"Collateral Damage Part 15: Ending the Era of Ponzi Finance"
Record levels of developed-world debt amount to a Ponzi scheme in which future wealth has been used to fund today’s consumption. Political and business leaders need to acknowledge that many of these debts will never be repaid and embrace debt restructuring and defaults. It is time to act. part 15
"Collateral Damage Part 14: Reasons to Be Cheerful: How Companies Can Rise Above Faustian Economics"
Companies will have to deal for many more years with the fallout of the Western world’s debt bubble. In the latest report in the Collateral Damage series on the global economy, BCG’s David Rhodes and Daniel Stelter describe how to prosper in the face of seemingly perpetual economic uncertainty. part 14
"Collateral Damage Part 13: Succeeding in Uncertain Times"
In the Collateral Damage series on the global economy, Gerry Hansell, David Rhodes, and Daniel Stelter look at which companies are winning with profitable and sustainable growth strategies, the factors that have contributed to their success, and what other companies can do to write their own destiny. part 13
"Collateral Damage Part 12: What Next? Where Next?"
This paper covers some familiar ground in order to remind readers of the interplay among the most important economic developments, considers the scenarios for which companies should prepare, and suggests some steps that prudent companies may wish to consider. part 12
"Collateral Damage Part 11: Back to Mesopotamia?"
To what measures might governments have to resort if they keep trying to solve the debt problem by playing for time? In their latest paper, David Rhodes and Daniel Stelter look at what might need to happen if the politicians persist in muddling through for much longer. part 11
"Collateral Damage Part 10: Stop Kicking the Can Down the Road"
Since the downturn began three years ago, governments have tried to fight too much debt with more debt, hoping to be rescued by the emerging economies. They have played for time and failed to address the root causes of the crisis: global trade imbalances and unsustainable debt loads.part 10
"Collateral Damage Part 9: "In the Eye of the Storm: Ignore Short-Term Indicators, Focus on the Long Haul"
BCG predicts a slow-growth economy in the West. Our view is reinforced by the evolution of the credit crisis, particularly the questionable sustainability of public deficits; changes in government intervention, protectionism, and trade; and our belief that globalization trends do not favor job creation in the developed world. We highlight a proprietary 2010 study surveying 440 executives. Among our findings: executives are less enthusiastic about the economic outlook than many of their governments, and half of respondents expect an L-shaped recovery. part 9
"Collateral Damage Part 8: Preparing for a Two-Speed World: Accelerating Out of the Great Recession"
In the eighth paper in the Collateral Damage series, the authors suggest that we may be entering a two-speed world, in which most of the developing world grows slowly and many of the rapidly developing countries power ahead (at least for now). It describes what high-performing companies must do to seize advantage in a slow-growth environment. part 8
"Collateral Damage Part 7: Green Shoots, False Positives, and What Companies Can Learn from the Great Depression"
Recent press reports have talked a lot about “green shoots.” Are these signs of stabilization and recovery reliable? BCG analyzed 61 leading indicators for five of the world’s largest economies to see which might be real signals of an upswing. Our conclusion: Green shoots are notoriously difficult to call and it’s still too early to confirm an upturn. However, things are clearly better today than they were three months ago. Lessons from the Great Depression’s winning companies are also discussed. part 7
"Collateral Damage Part 6: Underestimating the Crisis"
The sixth paper in the Collateral Damage series considers actions taken by companies around the world in light of the unfolding economic crisis, as reported in a new BCG survey of more than 400 major companies based in seven developed countries. Our key finding is that too many companies appear to be doing too little, too late. We offer some thoughts about how to instill a sense of urgency into an organization—including treating a company like a turnaround.part 6
"Collateral Damage Part 5: Confronting the New Realities of a World in Crisis"
The financial crisis has inflicted widespread collateral damage on businesses and economies around the world. But it is also giving rise to a new corporate environment shaped by a new global economic order. We identify some of the “new realities” of the world in crisis and explore how the world might avoid sinking into even bigger economic trouble. In a search for more radical measures, we also propose some alternative policy solutions to this economic crisis.part 5
"Collateral Damage Part 4: Preparing for a Tough Year Ahead - The Outlook, the Crisis in Perspective, and Lessons from the Early Movers"
In this fourth part of our Collateral Damage series, we consider the outlook for 2009 (including the likely effect of the crisis on consumers around the world), revisit the history of the crisis in order to understand why the economic story has developed as it has, describe the very varied assumptions that some major companies are making for 2009, and detail how four major companies responded early to the crisis. We also include three appendixes. The first contains an analysis of the parallels between the current recession and the Great Depression; the second provides a portrait of the recession through a series of statistical graphics; and the third describes some of the seminal events in the crisis.part 4
"Collateral Damage Part 3: Asia, Advantage, and Action"
This paper considers the likelihood of a deflationary outcome to the economic crisis, reviews the impact of the crisis on some Asian markets, explores what effect this might have on global sourcing strategies, and describes in more detail what companies should do in three specific areas: leadership and people, the financial fundamentals, and pricing. There is also an appendix for readers interested in examining where the culpability for the crisis might lie.part 3
"Collateral Damage Part 2: Taking Robust Action in the Face of the Growing Crisis"
This paper examines the developing economic crisis as it spreads beyond the financial sector and assesses the likely impact of the interventions on companies around the world. It warns of a deep and prolonged recession in the United States and Europe and provides a holistic three-part executive action plan.part 2
"Collateral Damage Part 1: What the Crisis in the Credit Markets Means for Everyone Else"
This paper presents BCG's initial prediction that the financial crisis will have a damaging impact on the wider economy. It investigates the roots of the crisis and enumerates the various ways that nonfinancial companies will be affected, including limited access to funds, a higher cost of capital, tougher stock markets, government protectionism, more regulation, and weaker consumer demand. It also outlines a series of practical steps that senior executives can take to counter the worst effects of the downturn.part 1