EditorialNo Comments | August 2011
Four years after the global economic downturn began the world markets continue to falter and struggle. In 2007 we entered into the harrowing financial crisis that is shaping our present and future. Cue the collapse of major institutions, bailout of banks by national governments, severe global economic decline and the longest recession since the Great Depression of the 1930s—just before the start of World War II. The crisis that began in the US spread globally. In Europe, 15 nations that signed up to the Euro fell into recession for the first time ever in 2008. Major institutions, banks and multi-national companies around the world were forced to close shop due to bankruptcy.
With the world firmly rooted in economic crisis, governments rushed to organise emergency bailout plans. In 2009 the US injected $700 billion and the UK £500 billion into their banks, effectively taking ownership, or into underwriting debts. From Iceland to France, governments around the world moved to nationalise banks and cut interest rates to next to nothing.
And so it appeared that complete financial collapse had been avoided. Banks appeared to be making profits again and were working towards repaying the bailout money to governments. Politicians hailed their rescue plans as heroic successes. We were told that “the recession is over” by the National Bureau of Economic Research, who determined that the recession that began in December 2007 ended in June 2009.
But it did not seem as if we had, in practical terms, exited the downturn. Unemployment in countries continued to rise and even in some places, reached the highest levels in a generation. Addressing British politicians during the Peace Symposium held in early 2010 Hadhrat Mirza Masroor Ahmad(aba), Khalifatul Masih V, Head of the worldwide Ahmadiyya Muslim community commented:
“It is said that the recession has ended, that we have passed through the worst and that now we are emerging from it to recovery. But the public is still affected; jobs are still being lost; the purchasing power is still as affected as it was before. These are matters for governments and major steps must be taken, rather than making choices based on personal preferences.”
The economic crisis was re-ignited in 2010 when huge debts in Greece caused markets in Europe and across the globe to tumble. The IMF pumped $1 trillion dollars to Euro nations in need. It was clear that the steps taken by the US Federal Reserve and other countries had not quite worked. The US Congress had been preparing to phase out their bailout programmes, but growth stagnated, and instead a second bout of ‘quantitative easing’ was introduced. A similar story unfolded in Ireland and Portugal with the governments turning to the EU for bailout. Finances in Spain, Portugal and Italy were subsequently seriously threatened shattering confidence worldwide in the Euro and raising doubts whether this had actually been a period of recovery, or just a temporary lull amidst a wider period of economic slump. In the UK, household finances are currently declining at a more rapid rate than at the peak of the recession in 2009. In the US the credit rating was downgraded from AAA to AA for the first time. Before, the ‘recession’ had been the buzzword, now there is talk of a ‘double-dip recession’.
Governments around the world have had to make exceptional cuts to national spending with the ordinary citizen being hit the hardest. The economic squeeze has boiled over onto the streets all across globe. People have turned to aggression and violence; some have been unable to control their frustration, filled with anger, hopelessness, jobless and unable to afford the amenities of life, some have resorted to rioting, looting, bloodshed and revolt.
The solution to pump huge quantities of money into the economic system failed to revive the world economy. Yet still, the decision was taken to inject further, extraordinary sums of money to try to once again avert the problem which could not be solved using the same approach. Even now, the banking sector that was a major factor in the downturn still operates in more or less the same way. “The problem is still there” commented Mervyn King, the governor of the Bank of England, “…the search for yield goes on. Imbalances are beginning to grow again. We allowed a [banking] system to build up which contained the seeds of its own destruction”.1
It is easy in times of crisis to rise up and take the high moral ground. However, the message imparted in the pages of this magazine is the same at times of crisis, as at times of relative peace. It is a message based on the Holy Qur’an, whose teachings claim to be as relevant today as they were 1500 years ago. The Holy Prophet Muhammad(saw) displayed practically how those teachings were to be implemented in our daily lives, on a local and international level. 1400 years after him, as the Qur’an foretold, his Messiah and Mahdi was sent to revive those teachings and to once again establish the link between man and God. Hadhrat Mirza Masroor Ahmad(aba), 5th successor to the Promised Messiah(as), continues to impart that same message today. Our feature article in this edition features an address by His Holiness in Germany in which he explains that only if we maintain that just and fair system established by God, which covers all relationships and aspects of life, economic, social or otherwise, then not only can we avoid economic injustices, but also inequality at every strata of society. We invite our readers to reflect over this most urgent message that the world stands in dire need of.