For many months now, those in power have been describing economic recovery, the G-20’s accomplishments, and the end of the crisis—when will we see through these mascarades? Nothing has been solved; no serious measures have been undertaken. This crisis has even turned into a greater avalanche, to tumble down onto future generations.
First the facts: economic growth is not back in the picture and considerable unemployment holds consumers back from buying goods and paying bills. In France, 4.7 million people do not work as much as they would like, or worse, they do not work at all. In the United States, 17.5% of the people are in the same predicament, working an average of 33 hours a week. Everywhere, unemployment is stretching out into longer periods. International commerce is shrinking. As prices around the world lower, just like the values of the dollar and yuan, unemployment rates rise and push consumers to seek low-priced goods; this destroys even more jobs.
Although the banks were said to have pulled through, they will not be able to make the investments needed for economic recovery: several large banks, from the U.S. to Europe to China, have a terrible shortage of shareholders’ equity; Jean-Claude Trichet had to ask them not to distribute dividends. Furthermore, the governments of industrialized countries must find 12 trillion dollars over this year and the next in order to finance their deficits; their debts will soon go beyond 80% of the world GDP and will lead consumers to be even more frugal, as they brace themselves for inevitably higher taxes. Also, treasury bills will no longer be considered as safe investments for banks and insurance companies, possibly affecting retirement savings plans and supplementary pensions. To make matters worse, the central banks have taken spectacular risks without any transparency; sovereign wealth funds have been seriously affected, as we saw in Dubai.
The incurred risks look threatening: public services could be discontinued; banks, companies and nations could go bankrupt; working people and those with savings in the bank could lose their earnings. This domino effect, this downward spiral, would be followed by a jump in inflation. And even if the economy is revived, against all odds, historical precedents have shown that employment levels need at least 2 years to come back to normal.
We cannot just accept these threats without taking action. We cannot sit on our hands, more or less reassured, because of some artificial miniscule growth; inaction would create even more hardship for future generations. We urgently need to make structural reforms, at least in France, to put us on the right track towards a strong economic comeback. This is perfectly possible. We need to muster up the courage to face the truth, which will justify the great efforts to be made—otherwise, we will never find success.