Financial Crisis Lays Seeds of 'Dystopian Future'

Financial crisis lays seeds of 'dystopian future'LONDON (AP) - The World Economic Forum warned Wednesday that the financial crisis that has gripped the global economy for the past few years is fueling resentment that could lay the seeds for a rising tide of protectionism, nationalism and social unrest.

In its assessment of the risks to the global economy, the Forum flagged a "dystopian future" for much of humanity that could wipe out the gains achieved so far by globalization and undermine a nascent economic recovery.

The economic crisis, which started in 2007, has already laid siege to some of the world's biggest banks and pushed the global economy into its deepest recession since World War II. It ravaged the public finances of much of the developed world, particularly in Europe, which in turn has prompted many governments to embark on often-savage austerity measures that heighten uncertainty and do little to boost short-term economic growth.

Though finding that the failure to address excessive government debt is perceived as the most "systematically important" economic risk, the report's authors warned of the impact of bulging populations of young people with few prospects, as well as growing numbers of retirees dependent on debt-saddled states.

"For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs," said Lee Howell, the Forum's managing director responsible for the report. "This new malaise is particularly acute in the industrialized countries that historically have been a source of great confidence and bold ideas."

With that grim backdrop, the report's authors warned of an expanding gap between the rich and the poor and between the skilled and the unskilled. As a result, they urged the public and private sectors to work together to prevent a vicious cycle, whereby tough times feed disillusion and jeopardize the social contract between states and citizens.

"This report is a wake-up call to both the public and private sectors to come up with constructive ways to realign the expectations of an increasingly anxious global community," said John Drzik, chief executive officer of management consultants Oliver Wyman.

Wednesday's report was the Forum's seventh assessment of the risks to the global economy, which it publishes ahead of its annual meeting in Davos, Switzerland. This year's summit begins on January 25.

The report, which was based on a survey of 469 experts from industry, government and civil society, also found that the policies and institutions that were created in the 20th century may no longer be fit for purpose in a more complex and interdependent world.

It also warned of the "dark side of connectivity," whereby societies are susceptible to "malicious" individuals, institutions and nations that "increasingly have the ability to unleash "devastating cyberattacks."

While new technology and social media helped drive the Arab Spring, the report noted that the riots in London in the summer of 2011 were largely facilitated by the same tools.

"Governments, societies and businesses need to better understand the interconnectivity of risk in today's technologies if we are truly to reap the benefits they offer," said Steve Wilson, chief risk officer for general insurance at Zurich.

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Mike

"WEALTH" and so call American " POVERTY" are like Heat and Cold. Cold is the ABSENCE of heat. Poverty is the absence of wealth. This means like Heat can not make anything cold wealth can NOT make any one poor! Poverty is the lack of input of wealth buy the individual. Life is not fair and can be very hard, get over it. Free market wealth is fair. Wealth goes to those that produce for others directly or indirectly through labor to producers. Non producers ( able bodied) do not deserve wealth. That's as fair as it gets. Quit wining and get a job, or make one. And no you aren't owed a job so start kissing as s and be thankful to those that invite you to share in their production. Got gold?

January 17 2012 at 12:07 PM Report abuse rate up rate down Reply
kngathr

Sometimes a step "back" is exactly what you need. Time to take care of business at home for ALL countries involved. BUT while on topic of the "wonderful" globalization... What about getting China to pony up for their share? Article below will illustrate how our tax dollars are going to help other countries while China keeps a closer eye on business at home.
World Bank


The World Bank was founded in post-war 1944 and created to redevelop countries. It was expanded to develop emerging countries and keep mid-tier countries developed. The member countries are first members of the IMF, who then also join the World Bank. These 187 countries combine and work through their 10,000 employees and 100 offices worldwide.
The programs are numerous and expansive, but are all contained within 4 primary diversions. The IBRD aims to reduce poverty in countries who struggle with credit worthiness and income, while the IDA is mainly concerned with the poorest countries.
The countries come together to vote based on shares (shares are paid for by the member country), and work through a Board and Executive Committee to make solid decisions about where moneys should be spent, assets allocated, and direction the WB would take.
The top member by percent in all divisions is the United States. The Percents by Divisions are as follows:

Multilateral Investment Guarantee Agency:

United States 14.98%
Japan 4.21%
Germany 4.19%
United Kingdom 4.02%
France 4.02%
China 2.64%
Saudi Arabia 2.63%
Russia Fed 2.63%
India 2.56%
Canada 2.51%

International Development Association:

United States 11.03%
Japan 8.70%
Germany 5.65%
United Kingdom 5.43%
France 3.84%
Saudi Arabia 3.17%
India 2.79%
Canada 2.55%
Italy 2.35%
China 2.05%

International Finance Committee:

United States 23.58%
Japan 5.85%
Germany 5.35%
United Kingdom 5.02%
France 5.02%
Italy 3.38%
Canada 3.38%
Russia Fed 3.38%
India 3.38%
Netherlands 2.33%

International Bank for Reconstruction and Development:

United States 15.80%
Japan 9.45%
Germany 4.63%
France 4.40%
United Kingdom 4.40%
Italy 2.68%
India 2.68%
China 2.68%
Canada 2.68%
Russia Fed 2.68%
Saudi Arabia 2.68%
Netherlands 2.13%

Idea: This group is still based on facts from decades (or more) ago. Why is the United States leading this group by so much? Why is China 2nd on the list when it comes to GDP but way behind most smaller nations when it comes to this? Why not call them on that? Why not ask (or offer) some countries to be smaller entities based on current stress levels in their home countries, such as Italy and France? Why not back off the United States percentage seeing as we have much more needs at home? OR flip it around and start using this as leverage to get other countries to understand exactly how much we keep giving, while getting so very little in return? No matter how you look at it- this needs to be looked at seriously and rebalanced to reflect current world conditions and economies.


More Ideas at FixTheNation.com

January 12 2012 at 9:18 AM Report abuse rate up rate down Reply
bggdg

"............embark on often-savage austerity measures ..........."

It's not government austerity that is "savage". Rather the stupifying government spending that is at the roots of the financial crisis is what is "savage".

January 11 2012 at 9:23 PM Report abuse rate up rate down Reply
Sam Das

Technology is destroying the past and changing our future at a wrap speed...it is too early to predict if it is writing our obituary or immortality.

January 11 2012 at 4:53 PM Report abuse +1 rate up rate down Reply
Len

Technology rules all. This is a piece I wrote for the Chicago Tribune January 11.

This is in response to "Saving The Middle Class: An Agenda" (Perspective Jan 4) by Peter Morici, a professor at the Smith School of Business at the University of Maryland and former chief economist at the U.S. International Trade Commission. Morici's article on the collapsing American middle class got about half way to reality. He does a fine job of recognizing the errors in American thinking since the end of the Cold War, but he doesn't so much as cast a glance at the future.

If he had shown spunk, he might have mentioned the Tesla plug-in electric roadster that has turned the world's automotive industry on its head, the Stratolaunch megaplane that will rewrite aerospace scenarios both in air and in orbit, and forged composite carbon fiber that will make a paradigm shift in just about everything Iin particular, architecture). For the first time in human experience, a metallurgy exists that exceeds in strength, resistance and durability all but our loftiest ambitions. What would Falling Water look like if Frank Lloyd Wright used forged composite carbon fiber, I wonder?

Len

January 11 2012 at 4:26 PM Report abuse rate up rate down Reply
rd1171

if everyone thought alike, then a global economy would be possible. The people in charge would like a global economy to make society more tractable.

January 11 2012 at 1:35 PM Report abuse rate up rate down Reply