First there was news that the US economy is on a recovery path. Then came another surprise from across the Atlantic where the Euro zone recession may also be finally coming to an end.
And now it appears that the Chinese economy too appears to be
stabilising after a pronounced slowdown in the first half of 2013. So,
is the world suddenly out of the mess it found itself in during the
sub-prime crisis? The news flow we just highlighted does point towards
that direction. However, the most important question is whether the
growth has come about on its own? Certainly not. Enormous amounts of
money have been printed across the world to bring the economies back on
track. And as soon as this process starts winding down, we would be back
to square one we believe.
Thus, the hope of the policymakers that the recovery would be able to stand on its own once some kind of support is given to it is proving to be totally wrong. May be they should try a new approach now. They should totally stop their intervention and instead let market forces do their work. This would ensure that leveraged, uncompetitive firms don't survive and will in turn lay the ground work for a fresh round of sustainable growth. Is anyone listening?
Thus, the hope of the policymakers that the recovery would be able to stand on its own once some kind of support is given to it is proving to be totally wrong. May be they should try a new approach now. They should totally stop their intervention and instead let market forces do their work. This would ensure that leveraged, uncompetitive firms don't survive and will in turn lay the ground work for a fresh round of sustainable growth. Is anyone listening?
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