As the U.S. reels under its largest job losses in a half century, the situation may be growing even worse in Asia, Europe and Latin America. The world community may be on the cusp of an economic collapse that triggers unprecedented chaos, experts say.
In a recent report published in Forbes, American Enterprise Institute scholars Michael Auslin and Desmond Lachman point to economic brushfires poised to coalesce into a conflagration of a global order.
Heading the roll call of dangerous hotspots is China.
The experts voice concern about “the virtual grinding to a halt of economic growth in China.”
The International Monetary Fund (IMF), they note, now expects that China’s growth rate will be cut nearly in half to 6 percent in 2009. Such a growth rate falls far short of that needed to absorb the hordes of Chinese workers who migrate each year from the countryside to the towns in search of a better way to fill their rice bowls.
China has reported that 20 million migrant laborers have lost their jobs. “Even in the good times of recent years, China faced upward of 70,000 labor uprisings a year. A sustained downturn poses grave and possibly immediate threats to Chinese internal stability,” the scholars report.
In their final analysis, the team expects that the regime in Beijing may be faced with a Hobson’s choice of repressing its own people or diverting their energies outward, leading to conflict with China’s neighbors.
Meanwhile, the International Labor Organization is predicting that the global financial crisis will wipe out 30 million jobs worldwide in 2009. In the worse case scenario, as many as 50 million jobs could be lost.
The volatile formula repeats across the world, say the authors: A number of important emerging-market countries like Ukraine seem to be headed for debt default, while a highly oil-dependent Russia seems to be on the cusp of a full-blown currency crisis. Russia has had to put down riots in its Far East as well as in downtown Moscow. Hit hard by the global recession, output is declining precipitously across Eastern and Central Europe -- as well as in a number of key Asian economies, such as South Korea and Thailand. Japan’s exports have plummeted by nearly 50 percent, while one-third of the country’s prefectures have passed emergency economic stabilization plans. Hundreds of thousands of temporary employees hired during the first part of this decade are being laid off. Spain’s unemployment rate is expected to climb to nearly 20 percent by the end of 2010. Spanish unions are already protesting the lack of jobs, and the specter of violence permeates the country. In Greece, workers have already taken to the streets. In the midst of the employment crisis, all of Europe must cope with mounting tensions between native citizens and immigrants -- most from poorer Muslim nations. (Spain has absorbed five million immigrants since 1999. Nearly 9 percent of Germany’s residents have foreign citizenship.) The xenophobic labor strikes in the U.K. may be setting a precedent for the rest of Europe. The IMF, after a determined spate of optimism, is now conceding only a very gradual global economic recovery in 2010 -- which will keep global unemployment at a high level.
The Past is Prologue
“The Great Depression showed how social and global chaos followed hard on economic collapse,” instruct the experts. “The mere fact that parliaments across the globe, from America to Japan, are unable to make responsible, economically sound recovery plans suggests that they do not know what to do and are simply hoping for the least disruption.
“Equally worrisome is the adoption of more statist economic programs around the globe, and the concurrent decline of trust in free-market systems…
“One has to hope that ahead of the next G-20 summit in London this April, global policymakers will get real about the gravity of the present global economic and political situation,” the authors conclude.
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