Economy

Economy

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In his keynote speech at the 2019 edition of the Paris Talks Conference at UNESCO,  Lassina Zerbo, the Executive Secretary of the Comprehensive Nuclear-Test-Ban Treaty Organization challenged the Paris Talks participants on the importance of innovating through the art of getting to commit to our engagements as Nation States and citizens but also learning to love and care for one another.

His talk covered issues related to multilateralism but also how we approach innovation in multilateral exchanges. His views are pretty clear and straight to the point. The future, as we know, is all about finishing up what we started. In other words, the future is in the past. 

These powerful insights, if applied to economics, can help us to envision the future of our economies and its challenges in a more different and innovative way based on lessons of the past.

Experts predict that our market economies, despite their highly collective expertise, seem apparently destined to repeat history as irrational exuberance is followed by equally irrational despair. Periodic bouts of the economic crises are the inevitable result. 

Financial crises have been an unfortunate part of the industry since its beginnings. Bankers and financiers readily admit that in a business so large, so global and so complex, it is naive to think such events can ever be avoided. A look at a number of financial crises over the last 25 years suggests a high degree of commonality: excessive exuberance, poor regulatory oversight, dodgy accounting, herd mentalities and, in many cases, a sense of infallibility.  

The 1982 “LatAm sovereign debt crisis” for example, developed when Latin American Nations, which had been gorging on cheap foreign debt for years, suddenly realized they could not repay it anymore, the crisis finally and officially kicked off in August 1982 when Mexico’s finance minister Jesus Silva-Herzog said the country could not pay its bills.

It took quite a lot of years to sort out the crisis, with Latin American nations eventually turning to the IMF for a bailout in exchange for pro-market reforms and austerity programs. 

From the 1980s (through the 90s) US “Savings and loans crisis” to the 1987’s “Stock Market Crash” via the 1989 “Junk bond crash” and the 1994 “Tequila crisis”, our recent financial history reminds us of one clear lesson. Sometimes, history repeats itself. 

Even if some far-fetched sounding predictions say that, by the year 2040, there will be a new economic order making the US less dominant and Europe's leading economies slipping behind (or probably collapse), it’s important to mention here that the Chinese (and maybe Indian) economic performances are miracles.

Okay, who thought Great Britain would ever be surpassed by the USA in the economic order. 

Not many people did, but that's exactly what China could do to the US in the next few decades. City Talks’ ideas festivals aim at analyzing these trends and how this money power will be played on decades to come.

Some analysts argue that the Brexit vote and Trump presidency were two major key triggers that the next few decades’ events upon which the basis of economic predictions in their respective regions and the entire globe will be formed. 

While investor confidence and relations have considerably improved since the Trump election, not much optimism is seen in Britain after the Brexit negotiations. 

Once again, while China is increasingly laying down investments nationally and around the globe, the US is massively in debt despite being a superpower. 

In fact, it is projected that China's GDP will have doubled by the next two decades.

Whether this will make China close the gap between her and the United States or it will eventually become the economic superpower is something that's up for discussion. 

A question we might ask is what do economic trends predict to the public citizenry of the world? 

What’s the future of the digital currency? Who will pay our debts?

Will markets continue being as influential platforms for our economies as they are today?

How far is the next economic crisis?

Can we afford to finance our older-citizens pensions?

These and others are only questions based on economic trends and are frequently put to debate every year at City Talks all around the world.

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