The Perspective on Global Economic and Financial Status for 2013 and its impact on the future of the global economy

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The Perspective on Global Economic and Financial
Status for 2013 and its impact on the future of
the global economy
(1888PressRelease) Short-term supply shocks are
not just inadequate remedies but can hide the
real sickness of the worlds economy debt
mismanagement and its ensuing crises. Indeed
The Emperor has no clothes. During the year
2012 all economic forecasts were documented and
recorded as it stands today predicted economic
growth has fallen short of expectations.
Essentially growth has been calculated at 30 to
50 below forecasted trends. This review has
seriously affected the world economy and
supported continued apprehension towards a cure
for the financial crisis in Europe Asia and
America. Most believe 2013 will be a year of
further economic disparity and uncertainty. 2013
is already here and we do not see any change or
hope in a global economy. The European Central
Bank Bundesbank in Germany Bank of China
England Central Bank and the Fed anticipate a
recession and anticipate economic growth in 2013
to be significantly low. In Japan trust in the
financial marketplace has severely deteriorated
which was represented by a 10 increase in the
second quarter alone bringing the total public
debt to 214 of the countrys GDP. The inception
of the Euro in 2002 was seen as a major step
towards Financial Fiscal Foreign Affairs and
Economic integration. Europe envisioned
positioning itself as a unified entity speaking
in one voice for the economic prosperity of all.
The anchor country which fortified this eleven
country venture was Germany who financed the
effort with its countrys economic surplus. In
2005 the European membership was increased to 25
countries. Many of the countries joined the
effort with hopes of Brussels European Central
Bank extending its coffers to their individual
countries as financier for their development
projects. The printing of money in this fashion
can best be categorized as analogous to the baby
boom generation for money as this increase in
paper production devalued the purchasing power of
the currency and proved to have a negative effect
on smaller less developed countries. The projects
funded during this time were economically
unnecessary and approached malfeasance as
countries mismanaged their development and debt
began to spiral out of control all because the
countrys loans were reimbursed by the European
central Bank and other lending institutions.
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This funding from Brussels European Central Bank
was blessed by other private institutions and
continued perpetually. When the USA market was
shocked in 2007 due to controversial lending
practices these European countries did not
expect a similar fate. In fact they were
traveling the same road as the USA. Banks in the
USA were able to easily lend because their loans
were backed or guaranteed by a government agency
much like the loans in these European countries
were backed by a government entity the Brussels
European Central Bank. The collapse of the
European economy should have been foreseen since
many of policies the central bank followed were
modeled after the USA which is printing money to
finance development. The problem mainly exists
for two reasons the associated costs to print
money and non-sustainable economic development
projects these countries invested in. Stated
simply these countries invested in projects that
did not last to service the countries associated
debt pertained to the individual project. As more
and more projects failed in this manner a debt
tsunami occurred much like the crisis that
persisted in the USA. According to Dr. Mehenou
Satu Amouzou President of MSA Inc. Investment
Trade and Management this debt mismanagement and
later crisis was predictable and could have been
managed much more efficiently. It was novice to
think that Poland Bulgaria or Greece could
become Germany over night. According to Dr.
Mehenou Amouzou the global economic crisis in
particular financial market disparity is
everyones problem and we all bear the burden to
cure it. The willingness of the central bank to
purchase Euro Zones short term bonds in the
secondary market serves as a band aid because the
central bank has unlimited resources. However
the band aid will not hold forever. At some
point a fortified remedy will be necessary to
stop the permanent bleeding. If there is an
explosion in the Euro Zone some countries will
break from the European Economic community
causing massive consequences such as the breakup
of the European Financial System identity as
European Nations shortage of spending power for
infrastructural improvements and advancements
and ultimately a recession that may affect the
financial sectors of many of countries on all the
continents. According to certain economists the
breakup of the Euro Group will increase
unemployment above 22 in the world and will cost
Greece alone close to 1.3 Trillion dollars to
cure its debt with defaults and exit cost. As
we begin to analyze this eminent crisis the
first question is how much currency has Greece
actually borrowed Research has estimated this
number to be 1.3 Trillion USD. The second
concern is even if this debt is repaid will
Greece stabilize itself by continuing to operate
economically in the Euro zone
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Anything is possible however I and others who
have followed the Euro zone phenomenon note that
the cloud of debts above Greece and other
countries have persisted for several years. Some
of the lending institutions are aware that these
loans will most likely never be repaid simply
because the funds never reached an economic
development project which means these loaned
funds were never given the opportunity to
generate any revenues from their investment.
Instead the loaned funds entered a system of
progressive corruption. This system of
progressive corruption is always present in less
developed countries where they lack oversight
committees and organizations. The 2008 crisis
has affected the worlds economy and the
associated fiscal policy that was codified to
assure its effective implementation and
management. Today the crisis has detrimentally
disturbed many countries in Europe not just
Greece Italy Ireland and Portugal but the
continued support of these so called super
countries and its impact has reached many smaller
countries speeding their demise as they struggle
to support increasing debt. Recently Greece
received 50 Billion Euros to repay part of its
growing debt to certain banks while the rest was
reserved for public investment in hospitals and
other basic necessities. Instinctively because
the Euro ties these countries together
essentially the lives of people in Greece depend
on the occurrences of other Euro countries.
Specifically Greece is dependent on the German
election where Greeces future and its debt
management will be decided. At the same time
Greece has become a welfare state with huge debts
that will never be repaid and a general public
that depends on the European Food stamp to
survive. The general consensus in the financial
community is these countries will fall further
into debt until they default further increasing
their financial risk until depression occurs. The
only viable remedy will be for lenders to forgive
half of the debts. Dr. Mehenou Amouzou in one of
his articles published a year ago The World
Financial Honey Moon is over Debt Crisis
Continues to Wage war on Economy Policy he
stated Printing new money to finance existing
debt will be a fiasco. The only tangible solution
is to cut the outstanding debt in half this
means to forgive 50 of the countrys current
debt in exchange and conditioned upon drafting
new policies to promote investing in more
productive industries creating jobs and
committing to sustaining economic growth at a
yearly average which falls between 3 and 5 with
progressive growth of 0.5 to be added each year.
