Are You Ready for A Long Dark Night?

Are You Ready for A Long Dark Night?
China Times editorial (Taipei, Taiwan, ROC)
A Translation
February 20, 2009

We knew the numbers were not good. The economy experienced a significant 8.36% decline in the fourth quarter last year. This year's economic growth will be negative, and turn positive only in the fourth quarter. Growth for the year declined 2.97%. Nevertheless one cannot help being shocked at the seriousness of the crisis. Faced with this prolonged economic recession, the government must offer a more aggressive and comprehensive response.

The causes of the worst economic crisis in our history are obvious. The global economic crisis caused demand to disappear overnight. Taiwan's export-driven economy immediately dropped into an abyss. Exports have fallen dramatically. Profits and revenues have plummeted. Unemployment has risen. Unpaid leave is now common. This has led to the largest drop ever in private consumption and revenues. The future looks grim. Orders have evaporated. Private investment has been scaled back across the board.

Let's look at the numbers. January exports fell by 44.1%. Even discounting the effect of the Spring Festival, exports fell 34.9%. Exports are expected to fall by as much as 20% this year. Consumers may have 80 billion NT in consumer vouchers. But this year's growth rate is a mere 0.82%. Private investment is expected to fall 28%, having fallen over 40% in the first quarter.

Monetary policies such as interest rate cuts attempt to boost investment. Exchange rate policies such as currency devaluation attempt to promote exports. Consumer vouchers attempt to increase private consumption. But the impact of such policies is limited, because demand has evaporated. Currency devaluation cannot promote exports. The future looks grim. Zero interest rates cannot attract investments. Confidence has vanished. Once the consumer vouchers have been used up, private consumption will remain idle.

In other words, apart from the public sector, almost all economic growth has flamed out. How can one possibly be optimistic about the economy? Therefore, the government's responsibility is far greater than it was in the past. The effect of many policies may be just a drop in the bucket, but the government cannot refuse to act. Its actions must be more comprehensive and prudent. Only by doing the right thing when the economy has bottomed out, can it help the economy to rebound as soon as possible.

Interest rate cuts at a time like this cannot stimulate private investment. But at least they can give mortgage rates a breather. Allowing households to extend their mortgage policies will at least prevent the mortgage market from becoming another disaster area. Otherwise, mortgage defaults will surge. People will be left homeless, creating social problems. Large numbers of non-performing loans are another potentional landmine.

Currency devaluation cannot create foreign demand. But at least it can ensure that the most important engine of all, exports, will not simultaneous experience a sharp drop in demand. It will spare exports from a harsh exchange rate environment. According to domestic export forecasts for January, high tech products will decline. If the "Two Trillion, Twin Stars" industries, such as the LCD screen industry decline 70% or more, the entire DRAM industry will largely be done for.

The economic engine has flamed out. The most effective action the government can take is increase domestic demand, increase government procurement and public construction. It should do so promptly and aggressively. It should also vigorously promote economic openness and liberalization.

Faced with an unprecedented, protracted, and deep economic recession, the government must bolster the economy, creating a virtuous circle. Even more important, far more important than economic policy, is a comprehensive social safety net. Society must not be allowed to descend into chaos under the impact of this economic depression.

We have already seen a number of countries reel under the impact of the financial crisis. These include the comparatively backward economies of Latvia, Chile, Greece, and Iceland, where street protests have erupted. Waves of labor strikes have broken out in the Group of Seven, and even Britain and France. Dennis Blair, US Director of National Intelligence, warned that the economic turmoil triggered by the global economic crisis has become the United States' greatest security threat, more to be feared than terrorism.

People on Taiwan are good natured and rational. The rule of law is firmly established. The family structure remains strong. This enables family members to maintain a minimum standard of living during an economic downturn, when unemployment is on the rise. It can buffer some of the factors contributing to social unrest. The savings rate on Taiwan is high. This provides a certain amount of capital during a downturn. These are important assets during the global recession that will help maintain social order.

These are no guarantee that we will pass through the crisis without incident. If unemployment continues to surge, if people have no incomes, and even the basic cost of living increases, the result will be a decline in law and order. Even basic public safety will be difficult to maintain. The social structure is likely to collapse. Foreign investors will leave. Investments will vanish. The economy will be in serious trouble.

This chances of this worst case scenario happening on Taiwan is not high. But the government must take preventive measures. It must build a better social safety net, thereby stabilizing society and allowing everyone to safely pass through the storm. This is something the government must do. It may require substantial resources. But it is essential. Therefore the government must make prudent use of its resources, it must not throw money about, squandering precious resources.

DGBAS forecasts five consecutive quarters of negative growth. This will be the longest period of economic darkness in recorded history. Clearly we are in for a long, dark night. We can only bite the bullet and stay the course. Is the government ready? Can it lead? Can it help the people safely make it through this long dark night?

