Jordan Times

  • Subject : Impact of financial crisis needs a ‘long time’ to subside
  • Date : 21-Sep-2010
  • Text :

    AMMAN - Mahmoud Al Abed- Any talk of an imminent recovery from the global financial crisis is baseless, a prominent businessman and economist said Friday.

    The effects of the crisis will remain for no less than a decade and by the time it subsides, a new global order will make the world different from what it is now, said Talal Abu Ghazaleh, chairman and CEO of Talal Abu Ghazaleh Organisation (TAG-Org).

    His remarks came in a presentation, titled "The Arab World in Changing Global Economy", he delivered at King Hussein Club in Amman during a meeting of the Germany-based Club for Modern Market Methods (MMM-Club).
    Dozens of the club members were in Jordan to exchange ideas and views with local partners, a TAG-Org press release said.

    According to Abu Ghazaleh, the crisis will inevitably yield two groups: Winners comprising economies like China and India, in addition to the Arab world, especially the Gulf states; and losers including the US and west European countries, if no substantial changes are made, particularly to the pillars and policies of the US economy. He singled out Germany as an exception, citing its strong economy.

    One of the big mistakes Western governments made, he said, was buying bad debts from companies on the brink of collapse, thus saving these companies while falling in debt themselves.

    The US is in deep crisis as a result of its policies, Abu Ghazaleh indicated, quoting John Williams in The Energy Report (May 2010) who said that the super economic power is heading towards "a systematic collapse, a hyper inflation or a great depression”.

    He agreed with American leading industrialist and investor, Warren Buffet, who said that we cannot rely on the people who "created the mess to provide remedies".

    Abu Ghazaleh blamed bankers for much of this mess, pointing in particular to derivatives as the catalyst of the crisis.
    The expert also noted that the world is heading towards protectionism despite claims of otherwise, citing as an example the decisions by the EU, authorising member states to take the measures they deem appropriate to protect their economies. He disagreed with Thomas Freeman, who said once that globalisation is not a choice.
    "Wrong. Globalisation is a choice," he told his audience of entrepreneurs and representatives from companies dealing with consumer goods and opinion leaders.

    Further commenting on global economy, Abu Ghazaleh, whose organisation spans 73 branches, said the wealth is moving towards the south and the east. He advised Arab nations to diversify their business partners and invest more in other regions than Europe and the US.

    The expert also called for a new reserve currency other than the dollar, echoing a similar call by the International Monetary Fund (IMF). One feasible alternative, Abu Ghazaleh said, also citing the IMF, is the Special Drawing Rights, the international foreign exchange reserve assets allocated to nations by the IMF. China has also called for such a replacement.