In the context of the economic crisis looming over the world, it is noteworthy that when the shocks, So it is not necessary that always severe earthquakes occur. But such earthquakes never happen without aftershocks.
Inflation, high interest rates, and the debt crisis affected the weak countries of the world. Then it was said that emerging economies are also under threat. Meanwhile, the matter has now reached the rich countries. The first example of this has been seen in Britain. Following the turmoil in the UK bond market, economists have rightly warned that these shocks could reach other developed countries. Meanwhile, speculation about the bankruptcy of Swiss bank Credit Suisse has added to the concern. The apprehension is that if this bank fails, it may have an effect like Lehman Brothers. The recession like 2007-08 started with the collapse of American investment bank Lehman Brothers. The immediate cause of the crisis in Britain is the policies of the new Prime Minister, Lee Truss. He cut tax rates drastically last week. Most of the wealthy sections will get the benefit of this.
But the truce government’s argument was that this would accelerate the economic growth rate. But the opposite happened. The prices of British government bonds and the British currency, the pound, fell sharply. The Bank of England (Britain’s central bank) then took over the bond market by deciding to buy government bonds. But in simple language it means that the bank will print the note and give it to the government. This will of course increase inflation further. However, the matter may not end here. America is largely left out of a deep crisis now. But inflation is uncontrollable there too. Therefore, it is believed that he too will not be able to survive the effects of the crisis. That’s why the American newspaper Wall Street Journal has rightly said that Britain is still playing the role of a warning bird. It is difficult to predict how bad the situation is. But this remark of former US Treasury Secretary Larry Summers is significant – ‘When tremors do occur, it is not always necessary that there will be a severe earthquake. But such earthquakes never happen without aftershocks. Right now, the tremors are definitely being felt.
