December 27th, 2008
04:38 AM GMT
LONDON, England - Binge ... hangover ... regret ...resolve.
It's the pattern of the holiday season. Eat and drink too much, suffer for it, wish you hadn't overdone it - and then savor the chance of redemption in the shape of New Year's resolutions. You know the drill: something along the lines of "I will never ever touch a drop again" or "I will never eat so much rich food ever again."
It's also, of course, the pattern of the world economy. Grow too much too fast on borrowed money, and things will feel lovely until the awful day the bust comes. Then comes the pain, only partly offset by the usual measures to remedy it.
Think of interest rate cuts as the equivalent of a couple of aspirin or liver salts.
And of course policymakers and investors alike wish they had all spotted it coming sooner and taken action in time.
So what about the economic equivalent of New Year's resolutions? As we enjoy the tail end of the holidays and cross the invisible frontier that divides 2008 from 2009, what can we promise that we will always do in the future, and what will we swear to avoid?
The world's policymakers are already working hard on tighter, more effective regulation. In the new world that awaits us, banks and other financial services players will have their wings clipped to prevent them from soaring again to the heights of excess.
Economists are busily rewriting their textbooks, airbrushing any passages that suggested that the cycle of boom and bust was history. And of course we journalists are insisting that we were taken in by the same irrational exuberance as everyone else and could only tell the truth as we saw it.
So there will soon be new regulations and a new economic orthodoxy to bow down to. Meanwhile, what can we do to hasten recovery and prevent a recurrence of the current slowdown?
The words of U.S. President Franklin Delano Roosevelt's first inaugural address in 1933 have have always had great resonance and wisdom: "The only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."
As investors sit on great piles of cash, as banks refuse to lend money even to the most promising and worthy of ventures, as consumers steer clear of the shops, and as companies slash jobs, the impact of that "nameless, unreasoning, unjustified terror" is plain.
And we can be sure that it will intensify, as 2009 progresses. It's going to be that kind of year. As Germans say, "Augen zu und durch!" ("Shut your eyes and get through it!")
But if abject fear could be replaced not by misplaced optimism but by a rational prudence, what impact would that have? Would a change in psychology make much difference?
As with the question of climate change, if we changed our attitudes and actions together, could we solve the problem?
What do you think? What New Year's resolutions are you making to beat off the economic crisis? And what do you recommend to the rest of us?
Post your questions and comments, and we'll put them to an expert on Friday's edition of Business International. (It's helpful if you also say where you are writing from.)
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