Middle-east Arab News Opinion | Asharq Al-awsat

A Solution to the Financial Crisis | ASHARQ AL-AWSAT English Archive 2005 -2017
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The financial crisis is intensifying on the international level, especially with regards to the economic situation in the United States. There is concern regarding the rising rates of unemployment and the ongoing staff cutbacks that aim to decrease expenditure by all means even if it comes with a heavy price for society.

In spite of increases in the stock exchange indexes in numerous countries worldwide, there is a widespread belief that the level of financial loss so far is very high and that what is happening is only temporary as the economic foundations are suffering from shortcomings that require long-term, radical treatment.

There are sensitive discussions once again about the status of the American Dollar, in which many stress that the time is coming to reconsider the exchange rate and that it is only a matter of time before it is devalued. This would change many theories and rules regarding the financial game today. Many believe that America has no option but to devalue its currency in order to revive its exports and restore hope in amending its negative balance of trade with many countries including China. But will this strong and difficult step be enough? There are many calls for restoring economic rationalism in that one should not spend money that one does not have instead of lending hysterically, which is what happened. Therefore, the issue is simply about expenditure and codification.

I was at an evening party with some friends when we began to discuss a variety of issues including the global economic crisis and the impact it would have on Arab markets in particular. A friend said calmly, “I have a solution to this crisis.” We waited for him to continue. “Give the bread to the baker who baked it,” he said. Bewildered, another friend asked him, “What do you mean?” He answered, “I suggest that an international supreme council, or let us say an Arab supreme council comprising of members from Damascus, Damietta, Buraydah and Hadhramaut is established.” We looked at him in astonishment. He said, “I know that you are surprised and confused at my suggestion but we are on the verge of difficult economic times, the level of which will depend on who can control expenditure and not on increasing spending to the extent that one is drowning in debt, which is what happened. These cities have strong heritages and knowledge of mechanisms for saving and how to cut back on spending.”

Somewhere between seriousness and banter, the discussion continued and we went into more detail; but the concluding idea was that the upcoming period would be one dedicated entirely to saving. Whoever is successful at maintaining the “value” of his finance for the longest time possible, will succeed in getting through the current stalemate with the least amount of financial losses.

Difficult decisions are going to be made regarding staff cutbacks, reducing salaries and expenditure, the cancellation of projects and currency devaluation. However, the door remains open for sensible, simple and important ideas. Therefore, saving in its simplest context seems very logical and the challenge that remains is how to apply it as soon as possible.