How will historians characterize the defining moments of the early 21st century? There is no shortage of momentous events, from 9/11 to the Tsunami to global terrorism to the global financial crisis to Obama’s election in 2008. My sense is that the tectonic shift in the global financial order will most likely be the undisputed defining epoch of the 21st century.
For the last decade and half, the US, Japan, Germany, and the UK dominated the world’s economic league table. Since the global financial crisis of 2008, the axis of financial power and global capital flows changed. In the west, sovereign debt has spiraled out of control, unemployment is on the rise and growth is stagnating.
Hamstrung by weak consumer spending and lower corporate investment, Japan has been surpassed by China as the second largest economy. Despite the 72nd “Commonfilth” Games, India’s economic growth is projected to reach an incredible 8.5% in 2010. The rest of the so-called Third World is growing too. Africa for instance, has grown faster than at any time in its short and tumultuous post-colonial history. The end of apartheid has given rise to a more engaged South Africa, with its economy more integrated with the rest of Africa’s.
The path to economic recovery in the west is proving exceedingly problematic. The dilemma in the west is whether to stimulate or cut public spending. Moreover, despite Obama’s stimulus, both the private and the public sector are still shedding jobs. In fact, a second stimulus by the Obama administration is not off the table.
We could see more and angrier tea party like protests as the economies of the west confront the inevitability of a double dip.