29-June-2011 Guest Column by Dr. Kumar David
The impact of the global economy on small countries can be severe and we are passing through a phase when stocktaking is timely. First, a few paragraphs regarding the beast itself – the world economy, which, mainly, is the advanced capitalist world. A recession is called V-shaped if recovery is steep and U-shaped if recuperation is slow. When stuck at the bottom for a long time (Japan’s lost decade) the appropriate shape is an L, a double-dip or W is when a second recession follows before recovery from the first. However, none of these terms provide a pictorial handle of the Great Recession (GR) that started in Q3-2008.
At the time I developed a model, the Wobble-U, to deal with the difference and illustrate a hypothesis. The Wobble-U is more complex than a double-dip which lay at the heart of the Great Depression (GD) of the 1930s. It is a seesaw of ups and downs, small recoveries and flops and slumps, depicting a long-duration limping economy. (My case, based on fundamental reasoning, is in Essays on the Global Economic Crisis, published by the Ecumenical Institute, Sri Lanka). In fact it is a depression in its own way, and anyone expecting the next depression to manifest the same symptoms as GD is awaiting the wrong Godot. Capitalism is different now, more globalised with new strategies. A depression manifests itself with different symptoms, the Wobble-U. The new strategies are: a) new tools developed by policy economists, and b) global state-capitalism, that is the coordinated responses of world political leaders and central bankers.
