This economic crisis ends in depression:
It is thought that we have to deal with an economic recession that only lasts a couple of years, however this recession is becoming a depression. The difference between the two is that recession is temporarily, but depression is structural. The world has too much production capacity from everything cars, electronics, houses, offices, you name it. Structural reform now is necessary, by reducing manufacturing capacity and so on. Innovative ways and thinking have to be deployed to make the change cleverly and with minimal harm. Damage will occur, and that should be dealt with subsidies.
There is no straightforward solution authorities don’t have one! They just are experimenting with throwing taxpayers’ money. They are in a hurry to put things right, but don’t take the time to investigate what really brought us in this mess, and don’t analyse the situation thoroughly to come up with adequate solutions and approaches. Stimulus packages invite corruption. Like in Japan they built in the 90s bridges to nowhere because the local politician wanted to create work for his electorate. Now the same mistakes are going to be made in the west! There is plenty around to learn from. But if you put people in charge that created the mess, don’t expect workable solutions, like Einstein once wrote, “Never expect the people who caused a problem to solve it.”
The economy needs to be restructured and not revived.
No banker nor authority and/or politician are able to solve this crisis. Not on their own neither together. They just apply the wrong medicine (money) and won't believe or listen to the few that could help. It is mainly Mr. Market, and the clever entrepreneur that adapts himself quickly into the arriving new situation of depression, that will become contributive, but this process easily could take 10 years or more.
Flooding the market with money as the FED and other Central Banks are doing causes INFLATION, and finally STAGFLATION. You can’t buy your way out of a depression, because the problem is deeper than that. All these measures are designed to encourage consumption...in order to support the old structures. But more consumption is just what the economy doesn’t need. It is in trouble because people have spent too much. Now, they have to cut back...and when they do, every enterprise, speculative investment, and household that depended on excess consumption is in trouble.
Taking advantage of the lessons from Japan is obviously no option.
Japan is in recession since 1989, and still is in it, now twenty years later. They were not able to put back the economy in good shape, due to applications of the wrong medicines. Japan didn’t restructure their economy. The rest of the world does have Japan's example on hand, but think that this is not valid for this crisis. Isn’t that unwise? Yes it is.
Only innovative ways of thinking can get us out of this economic mess that was caused by people that were too greedy and not groundbreaking at all. All those hastily designed financial rescue packages are doomed to failure if not innovative approaches are implemented and applied.
Stronger support for innovation in business, government and society in general will be essential.
I myself applied innovation in the crisis of the early 70s and became very successful in my sector of ‘industrial innovation’, first as consultant, later as manufacturer and turnaround expert. Innovation unfortunately has a bad reputation and is distrusted by the establishment, as I experienced. Starting on my own was the only solution to go ahead. I’m still a fervent promoter of innovation and young students and established manager should be trained in this profession. The University of Alborg Denmark runs an innovation management-training course, initiated by the industry. For every crisis is a solution, the question is to find the right one.