France for instance was seriously affected
before the crisis starting in 2007. Prior to the
dislocation of the former Soviet Union in 1989
France balanced its commercial debt with the rest
of the developed countries by leveraging its
dominance in its former colonized countries.
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In these dominant countries France controlled
90 of the countrys financial marketplace and
left 10 to be divided by other developed
countries like China to split. As the global
economy further developed French Administrators
found it necessary to shift its resources from
its former colonized possessions to the riper
eastern countries. This overnight disengagement
from its former colonies (as some have
characterized the act) was viewed as an act of
betrayal since for over 75 years approaching 200
years these French colonies relied upon the
direction and leadership of France and maintained
loyalty long before the break of the Soviet Union
and the development of new independent countries.
The betrayal goes further. Although there have
been several French Administrations since 1989
there remains one constant control. The French
maintained control to pilferage the colonies
natural resources as exports while neglecting to
reinvest in the colonies infrastructure and
building the colony to an independent
municipality. The difference between the
Japanese and their ex-colonies juxtaposed with
the French and their ex-colonies is the Japanese
developed a scheme to transfer technology by
substitution to their colonies. This in turn
allowed these countries to tale Japan and has
created the four tigers (four countries who are
leaders in the global technology industry) and
certain technological advancements were extended
to other countries in Asia. USA involvement in
Asia has also contributed to the economy growth
where French colonies were left to dwindle
because of Frances control and ineptness in the
global marketplace. The French exodus from its
colonies to the Eastern European countries was
ill advised. First the French underestimated the
competition for control of these newly developed
countries. Germany and England already boasted a
presence in this region and were pouring
resources here to continue and sustain its
growth. At the same time the betrayed colonies
began to open its markets to China South Korea
and the U.S. which gave them invested capital for
economic development in the colonies
infrastructure and to build trade relationships.
Unintentionally France has lost 85 control of
its former colonies to now be estimated 10 to
15 which is still in regression. Frances annual
balance of payment which mainly represents a
deficit compared with other developed countries
continues to stagnate because relied on its
colonies to purchase its products. With Frances
betrayal and exodus it lost 90 of purchasing
power from colonized consumers while non-French
products were represented by French companies as
a result of France Private Domain.
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For the past five years 600 Billion Euros have
been borrowed representing a monthly average
close to 10 Billion Euro adding to an exorbitant
debt balance. This year is going to be very
difficult for France and other Euro Zone
countries the downward spiral will continue. All
the economic indicators are in the red and France
has a higher possibility to default in this 2013.
Lawmakers in France are faced with the
challenge of managing government income tax and
its effectiveness to service the countrys basic
expenditures. Because annual taxes collected will
not service the cost of basic expenditures for
the country long term debt continues to rise and
accumulate remaining unpaid. Frances debt
represents nearly 90 of its GDP the countrys
total 2012 spending was 376.2 Billion Euros
compared to 363.4 Billion in 2011. The total
income was approximately 290.8 Billion Euros in
2012 compared to 271.8 Billion Euros in 2011.
While total income has risen for the year total
spending also increased for the same year. Today
France total debt is near 1789.4 Trillion Euros
with yearly interest cost close to 49 Billion
Euros. The country will continue to borrow to
live further increasing its debt until its
lending sources are depleted. The country today
is challenged to service its debt and may as we
have seen in the past with Central America
default as a nation. Dissention among law makers
is steadily increasing as they race to blame the
Euro for these problems. The general consensus
ponders the pros and cons of the policy its
implementation and management. Some politicians
are raising the issue if it is worth it to be
part of the European community since maintaining
membership has costly repercussions the member
countries have essentially forfeited their
sovereignty to bureaucrats who are not elected by
their citizens and who have no real concern for
the viability of the nation. As Dr. Mehenou
Amouzou has previously stated in order for the
Euro Zone problem of debt spiral economics to be
eradicated policy desperately needs to be
revised. Short-term supply shocks are no longer a
plausible remedy as these remedies are surely
band aids to succumb a raging eruption with
debris which lands squarely on the citizens
shoulders. This type of policy certainly leads to
recession and degradation of the community with
long-term implications far more depleting of
future generations.
For more information from Dr. Amouzou please see
his previous articles
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COULD THE WORLD AND THE EUROPEAN FINANCIAL
SYSTEMS SURVIVE THIS WORLD WAR III FINANCIAL
CRISIS OR IT IS THE END OF THE WESTERN
CIVILIZATIONS CORRUPTION AND DEVELOPMENT IN
THE DEVELOPING COUNTRIES THE WORLD FINANCIAL
HONEY MOON IS OVER DEBT CRISIS CONTINUES TO WAGE
WAR ON ECONOMY POLICY EUROPEAN CENTRAL BANKS
OUTRIGHT MONETARY TRANSACTIONS (OMT) THE BAZOOKA
APPROACH Dr. Amouzou received his Master in
Business from the European Advanced Institute of
Management also a Certificate in Finance and
Investment in Paris France. He completed his
Post Graduation work in Political Strategy
International Relation and Defense Strategies and
earned his Ph.D. in International Finance.
Contribution to this article was made by Byron K.
Belser from Leverage PartnerGroup. Mr. Belser
assists Dr. Amouzou and holds degrees in
Development Economics Law. Ray West from
West International Enrique H. Mayor JD from
HMGroup International Managing Partner