The ancient Arabs had a custom upon learning of a disaster or misfortune, which was to write a verse that would serve to caution future generations.
A well-known example comes from Duraid Ibn Al-Simmah who reproached his tribesmen for failing to heed his warnings to prepare for an enemy attack. In an elegy for his brother, he wrote “I pressed my counsel where the road begins to twist / They only grasped it by the next morning’s light.”
I recalled these lines when attending the annual meetings of the World Bank Group and the International Monetary Fund (IMF) in Washington this year. The atmosphere before, during, and after the meetings was charged with anxiety over the future of the global economy. There were attempts to offer reassurances that it was resilient enough to absorb shocks, and there were repeated appeals to world leaders to work together for the common good.
But the appeals mostly fell on deaf ears. How can such calls be heeded amidst all the present geopolitical turmoil caused by increasingly entrenched adversaries?
On the one hand, certain powers in the West cling to a dominance owed to long-accumulated advantages. Only recently have their “Us First” slogans been tempered with the explanation, which they somehow thought useful, that this did not mean “Us Alone.”
On the other hand, some powers in the East are rising on the back of well-managed economies, investment in human capital, and the gradual acquisition of the twin pillars of progress in our times – the digital transformation and the wherewithal to explore the frontiers of artificial intelligence (AI) – coupled with a planned transition to a green economy.
Against this extremely fraught backdrop, we have seen successive waves of rising stock prices that far exceed the actual earnings of companies. When these occur without review or correction, talk abounds about “bubbles” that can precipitate crises in financial markets when they burst.
Comparisons are currently being drawn between the “dot-com” bubble that burst on 10 March 2000 after nearly a decade of being inflated through fraud and runaway speculation, and the current prices of the so-called “Magnificent Seven” tech firms, namely Microsoft, Meta, Amazon, Apple, Nvidia, Google, and Tesla.
Analysts are wondering whether these firms can deliver on their promises to raise productivity through AI at a pace that matches the race to acquire their shares. If not, they warn, we will see the disastrous replay of a familiar pattern: voracious price increases swell the bubble until it bursts with impacts that extend across all the sources of the borrowed money that the speculators played with. This then triggers a liquidity crisis, setting off a chain of other economic crises of varying severity, wreaking economic, social, and political havoc.
Once again, commentators will recite from the classic text on financial crises, “Manias, Panics, and Crashes”, by US economist Charles Kindleberger (1978). Others will vie to claim that they were the first to see the crisis coming and warned that the market had entered a “Minsky moment” – the tipping point between a market’s ascent and the onset of its collapse.
The term is attributed to US economist Hyman Minsky, who described how the finance sector transitions from stability to fragility and then to crisis as a result of unbridled speculation.
Two conditions need to be met to prevent bubbles from bursting or at least from precipitating large-scale crises like their predecessors. First, real gains in AI-driven productivity and efficiency must accrue. According to economist Jason Furman, these gains must offset the losses to the US economy due to the ongoing trade war. Second, the lessons of the 2008 global financial crisis must be fully absorbed. Measures must be in place to ensure prudent banking supervision and firewalls must be reinforced around the banks responsible for payment systems and monetary stability.
The troubles and risks we have been seeing in the private credit markets such as the collapse of the auto-lender “Tricolor” or the auto-parts firm “First Brands” in the US are said to be exceptions whose risks are merely surface-level and do not gnaw at structural pillars. The surge in gold prices is, apparently, just an understandable reaction to the climate of uncertainty caused by geopolitical tensions and the weaponisation of the dollar.
If this is the case, then what should the developing countries worry about and prepare for, so they do not find themselves staring at disaster in the dawning light of the day after? I suggest that they should consider the following:
First, there is the rampant rise of sovereign debt in the advanced economies and the rising costs of debt-servicing in the developing ones. The escalation of debt in the wealthy countries has grown so severe that this week’s UK Economist magazine dedicates its cover story to “The Coming Debt Emergency.”
Unfortunately, it pays no attention to the debt crisis of the developing countries, which has been covered by numerous articles in this newspaper, showing how this crisis imperils development, education, health, and social stability and describing possible remedies, including the 11 proposals of the UN secretary general’s Expert Group on Debt and Development.
Second, there is the global demographic imbalance. While the populations in the European countries and Japan are ageing, the developing countries enjoy predominantly youthful populations, yet this advantage remains largely untapped due to their underinvestment in people.
Third, there are persistent economic wars – and not just trade wars. The hardest hit by the fallout of these wars will be those who fail to implement strategies for indigenising development and integrating into the new regionalism through more trade, investment, and technological cooperation.
Fourth, there are sluggish economic growth rates that remain too low to generate decent jobs and to raise incomes and living standards enough to sustain the middle class while ending extreme poverty.
Fifth, there are shrinking opportunities for advancement due to the failure to sufficiently invest in developing the resources and architecture needed for the digital transformation, AI, and the transition to a sustainable green economy.
These five challenges will not wait for those who have mastered the “art of doing nothing” before they strike. I will have more to say on that in my next article.
This article also appears in Arabic in Wednesday’s edition of Asharq Al-Awsat.
* A version of this article appears in print in the 23 October, 2025 edition of Al-Ahram Weekly
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