The threat of a new financial crisis is not some sensation that appeared only yesterday. Now there are a number of systemic factors that indicate the possibility of a new crisis.
Speaking generally about the nature of world crises, the Nassim Nicholas Taleb is such a definition as a “black Swan”. This is a global phenomenon that is hard to predict, but which, when it happens, has a pervasive impact. All the analysis of this phenomenon agree that it had to happen, but come to this conclusion in hindsight. Therefore, any financial crisis is a black Swan. We can’t predict any exact date of its appearance, nor its full negative effect for the global economy. But we can grasp the outlines of this black Swan and to evaluate the degree of its approximation.
Now we see that this crisis coming. The collapse may happen this fall and next winter. But everyone understands that the crisis will come soon. Here are the basic prerequisites that are talking about it. First, the world economy is subject to certain cycles. In theory, economic cycles short-term cycles Kitchin, juglar of medium-term and long – term Kondratieff. And now they all converge around one point, being somehow related to the last crisis in 2008.
Short-term cycles related to the fact that the company is disproportionately responsive to changes in world market conditions, that is, excessively respond to demand reduction and not enough on the increase. After the crisis they have dramatically cut production, and now in the commodity balances see in the global economy is some overproduction.
Relate to medium-term capital investment companies. In the case of the long-term we are talking about the transformation of the global economy. Now we see that the world came to the creation of the new technological order – the so-called NBIC-convergence. The old economic order is running with the big failures. In fact, the world is being rebuilt on a new innovative model of development. And in those countries where there will be new products and technologies, will highlight new points of economic growth. And who will not be able to readjust to the new paradigm, is very much affected by this restructuring.
If we talk about simple things that are understandable to most people, we can say that the 2008 crisis was a crisis of global Finance. In contrast to the “old” crisis, he was associated with the overproduction of the economy, and money and financial instruments. He was overcome primarily through so-called quantitative expansion by the Federal reserve – were issued trillions of dollars of additional money supply by reducing interest rates almost to zero and the policy of cheap dollar.
Now in the American economy, the consequences of this crisis is overcome, and the main threat is inflation. Therefore, the United States unfold the monetary mechanism in the opposite direction: instead of a policy of quantitative expansion policy of quantitative compression, and instead of the cheap dollar policy is the policy of the expensive dollar. The previous paradigm has contributed to the development of developing countries, because investors went to higher-yielding emerging, that is commodity markets. Now everything is exactly the opposite: there is a mass outflow of investments from emerging markets to the US market and the markets of other developed countries, and raw materials will be cheaper, because the policy provides for expensive dollar drop in the price of raw materials. Emerging markets will not be able to adequately refinance their external debt, corporate and government.
From China to Ukraine
The epicenter of the crisis is expected to occur in China, because it is more likely to suffer from trade wars that America starts, from the policy of trade protectionism. China is very dependent on foreign investments, there is a very high debt load of the banks, private and public companies. Any weakening of the yuan will lead to a sharp rise in price of service of China’s foreign debts. This can lead to pitting defaults in different sectors. In addition, the slowdown of the Chinese economy means for the world.
Ukraine in this situation is in a rather vulnerable position because we are not only dependent on the exports of the same metal, which may be cheaper, but are in a very busy cycle of foreign debt. We will be very difficult to attract external funding. It is likely that we will not be able even to refinance old debts. This is the first possible factor in the crisis. The second is the fall in metal prices and other commodities, e.g. iron ore. It will drastically reduce our exports. In addition, it may arise the effect of “raw scissors” – a paradoxical situation, when the price of our traditional raw materials will fall, and oil and natural gas to remain at a relatively high level. That is, our exports will become cheaper and imports more expensive.
What to do
On this basis we see what the main steps you need to take. Need to start looking for alternative programs to attract external funding. First of all you will need to work with large international donors. But they won’t give a lot of money under any obligation and dot amendments to the laws: they have to present is already a quality program economic development program economic success for the next 5-10 years. And it should be a consensus program in the framework of the whole society, and not a single political force.
Secondly, now is the time to begin negotiations on a new debt restructuring, because the restructuring the name Jaresko has devastating consequences, we cannot pay the creditors for their economic growth additional bonuses.
Thirdly, it is necessary to strengthen its energy security by creating a gas hub in Ukraine and the opening of full-fledged natural gas market.
Speaking about the export potential, it is necessary to undertake structural reform of the economy. And, most importantly, Ukraine must find its place in a new technological way, which will be formed in the next few years. If we continue to lose staff capacity, and to talk about the fact that we will become an agricultural superpower in the next few years may be passed over the global system of division of labour, and new technological way there is no place for our economy, we are riding on a very primitive, raw level.
We need to attract the intellectual, scientific potential, to bet on innovation activities, stimulate the development of creative economy. But it’s all in the system the current government is almost impossible. Because it is aimed at quite different: the preservation of the rental model of the economy to help with the rent, which is installed on the main financial flows in the country, to suck the remaining juices.