Chukwudi Achife
31 October 2008
Enugu — Central Bank Governor, Professor Chukwuma Soludo, yesterday, predicted that the world economy may not survive the current global financial crisis, as according to him, it is the beginning of a long period of economic instability that requires the urgent rethinking of policy makers.
He was speaking at the 40th Inaugural Lecture of the University of Nigeria Nsukka entitled "Financial Globalization and Domestic Monetary Policy: Whither The Economic for the 21st Century?" Soludo insisted that the global economic system can not survive many more of the current crisis, stressing that it offers a chance to create the beginning of an inclusive and responsive globalised capitalism.
He said from the cost of government interventions around the world, the other indirect costs of the current crisis could run into several trillions of dollars in income lost and tens of millions of people plunged into poverty for a generation, especially in developing countries.
According to him, "that one country could cause a crisis of this magnitude and many countries with sound fundamentals also plunged into a crisis because of the contagion effect, and then the rich ones bail themselves out because they have the resources to do so while the least developed countries suffer the long-lasting effects of the crisis, is a market-cum-system failure of global proportions."
He said the analytical tools for understanding and managing the current system are somewhat inadequate, adding that the national and global governance infrastructure for resolving or even preventing future crisis was at best obsolete.
"The pace of financial and economic globalization appears to have outstripped the pace of the theory and institutions that underlie it. No patchwork will do: a new economic thinking and a New Deal by way of fundamental institutional and governance architecture are urgently needed," he added.
He called for a new economic theory that could effectively tackle the current crisis saying policy makers have to understand each other's economic theory with a view to fashioning a system that could bring about the required solution.
Soludo said: "One lesson of the current crisis is that policy makers can indeed deepen the crisis by the way they react to it. My hypothesis is that much of the global crisis was aggravated by the panicky reactions of the policy makers. Politics and grandstanding often takes over from sober and sure-footed response. Politicians under pressure to be seen to be sensitive to the suffering masses sometimes behave like a panicky doctor in an emergency room who literally decides to administer all the drugs available to a convulsing patient in the hope that, with the cocktail, there is a chance that one of the medicines could get to the ailment."
Read comments. Write your own.
Copyright © 2008 Daily Champion. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
Thanks, Soludo, for your wise counsel and steady steward-ship at the helm of our nation's economic team. Unfortunately we have a blind & deaf Presidency that would procrastinate & govern with the 1960s' style & mentality rather than position Nigeria to take advantage on this 21st century first and only golden opportunity to re-order the global hierarchy. The damage of Tarry-A-Doer's presidency is to position Nigeria among the bottom 20 global ranking, given his slow-poke approach, which is contrary to OBJ's Vision 20/20 to which Soludo was a part of. What a turn of event that was and well deserved too, if our decision-makers can't think beyond their noses and their personal bank accounts in foreign countries while our peoples continue to encourage mediocre performance from "rulers" with their "sidon & look" gentility while their future prospect is frittered away by an uncaring rogues, expecting God to come to their rescue whereas they each have 2 legs, 2 hands and a brain in their skull.