On the 60th anniversary of the Organization for Economic Co-operation and Development (OECD) and the 10th anniversary of the New Concept for Economic Affairs (NAEC), interview with the Secretary General’s Senior Advisor and new head of William Hines on Approaches to Economics (NAEC), his renowned think tank. It is an open trade-off between the shortcomings of the current financial system and the urgent need for a new interdisciplinary approach to the incompetence of society, nature and the financial architecture. The clear requirements for the new system differ from traditional economic doctrine.
Briefly describe your role in the OECD, particularly as a leader in the New Approach to Economic Challenges (NAEC)?
The WH-New Approach to Economic Challenges (NAEC) initiative was launched in 2012. Its purpose is to learn from the global financial crisis and to provide a forum for discussion and criticism of new economic policies. It has been an attempt to better understand how the economy works, how to take a systematic approach, and how to build resilience to shocks.
Paul Krugman once said that the OECD is the center of traditional knowledge of what is good. Governments need a place to agree on a common approach that uses the same concepts, theories, models and data. He also described NAEC as an economic and political economy, a place to experiment and try new things.
NAEC is created through the interactions of billions of people, companies and institutions, local or global, as small groups or countries, ranging from nanoseconds to thousands of years. We have promoted the tools necessary to analyze a wide variety of behaviors that may seem irrational. .. The aim is to understand the shortcomings of the analytical framework on which organizations depended prior to the financial crisis and to lay the groundwork for better regulation of policy boards under the new framework.
Q-What are the biggest challenges facing the current economic and financial system?
The WH-Covid-19 epidemic shows that a health emergency can have serious economic consequences for the entire planet. The deep interoperability and interdependence of global systems means that regional crises can spread rapidly and contribute to global ecological, social, economic and political emergencies. These emergencies also interact and escalate.
Economic systems are inherently complex and interconnected by financial markets, global supply chains, social networks, and shared environmental foundations. Complex interactions at the individual level create new characteristics at the macro level. Such systems are subject to crises and cascading failures that can result from a variety of sources including financial crises, natural disasters, geopolitical tensions, cyberattacks, and pandemics.
These risks stem from several ubiquitous trends, including rising inequality, excessive financial complexity, increasing digitization, monopolizing critical skills, and environmental emergencies such as climate change and biodiversity loss. It intensifies. They not only increase the frequency and intensity of certain effects, but also allow the effects to flow from system to system. In addition, policies to promote growth can destabilize these systems and raise concerns about their sustainability.
Are F-Evergrande’s financial problems just the tip of the iceberg or an exaggerated fear?
WH-Ich is by no means an expert on China, but the Evergrande Group’s plight is reminiscent of many other things we’ve seen in the past, and Lehmann immediately comes to mind. The comparison is indirect because the commitments of the Chinese government are very different from those of the US. However, there are important similarities between the two cases. After overcoming several crises, the mortgage-based securities market finally beat Lehman. As the housing market cools, so do mortgage numbers, which become toxic when homeowners are late on their payments. While the market was ready to buy and sell MBS, nothing was right, but when some of the key players became nervous about their assets, the price of MBS collapsed and Lehman’s only hope. He had to decide that the government was too big to fail. And it will save him.
Instead, the outcome of this decision is known. Evergrande has had very similar problems with a slowdown in the real estate market and bond defaults. Last week he admitted to having found arrangements to please those who would be paid interest while the stakes were on hold. The Chinese government’s dilemma is notorious when it comes to destroying the Evergrande group and finding a way to save it. The final decision is difficult to predict. The government was finally able to leave Evergrande and rely on his imprisonment to prevent the collapse of China’s financial markets.
This has the benefit of reassuring investors that the Chinese government is determined to clean up this market and shows that the system is resilient but is collapsing. The alternative is to experience it by buying large amounts of loans to entertain those who think too big to talk about failure but ensure foreign investors lose the process. growth. Huarong Asset Management poses a similar dilemma and survives, but the CEO is executed, given that Voltaire’s execution of Admiral Bing witnessed at Candide “spoke Le Autre’s impetus”. Such a solution is still possible in China, but unacceptable in the West. Given its value, Christine Lagarde has just announced that exposure to European Evergrande decay is “limited”.