Do it yourself

The idea of a “global reset” has gained popularity in recent years. It reflects a widespread sense that the extant world order is no longer working and a fundamentally new thing needs to emerge to replace it. Total collapse of global growth in the past couple of decades, unsustainable trade balances, and excessive socialism (social security in developed countries) have raised the specter of a total collapse in the global order, just like it happened in the early part of the twentieth century. While this feeling is understandable, the term itself might be misleading, in my view. What we are witnessing may not be a reset, but a reorganization of global institutions and systems. Global systems rarely collapse overnight. Instead, they evolve unevenly, often while appearing stable on the surface. Trade continues, markets function, currencies circulate, and institutions remain intact. Yet beneath this continuity, the logic guiding decisions is changing. For much of the post–Cold War era, eco...

The year 2025 is likely to be remembered not as a moment of rupture, but as a period when several long-term global trends became impossible to ignore. Political realignments, economic fragmentation, and rapid technological change have collectively weakened the assumptions that shaped the global order over the past three decades. Rather than a sudden “reset,” the world appears to be undergoing a gradual but meaningful reconfiguration. Existing systems continue to function, yet their underlying logic is shifting. Governments, markets, and institutions are adjusting to this reality, though not always in a coordinated or predictable manner. From integration to strategic competition For much of the post–Cold War period, economic integration was seen as a stabilizing force. Trade, capital flows, and technology exchange were expected to align national interests and reduce conflict. That assumption is now being tested. Major economies are increasingly treating economic capabilities as ...

As I mentioned yesterday ( see here ), the current conditions are very different from the conditions in the 1980s when the US Federal Reserve under the chairmanship of Paul Volcker, managed to kill inflation with a deeper recession, but without pushing the world into an economic depression. But this does not imply that we have nothing to learn from history. A key learning from the past 150 years of economic history is that every major economic cycle has been a function of a different set of factors like war; decolonization; politics triumphing over economics; major demographic shifts; major technological evolution (industrial or technical revolution); etc. The policy responses to various economic cycles have depended upon the mix of factor that were responsible for the cycle. Industrial revolution, destruction due to world wars and then reconstruction effort; emergence of Communism (command economies) and cold war; decolonization of European colonies; population boom (baby boomers)...

Little more than a decade ago, a global financial crisis engulfed the global markets. The impact of the crisis on financial markets was mitigated in couple of years by collective efforts of the governments and central bankers. However, the social, geo political and economic impacts of the crisis largely remain unmitigated. The "Reset" button pressed by the crisis has resulted in widening of socio-economic divide across the world. The geo political tensions have intensified materially. The rise in protectionism has adversely impacted the global trade. The rising unemployment in Europe and most commodity dependent economies in Asia, Africa and Latin America, declining growth in China, substantial cut in developmental aid to least developed nations due to fiscal pressures, has caused widespread human suffering for over a decade now. The onslaught of novel coronavirus (COVID-19), in my view, will accelerate the "Reset" process leading to a new global or...