Eight centuries after the doughty knights of the Fourth Crusade looted huge quantities of gold from Constantinople, than the wealthiest city in the world, and the rebellion against King John of England that led to the signing of the Magna Carta in 1215, the world is sinking again in an ocean of debt, untenable liabilities and strained balance sheets.
Dr. Alexander Mirtchev, president of the Royal United Services Institute for Defence and Security Studies (RUSI) International (Washington D.C.) and Dr. Norman A. Bailey, an economic consultant, adjunct professor of Economic Statecraft at the Institute of World Politics — and president of The Institute for Global Economic Growth, are prescribing in their joint “The Globalist” article: “Sovereign Debt and Beyond: Toward a New Magna Carta?” the imperatives for a new global economic renaissance.
Alexander Mirtchev and Norman A. Bailey offer a fresh conception out of the debt trenches and the growth stalemates that the West, Japan, and a number of emerging markets, from Argentina to Dubai, are plagued with.
Lack of structural and the divergence of fiscal strategies in a global financial system have evolved, in the wake of social contracts increasingly becoming unsustainable, beyond the means of states to manage it, they say. Robbing rich Peter to pay poor Paul would in fact only invite more troubles for Paul.
Solutions, as difficult as they may be, addressing solvency rather than liquidity, are delayed to more painful solutions in the future, even though global debt burden appears to have gathered an unstoppable momentum.
Weakening of solvency and the impending global debt disaster and pumping liquidity in the ocean of debt is exacerbating the seriousness of debt problems. Growth is restricted by austerity measures dampening growth and stagnation due to mounting debt. Chasing growth to breach the surface of the ocean of debt does not break the vicious circle — it reinforces it, according to Alexander Mirtchev and Norman A. Bailey.
Matters will not improve by themselves, and before the evolving crisis will force its own realities upon us, they urge for a global concerted action – a new Magna Carta.