open economy by not limiting the potential for helping each other economy. The surge of products could be interchange between each country by utilizing each resources for the benefit of each other. In these times who could we rely on not only ourselves, but as well as with the neighboring countries.

     
  8. World Bank should encourage all countries of the World to help each other in this time of economic crises, emerging economies may be no-panacea, but they can help for bailing out debt ridden and economically struggling Nations. World Bank also needs the support of rich and emerging economies to help poor Nations.

     
  9. China could be in the rescue to help these nation sustain its economy. Undeniably China is on its way to bring a revolution in the economy. As it is the fastest developing nation ever. And its GDP is also crossing 10. And china is also showing here that it is rapidly developing.

     
  10. When the presents needs haunts it compels to take decision to findout solution with alternatives like what is said above. While bailing out, momentarity one gets relief and the time to take future action towards an effective solution. But no one is sure if this act of buying the bonds and investing or bailing out which may be like using bandages for a chronic bleeder!

     
  11. This is no longer new to the economic world. One country, even the less powerful one, is trying to help its more powerful counterpart. Well, it is worth given a chance. China is one of the emerging countries which is becoming stable, slowly, but surely. A country who is in need must be do some sacrifices and leave its fate in the hands of others who can save it. This is for such country to regain its stand again, without help, it’ll took a much longer period of time to figure out what to do best. And citizens do not have that much patience to wait.

     
  12. In the first place, if China will be buying the bonds and investing heavily on foreign opportunities, eventually, the belt will tighten up on Europe. Hope all the countries will solve their economical problem in the near soon.

     
  13. I would say bail-out is not a solution. It is simply providing crutches to a handicapped fellow. That doesn’t make him run, anyhow. The authorities, politicians and wise heads in IMF should focus on the basic solution of the problem.

     
  14. well imao, Zoellick got some point here. That big player like China and other tough nation intent to buy funds, invest to Italy is not a panacea for the ailing countries in Europe. I agree that bail out can’t really put an end mark to the debt issue. But I’m still hoping for the brighter side of it.

     
  15. Economic, that is the country ! Good economic countries must help the poor one ! Now we suffer from the world economic problem and things wont get better in the next years ! So world leaders have to think of something in order to soar the solution of the problem !

     
  16. Well as we all know China now is getting bigger and bigger every year. We expect them to be the world superpower country in coming years to come. For short China will beat the US in terms of economy in the coming years. China got a little problem about economic problem while the other countries are facing it right now maybe because of Chinese communism that’s why they had such a good country.

     
  17. The proposal us very good and would help each other economy. The good things each country resources would be utilize and each country products would be sold commercially while the other do the trade. This process would be benefit each other economy and this help to augment the job problem too.

     
  18. Its a shame that these countries are having those big economic problems. I get proud of countries as China that are willing to help the other countries in caos like right now . What the president of the world bank Robert Zellick says : “A cash injection from said nations are not a panacea” In my opinion it wont be a cure for the situation but it can a relief while they find a better solution and a way out for no more debts.

     
  19. China’s promise to buy bonds would be of help. But first and foremost, Europe should indeed face the fundamental issues and concentrate on the ways to solve them. I believe designing a fiscal union to closely match the monetary union will help a lot so Europe should decide on which way to do it.

     
  20. Injection money to fix fiscal problem is a shorten solution. It would not stop problem leaking from the poor fiscal system. The problem would still remain and money would have to pour the hole in order to cover it. But it would never recover because you don’t fix the hole in the bottom. You have to find a long solution to deal with this problem.

     

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