中時電子報
中國時報 　2009.02.20
社論－漫漫長夜 準備好了嗎
本報訊

雖然早知道數字不會好看，但當看到台灣經濟去年第四季大幅衰退八．三六％，今年經濟將一路負成長到第四季才能轉正，全年衰退二．九七％的數字時，仍不得不震撼於這波海嘯的恐怖與嚴重。面對這波最嚴重且長期的經濟衰退，政府是該有更積極而全面的作為了。

這波台灣史上「最衰」的經濟情勢，成因很明顯：全球金融海嘯造成需求一夕消失，以出口帶動經濟的台灣，立即掉入深淵。出口大減，企業營收獲利大降、失業上升，無薪假遍及各企業，結果，另一個影響經濟最鉅的民間消費也銳減。而前景看空、訂單茫茫，民間投資當然也全面縮手。

看看數據吧！台灣一月出口衰退四四．一％，扣除春節因素後仍衰退三四．九％。預估今年全年出口要衰退二成之多。民間消費即使有八百億元的消費券力拉，今年成長率只有○．八二％。民間投資預估全年衰退二八％，第一季更是一口氣掉了四成之多。

此時不論是降息的貨幣政策，希望拉抬投資；或是貶值的匯率政策，想推出口一把；或甚至如消費券等增加民間消費等作法，能達到的效果都非常有限。因為，需求不見了，貶值也喚不回出口；前景暗淡，零利率也難拉回投資；信心沒了，消費券結束後，民間消費也只能持續低檔徘徊。

也就是說，除了政府公部門，幾乎所有的經濟成長引擎全部熄火，經濟怎麼可能會好？因此，政府的責任，將數倍於過去。雖然各項政策的效果可能都杯水車薪，但政府不能無作為，而是更要全面、審慎的去作。在景氣谷底時作對的事，才能讓台灣及早反彈走出衰退。

降息，固然在此時喚不回民間投資，但至少讓廣大的房貸戶喘口氣，加上各項讓房貸戶寬延展期的政策，至少避免房貸市場成為另一個重災區。否則，房貸違約率大增，不僅讓自住者流離失所、產生社會問題，大量呆帳湧入銀行，更是一個大地雷。

貶值，無法創造國外需求，但至少讓出口這個最重要的引擎，不會在需求銳減的同時，還要接受匯率較競爭對手國「不具競爭力」的殘酷環境。看一月的出口值中，各項科技產品的衰退幅度，如兩兆雙星的液晶螢幕衰退七成多等，ＤＲＡＭ則幾乎整個產業都快掛了。

在經濟引擎全面熄火之際，政府最能控制且發揮直接效益的，就是擴大內需、增加政府採購與公共建設，這都應積極、加速推動；而開放與自由化，也應持續而更大幅度的推動。

在面臨前所未有、既深且長的經濟衰退期，政府不僅要在經濟政策面努力支撐經濟，將經濟推向良性循環面，更重要─而且遠比經濟政策更重要的是：要有「全面性的社會關照」，絕對不能讓台灣社會，在這波經濟蕭條打擊下，陷入紛亂。

我們已經看到不少國家在金融海嘯衝擊下引發動亂。從經濟相對較落後的拉脫維亞、南美智利，到歐洲的希臘、冰島，都出現抗議活動；甚至七大工業國英、法，都出現罷工抗議潮。美國全球情報總監布萊爾日前才警告說，全球經濟危機引發的經濟動亂，已超過恐怖主義，成為美國面臨最大的安全威脅。

台灣人溫厚理性，法治有一定基礎；社會上的家庭結構仍強，可在景氣低迷、失業升高之際，容納家族成員，支持其基本生活，因而能吸收掉一定程度的動亂因子；經濟上台灣人的儲蓄率亦高，對抗不景氣有一定的資本。這些都是台灣在這波全球蕭條中，保持社會安定重要的資本。

但這不代表台灣社會就一定能安度危機。如果失業率持續飆漲、社會上無收入、基本生活都匱乏者大增，結果必然是：治安大壞，一般民眾連基本安全、安定的生活都難以維持，社會結構即可能崩解；然後是外資與外人撤離、投資消失，經濟更陷入困境。

這種「最壞的結果」，在台灣發生的機率也許不高，但我們仍提醒政府，應特別防患於未然。也因此，架構更完善的社會安全網，以穩定社會，讓全民安度海嘯，是政府刻不容緩的課題。這部分也許需要相當龐大的財政支持，但絕對有必要。也因此，政府更該審慎使用資源，切勿散彈亂發、浪費資源。

這波衰退，主計處預估會有連續五季負成長，創下史上最長的經濟黑暗期，顯然，這是一個漫漫長夜，全民只能咬牙共度黑夜。但，政府相關主事者，準備好了嗎？能否帶領、呵護著全民共同平安的度過這個長夜呢？