A Kaleidoscope of Possibilities
What we have learned from the Great Financial Crisis (GFC) and the COVID pandemic is that, every so many years, endogenous or exogenous events shock our economy and our highly integrated and complex global system. Transmission mechanisms and pathways often only become clear after the fact. The global economy is still in its recovery from the Pandemic shock and the massive government responses that followed. Each country and region is adjusting and calibrating back to “normal” at a different pace. 2024 has been a year of challenges for political incumbents globally with the adoption of new/old ideas and witnessed a further rise of left/right populism laced with nationalism. Globalization, liberal democracy, and the liberal world order are not dead, but they are weakening. The U.S., holder of the reserve currency, was able to unleash massive fiscal stimulus/transfers post-Pandemic that, not only truncated the economic impacts, but also initiated a new industrial policy that meets three important objectives: (1) bring high value (dual use) manufacturing back, (2) boost energy transition investments, and (3) create new job opportunities and restore infrastructure. These are long-term, public/private partnerships that intend to foster America’s independence, leadership, and prosperity. With the reelection of Trump, the world is bracing for a new shock, which is already being felt even before he is sworn in as President.
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