Researcher Shatha Khalil *
Eleven years have passed since the economic crisis of September 14, 2008, when Lehman Brothers Bank officially declared its bankruptcy due to losses in the mortgage market and its effects exceeded US to spread across the world. It was described as the worst financial crisis in history But this economic disaster may be revived amid expectations that the situation will worsen in 2020, which requires preventive measures to reduce the impact.
Fears began to deepen from the next financial crisis, with the state of confusion and record declines in the financial markets, and in light of the sharp decline in oil prices, which has become alarming among several quarters in the United States, as well as the continuing trade war between Washington and Beijing, if calmed down after the announcement of a temporary truce between them in the last summit of the twentieth, but it is sure that it casts its shadow on the world economy which is already burdened with a lot of political problems that create chaos, and does not expect new investments and economic development, except war economy, which means the production of resources and allocation it to support the war effort, including measures such as increased tax rates, as well as the introduction of resource allocation programs.
According to experts, based on fortune site, JPMorgan chase Bank, a US multinational bank, has predicted the likely date of the next financial crisis, which is likely to hit the world in 2020, meaning that the “economic shock” will hit global economies soon. .
The director of one of the most important multidisciplinary research and advisory centers in one of the Arab states said that the crisis in the United States will begin, which will eliminate all the economies of the world. There will be many reasons, including America becoming an importing country of the oil after consuming most of its potential, and will impose its conditions on the markets in the light of its military power to reduce prices, and there are other reasons for the crisis, such as rising interest rates and their impact on financial markets, and thetrade war led by US against the world, especially China, and may declare a military war against China when the crisis occurs between them.
The British financial expert, Anne Pettfor, said that the world has not learned lessons from the previous crisis, despite its mismatch on the sidelines, as banks are still working as they did in the past.
A financially secure world requires democracy first, as it is a political mechanism, which ensures decision-making by honest people so as to ensure the flow of funds and currency exchange at levels that benefit the economy and peoples and do not serve a few beneficiaries, she added.
Some economists and analysts believe that the most likely reason for the decline in US economic expansion is narrowing the deteriorating economy to the Federal Reserve Bank, burst of a bubble of assets, a potential tax crisis, or disruptions in international trade.
Economist Daniel Buckman said the reason for the decline in economic expansion lay in the recession caused by unexpected shocks. However, the Wall Street Journal poll provided an idea of the “current consensus” on the idea of a halt to expansion and the onset of recession, “The recession is not imminent, but the expansion will not last forever, and the next decline may come in the midst of the presidential campaign of 2020.
The effects of the crisis are also the problem of the recession, which occurs when the demand is low in supply, that is, abundance in supply and low in demand due to the inability of domestic demand or external demand (exports) to absorb the supply of goods. The domestic demand deficit usually comes from a lack of high wage rates in proportion to the high productivity or layoffs caused by increased dependence on mechanization, and trade wars between countries constitute an increase in tariff and non-tariff barriers to the accumulation of supply of goods, both of which are the main causes of the Great Recession of 1929.
Usually when the volume of demand drops from the size of supply and unemployment increases, prices fall rather than rise supply noting that the unemployment does not meet with price rises except in special cases not available here, so there is no economic logic to say that there will be a crisis leading to a large recession, unemployment and a huge rise in prices, because stagnation or recession usually is accompanied by a drop in prices, not a rise.
The problem of America’s transformation into an oil-importing country after consuming most of its potential and thus imposing its conditions on markets by virtue of its military power to drop prices and its expectation that the price of oil will reach $ 150, it was based on statements made by a number of institutions and figures directly involved in issues of oil, warn of the risk of a shortage of oil supply in the next few years.
The International Energy Agency (IEA) issued its 2017 report on oil market analysis and its future. The report says the supply is now growing in America, Canada and other countries in the world, but production could fall by 2020 if investment in the oil production industry does not resume .If the current size of the investment capacity continue s , the reserve production capacity will fall in 2022 to the lowest level since 2008 (that is, when oil prices reached $ 150 per barrel), the agency said it does not expect that electric cars occupy a large position in the transport sector by 2022, and we don’t see a decrease in oil demand in any time in the near future.
The accumulation of debt is an important warning of a financial crisis in 2019, due to the accumulation of regional and global debt. Economists have warned of a more severe global and regional financial crisis than the 2008 crisis due to an unprecedented rise in global debt to more than $ 247 trillion. In line with slower growth rates, lower oil prices, the US-China trade war, Brexit , and the political crises sweeping a number of countries in the region.
The repercussions of the next financial crisis on:
The Arab region in general and the Gulf region in particular will be affected by the repercussions of the next financial crisis, especially as the Gulf countries’ debt to 2022 exceeds $ 400 billion, coinciding with concerns about the production of shale oil by the United States, which it started to Asian countries, one of the largest importers of Gulf oil.
Experts predicted that oil prices would remain low for a long time and growth rates would not exceed 2% in the coming period. This would require structural reforms in the economy as well as financial reforms.
And the International Monetary Fund (IMF) has lowered the outlook for the global economy for reasons such as trade protectionism and the US-China trade war as trade disputes around the world intensified.
Are new features beginning to threaten the structure of the global economy today, and after a decade of financial and economic collapse, and whether as a result of weak financial regulation procedures, the implications of inequality, and the escalating global imbalances and political tensions in the Middle East, among the causes of this collapse?
Countries with major economies must stop – and counter – any attempt to undermine global trade, which has been the main engine of global economic growth since the end of the Second World War, and which would have dire economic consequences and high costs for all, including the United States, and beyond the United States, the international community must address the wrong policies that destroy the economy and emphasize the principles of the open multilateral trading system before it is too late.
The widespread warnings of a new financial crisis leading to a recession may be worse than in 2008, caused by the accumulation of private and government debt in developed and emerging economies, while interest rates in the US and other countries are rising, leads to the inability of governments and the private sector to repay their debts, especially if interest rates continue to rise.
Economic Studies Unit
Rawabet Center for Research and Strategic Studies