Investors are too complacent, in no small part due to a fundamental misunderstanding of how rapidly the world has changed, economically and politically, writes Fred Kempe.
When G-20 finance ministers meet this weekend in Riyadh, they'll do so at a time when all of the world's ten major economies are slowing – and several confront recession.
They are underestimating the forces that are changing the very nature of the world economy – a growing degree of "deglobalization" in the face of U.S.-Chinese decoupling. At the same time, they are overestimating the power of monetary and fiscal stimulus to keep the global economic party going. Within democracies, the public's faith has been shaken in capitalism and globalization to produce results that deliver greater prosperity. Most recently, that has driven everything from the recent Irish election victory of Sinn Fein, to the UK's departure from the European Union, to the erosion of the German political center.
All of that is unfolding against a backdrop of a major power test that at its heart is a systemic struggle between democratic and authoritarian capitalist models. Though traditional security analysts continue to worry about how U.S.-Chinese, U.S.-Russian or U.S.
For example, Chinese lenders on Thursday cut their one-year loan prime rate, which is used across the financial system, by 0.1 percent to 4.05 percent. TheThat followed the Chinese central bank's cut to its medium-term lending rate this week, as well as dozens of other measures Beijing has introduced in recent days to support businesses hit by the epidemic. The Financial Times
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