1. 1 By LIM Chong Yah Albert Winsemius Chair Professor of Economics Director, Economic Growth Centre School of Humanities and Social Sciences Nanyang Technological University SINGAPORE SNG Hui Ying Lecturer (Economics) Fellow, Economic Growth Centre School of Humanities and Social Sciences Nanyang Technological University SINGAPORE UNPREPAREDNESS IN THE GREAT RECESSION (copyright © August 2009 by Lim Chong Yah)

2. 2 (I)Unpreparedness In The Great Recession (1)Pre-recession huge budget deficit (2)Market failure Unanticipated (3)Monetary Policy Only (4)Luke-warm Fiscal Policy (5)No Foreign Exchange Reserves (6)Insufficient Income-Generating Investment (7)Legal State Budget Balance

3. 3 (II)No Learning From Japanese Experience (1)Property Bubble (2)Budget Deficit (3)Monetarism, Liquidity Trap (4)Luke-warm Fiscal Policy (5)Fear of Inflation Without Inflation Targeting (6)The S Curve Theory

4. 4 (III)American Dilemma and Vicissitude (1)Paradoxical Fear of Inflation in a Great Recession (2)Unsure of Creative Destruction Policy, Schumpeterianism (Reversed Perestroika) (3)Equivocation on Fiscal and Monetary Co-ordination (Independence of Central Bank)

5. 5 (IV)Why Great Recession is Short-lived (H208 through H109) (1)Global Cheap Money Policy (Monetarism) (2)Global Fiscal Stimulus (Keynesianism) (3)China, India, Indonesia etc. No Recession 2009

6. Global Interest Rates (3-month latest) 6 United States0.34 Japan0.43 China1.32 Britain1.20 Canada0.23 Euro Area1.09 Austria1.09 Belgium1.10 France1.09 Germany1.09 Greece1.09 Italy1.09 Netherlands1.09 Spain1.09 Sweden0.28 Switzerland0.40 Hong Kong0.36 India3.31 Singapore0.50 South Korea2.41 Taiwan0.85 Israel0.33 Saudi Arabia0.65 Source: The Economist, July 4 th 2009, p 82.

7. Global Budget Balances % of GDP 2009 7 Country% % United States-13.2Turkey-5.6 Japan-6.8Australia-4.2 China-3.8Hong Kong-4.1 Britain-13.9India-7.7 Canada-2.1Indonesia-3.0 Austria-4.6Malaysia-7.8 Belgium-4.8Pakistan-5.0 France-6.6Singapore-4.1 Germany-4.6South Korea-5.7 Greece-6.5Taiwan-5.2 Italy-5.2Thailand-5.6 Netherlands-4.1Argentina-1.2 Spain-9.6Chile-3.3 Czech Republic-4.0Colombia-3.4 Denmark-2.5Mexico-5.4 Hungary-3.9Venezuela-4.7 Poland-4.0Egypt-7.1 Russia-8.0Israel-6.2 Sweden-4.7Saudi Arabia-5.1 Switzerland-3.1South Africa-4.1 Source: The Economist, July 4 th 2009, p 82 (based on The Economist poll or Economist Intelligent Unit forecast).

8. Global Stock Market Indices % Change from Dec 31 st, 2008 (In US $ terms, July 1 st, 2009) 8 Source: The Economist, July 4 th 2009, p 82. United States (DJIA)-3.1 United States (S&P 500)+2.2 Japan (Nikkei 225)+5.2 China (SSEA)+64.9 Britain (FTSE 100)+12.2 Canada (S&P TSX)+24.1 Austria (ATX)+24.2 Greece (Athex Comp)+27.3 Denmark (OMXCB)+23.7 Hungary (BUX)+26.4 Norway (OSEAX)+38.1 Russia (RTS, $ terms)+54.8 Sweden (OMXS30)+28.2 Turkey (ISE)+40.4 Australia (ALL Ord)+21.3 Hong Kong (Hang Seng)+27.7 India (BSE)+54.4 Indonesia (JSX)+62.6 Malaysia (KLSE)+21.0 Singapore (STI)+33.3 South Korea (KOSPI)+24.7 Taiwan (TWI)+43.5 Thailand (SET)+35.6 Argentina (MERV)+35.6 Brazil (BVSP)+65.8 Chile (IGPA)+56.1 Egypt (Case 30)+22.2 Israel (TA-100)+40.9 Emerging Market (MSCI)+36.3

9. 9 (V)Post-Aberration Prognostication (1)The S Curve Hypothesis (2)US$ Threatened (3)Acceleration of Convergence Process

10. 10 Have A Good Day THE END Cheers and God Bless