The harsh reality is that the most powerful political and economic leaders in the world have no effective way of stabilising the global economy and financial system rocked by widespread market panic and a loss of investor confidence. Instead, they are offering platitudes and half-measures that in many ways are only making matters worse.
The Group of 20 (G20) economically significant countries have said they are "committed to a strong and coordinated international response to address the renewed challenges facing the global economy".
But no new action was announced and markets continued to plunge because of concerns about the European sovereign debt crises and fears of another recession. Talk is cheap, but to solve the debt crisis, those European countries in trouble must stop spending and expend a lot of political capital on unhappy voters. Earlier in the week, the Federal Reserve had announced that it would engage in another bout of arcane financial engineering in an effort to stimulate the US economy with cheap money. However, investors are not convinced that the $400 billion (Dh1.47 trillion) plan is enough to help the dangerously fragile US economy — and started dumping stocks.
If it continues, the crisis in Europe and the US is expected to soon reach emerging economies. The World Trade Organisation has cut its 2011 trade growth forecast to 5.8 per cent from 6.5 per cent, a worrying indication that the global economy is faltering further. It is unlikely that the annual meetings of the International Monetary Fund and the World Bank will come up with anything that will change the mood of consumers or investors.
While coordinated action may help, there is no single solution for the global economy. Those that can afford them must implement stimulus programmes that will create jobs and spur economic growth; those that can't must endure austerity packages until they get their finances in order.