The Great Repricings

Let me first talk about economic repricing. Many bubbles have burst in the current crisis starting with sub-prime properties in the US. All over the world, asset prices are plummeting. In the last one year, tens of trillions of dollars have been wiped out...

The repricing of human beings will be even more traumatic. With globalisation, we have in effect one marketplace for human labour in the world. Directly or indirectly, the wages and salaries of Americans, Europeans and Japanese are being held down by billions of Asians and Africans prepared to work for much less. China and India alone are graduating more scientists and engineers every year than all the developed countries combined. Now, while it is true that trade is a positive sum game, the benefits of trade are never equally distributed. We can therefore expect protectionist pressures to grow in many countries.

Governments will try to protect jobs, often at long-term cost to their economies. It is wrong to think that we can force our way out of a recession. Beyond a point, the stress will be taken on [by] exchange rates. If governments try to prevent the repricing of assets and human beings, international markets will force the adjustment on us. A country that is over-leveraged, living beyond its means, will itself be repriced through its currency. Its currency will be devalued, forcing lower living standards on all its citizens...

When this crisis is finally over, which may take some years, out of it will emerge a multipolar world with clearer contours. Although the US will remain the pre-eminent pole for a long time to come, it will no longer be the hyperpower, and power will have to be shared. The Western-dominated developed world will have to share significant power with China, India, Russia, Brazil and other countries. Thus, accompanying the economic repricing will be political repricing.

George Yeo
Minister of Foreign Affairs
Singapore

With video

http://beyondsg.typepad.com/beyondsg/2009/03/speech-by-minister-for-foreign-affairs-george-yeo-at-the-distinguished-lecture-at-the-university-of-cambridge-on-27-march-200.html