POOR LEGACY OF 2010: THE CRISIS

17 OCAK 2011

POOR LEGACY OF 2010: THE CRISIS The crisis began in 2007. First the financial markets were rocked. Then the real sector was disrupted. Later every field of the economy and of daily life were deeply impacted. The crisis made its presence felt in 2010. Those who claimed that the crisis would last a long time and that even when it is over its effects will be permanent were proven right.

The crisis also formed the starting point of a serious transformation in world politics. It is perhaps also for this reason that the crisis should be given special significance. For example, for the first time after a long period, the USA has taken up as a priority the development of cooperation with the international community. International cooperation and solidarity which had been pushed back under the Bush administration once more became a priority. This was a good development for all concerned.
 
Islamophobia became less apparent with the crisis. Perhaps it might be better to say that it was less encouraged. States and nations moved away from prefabricated concerns such as Islamophobia in the face of the heavy damage wrought by the crisis. Another impact of the crisis was on the agenda of the EU. It may be said that the crisis was a major challenge for the EU. Many EU capitals now live with the anxiety brought on by the crisis. The crisis has become a durability test for the solidarity within the Union.

The truth is, no EU member views EU interests above its national interests. No EU state is desirous of making sacrifices for the sake of another. It is also certain that the crisis will continue to bother EU institutions in 2011. EU members and institutions will try primarily to protect the Union and to prevent further bankruptcies among member states in 2011. Under such circumstances issues such as enlargement, Turkey’s accession and even the continuation of membership talks with Turkey may become more uncomfortable issues for the European public opinion. The only possibility of turning this around lies in an increase in the EU’s reliance on Turkey and conversely an increase in Turkey’s contributions to the EU.

Countries fighting the crisis have continued to make the same mistakes in 2010 which they had been making since 2007. The global financial system and the global economy avoided making any sacrifices in 2010. The rules of the free market were thus once more overridden. The global system which moves with the sanctified and almost deified preferences of the free market, resorted once more to protectionist and interventionist statist measures when its daily trading interests were at stake. Yet in terms of the rules of the economy and for the sake of healthy continuation of global processes, it would have been proper to avoid interventionism. In such a case firms going under would have done so and states facing bankruptcy would have gone bankrupt.
 
In continuation of this evolution the system would have produced the new necessary rules from experience and everything would have moved once more to a stable equilibrium. Developments in 2010 have shown that the problem once described as the global financial crisis really merits the name “global crisis”. The issue, which until 2010 consisted of instability in financial markets and banking problems came gradually to overlap with social explosions and national security threats. Yet, had the crisis been allowed to run its course, there would have been fewer problems. Of course it would have hurt when giant banks and companies went under. But trillions of dollars would not have been squandered. In fact, had those trillions been distributed to consumers and not to firms, the crisis would have definitely been mitigated.

However, it is becoming difficult both to protect the banks and companies which have taken advantage of the global system as well as to prevent societies exploding with a lot of noise, like a pressure cooker. This is one of the lessons to be taken from 2010 to 2011. Countries which came to the brink of bankruptcy in 2010 or were already there saw the solution in austerity measures meaning increased taxation and cuts to spending. To this end they either partially postponed or partially abandoned the social duties of the state. This preference did not solve the problem. Furthermore, the cooperation being developed, for example in the framework of the G20, on many issues, especially hedge funds, contains a flaw.

If the economic order were to be restored to pre-crisis circumstances, everyone will once more make the same mistakes from where they left off, causing another crisis. There are a number of reasons for the great anxiety being felt at the global level. For example recovery measures, packages, action plans and such other courses of action are not sufficiently transparent. There is another problem regarding the issue of transparency. The degrees of implementation of different countries when it comes to measures decided in the framework of international cooperation and solidarity also falls under the scope of the issue of transparency. Output needs to rise in order to halt or mitigate the fall in consumption.
 
In order to overcome the production crisis in the real sector one needs to overcome the crisis in employment. In order to raise employment spending needs to be increased. However, in 2010 states have preferred to cut spending and to reform budgets. Should spending be increased and inflation driven up, there may be an easier way out. In 2011, the global crisis will once more occupy the top place in the world agenda. However, in 2011, the crisis may be more damaging and troubling. For in the time passed since 2007, the number of states under risk of bankruptcy has been rising. The number of troubled firms has not been on the fall. For these reasons, it is appropriate to accept that as we move on to 2011, there has been no improvement regarding the crisis.

In 2011 the global crisis will necessitate increasingly tough measures. It is very much probable that all these problems brought on by globalisation will need to be solved within the context of globalisation. Yet in 2011, certain elements within the crisis and certain side effects of the crisis will become more prevalent. The food crisis may be counted among these. Illegal immigration may rise to the food crisis and similar factors. High tensions may be observed in regional conflicts.
 
The problems of trust between the rulers and the ruled may escalate. Social explosions could become more common. Mishaps in international cooperation and in solidarity against the crisis may produce more problems. There may be worse things to come. The habits to be produced under the new circumstances and new conceptions triggered by attempts at legitimisation may make the infarction, high blood pressure and panic attack permanent in the world economy and therefore politics. The world truly has a dangerous year ahead of it. We are at the start of the year. Looking back on it at its end, we will be truly surprised. Let us hope that we do not miss or long for 2010.
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