It is the truism of management gurus and new age authors that the Chinese character for 'crisis' combines the symbols for danger and opportunity. Well, like so much 'oriental wisdom,' it's a bit of fiction. The syllables in the Chinese character are actually more akin to the words 'danger' and 'turning point.' This makes it closer to our own word, the Greek 'krisis,' or decision.

Still, there may be some truth in the popular adage. If a crisis is a fork in the road, it means we must change direction. We can go no further using the old road map.

Ever-present danger

This seems to run contrary to instinct, though. In the midst of danger, the temptation is to retreat into the security of what we know. And, my, how the danger seems ever present. At home, workers are being laid off, the dollar is sliding, and government is cutting spending to the bone. Abroad, entire industries - American carmakers, British banks - are on the brink of extinction, while whole countries are on the verge of collapse. Iceland's best hope now is that Bjork puts on a benefit concert. Bono will be too busy doing it for Ireland to help.

In the industrial countries, ultra-loose monetary policy and fiscal stimulus packages are pumping trillions of dollars into the world economy. So far, though, the evidence suggests that panicked consumers, worried they might lose their jobs and sitting in homes that are losing value by the day, are hoarding the cash in their savings accounts. Nobody is lending. Nobody is spending.

Here at home, it is hardly surprising that the Government is feeling the pressure to do a big bail-out. But will a big burst of stimulus do anything to rescue our ailing economy? How do we catch some of the opportunities which could lie in the crisis?

It may be perverse to speak of opportunity in the midst of crisis. But let us assume that those trillions of dollars eventually must end up somewhere. Or put it this way: by swelling the money supply faster than the supply of goods and services to match it, Western governments are debasing their currencies. That means that consumers will want to spend their money before it loses value. Sooner or later, the hoarding must end.

Then again, maybe it won't - at least not right away. My hunch is that Americans, for instance, have lost so much wealth in the last year, they will boost their saving rates to get back on track. If their government debases its currency, they have the option of moving part of their money into assets which hold their value: gold in the first instance, commodities, and currencies seen as being more stable.

It seems likely that in time, what will result is a turn to 'emerging' markets on a hitherto unprecedented scale. This is because most economists expect that, given its considerable unused capacity, the developing world will account for more future growth than the rich countries.

Preserving social stability

How, then, does a country position itself to take advantage of this next wave (which could be expected to start well before the recovery begins in the developed world)? That all depends on the size and structure of the economy. But a bailout package geared towards forestalling bankruptcies might not be the way to go. Instead, a set of policies which creates a fruitful environment for business, while preserving social stability and creating a productive work force, may yield more dividends.

Sooner or later, the global crisis will end. We can't affect its course. We can only choose where in the water we'll be when the next wave rises.

John Rapley is president of the Caribbean Policy Research Institute (CaPRI) an independent think tank affiliated to the UWI, Mona. Feedback may be sent to columns@gleanerjm.com.