The global crisis approaches another major twist in its downward spiral. A key barometer of financial and fiscal pressure – the credit default swap (CDS) spread – has widened sharply for Irish government debt over the past few days; the markets think that the risk of a sovereign default is rising sharply. Immediate action is needed to forestall a dramatic deterioration of growth prospects across Europe and around the world.
The G7 ministers of finance and central bank governors met today in Rome. It was a great opportunity for this group of leading industrial countries to reassert its leadership in the global economy, taking strong preemptive action to prevent a recurrence of the calamitous days and near total financial collapse of September/October 2008.
Instead, all we received officially is a communique that blandly restates what these documents always say: we are opposed to instability and we are working on it, honestly. When an official has nothing to say, he or she talks about “principles” – and this was a pure principles communique (e.g., see their 3rd and 6th paragraphs). Nothing new or even vaguely reassuring.
Unofficially, it appears the situation is even worse. The G7 is signalling a lack of support for various key countries that are in the line of financial market fire. This is irresponsible, short-sighted, and bound to lead us all into great danger.
G7 effectiveness is at a low point. Why? The Europeans are in denial, particularly regarding the way their banks and their broader economic and political elite contributed to the global financial fiasco. The Americans are distracted, to put it mildly, while they search for a policies that make sense. There is a great deal of unproductive finger pointing within the G7.
But the real issue is that no one is yet ready to take on the deeper underlying problem – the political power structure of modern finance. While this structure is a particular problem – and particularly obvious right now – in the US, all industrialized countries today share some version of the same problem. We supersized our banking systems, allowed them to load up on risk that could threaten the macroeconomy, and gave them a mindboggling put option – in other words, the taxpayer is on the hook for a vast amount of downside. Across the industrialized (and coming soon to the industrializing world), the message from bankers is the same: give us the bailout money, or your economy will suffer.
Coming to terms with this reality and doing something about it will take leadership – the skills, popularity, and vision needed to really take on bankers (and preferably, win). That leadership is unlikely to come from Europe, Japan, or Canada. It’s also unlikely to come from the G20 (which is basically the G7 plus large emerging markets), whose next heads of government meeting is on April 2nd.
Everyone and everything, in some sense, waits for the US and for President Obama. How long will it be before he is able to fully and personally take charge of sorting out banking at home – and help those trying to do the same abroad?
If you see any other – even slight – glimmer of hope in this situation, post it as a comment here.
49 thoughts on “The G7 Are Asleep At The Wheel. Why?”
While the President is a master of being rapidly assimilated (and thus advanced) by ever higher power structures, there is little in his past that suggests he can actually lead one of them. This makes him the perfect candidate for pretty much every job but one … the one he has now. Don’t hold your breath waitng for changes.
I would like to hear more about how Obama could politicize the banks.
Here is one solution:
China sells 30 billion dollars of U.S. bonds. It sells the resulting dollars for Euros. It buys Irish sovereign bonds and at the same time if buys credit default swaps on the Irish bonds from the German government.
Having Germany guarantee Irish bonds would be moral hazard… if they did it for free. If they are paid to guarantee the bonds; that’s investment.
The sale of so many dollars would lower the value of the dollar and since the RMB is pegged to the dollar, China gets a free devaluation; plus the Irish bonds yield more than the U.S. bonds even after you pay for the CDS.
I think everybody wins from this transaction.
not only the did not even quote the g20, but also they asked their deputies to prepare a progress report in 4 months on principles and so on . they killed the g20.
OK…well a glimmer of hope might be to use the Ireland situation as the much needed ‘coordinating event’…for the political will to change?
I would have thought that Sept 16th was enough but apparently not.
It’s unlikely that financial and property markets will swing freely again until they undergo the much-talked-about “Darwinian flush.” Institutions are playing right along, bluffing as they go. “We really don’t need TARP. In fact, we’re going to return the money.” Sure. Meanwhile the Fed and the Treasury have an array of new tools suitable for intervening in most markets. They are going to need them because when the chips start to fall the dealing will be furious. To prevent being swamped value will have to be rationalized and markets made. Goldilocks would be right at home. Deals must be struck at levels high enough to avoid widespread insolvency yet low enough that buyers can be found. Obama has experienced dealers on hand. Rubin, Summers, Geitner and Volker have seen this kind of action before albeit on smaller scales. Interestingly, property and mortgage markets are the most impenetrable. Still, the temporary moratorium on foreclosures to March 6 reminds us that property contracts are amenable to adjustment or, in extreme circumstances, invocation of force majeure. As Nial Ferguson points out in The Ascent of Money, after August 1914 financial markets – all of them – simply closed. Think about that. What will trigger the flush? Hard to tell but it’s not far off if bank failures is any indication – 7 in 2007, 25 in 2008 and 13 in the first 6 weeks of 2009. The regulators cannot be too aggressive for fear of bringing it all down. But, as their handling of Lehman Bros. showed, when they move it has to be “just right.” Buckle up!
Glimmer of Hope: I hesitate to suggest one that most of Mr. Simon’s readers have already covered. I provide the following, just in case: Ellen Hodgson Tracy’s blog http://www.webofdebt.com/
The blurb for her book includes: “Web of Debt unravels the deceptions in our (American) money scheme and presents a crystal clear picture of the financial abyss towards which we are heading …it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln.”
Others of Bill’s guests you already know, such as Andrew Bacevich and William Greider.
Another glimmer of light may come from the University of Montreal’s Rodrigue Tremblay, who has propsed a global code of ethics to address the crisis. His most recent blog, Feb 13, 2009 and others, can be found at http://www.thenewamericanempire.com/blog Other articles, including a forecast of the G20 meeting are found at http://www.globalresearch.ca (a Canadian-based site covering a number of countries, principally the U.S.
I appreciate the reading list I just received from Mr. Johnson.
How about a massive right down of all CDS debt? The counterparties operated under the radar so let them surface if they want their money. Furthermore, let the courts deal with the debt problem of counterparty suits. Where’s the panic? If the “players” in this massive put can feed their families and give them shelter for a while, let THEM absorb the costs, not the world’s poor and middle class. Less than 10% of the people in the world own more than 90% of everything. Let them sort it out. Why should we pay for their casino losses?
Great job on the interview with Bill Moyers. You were clear and focused, and did a fine job articulating economic concepts for the layman. If I was Obama you’d have a very high ranking position in the administration.
Now please spice up the visuals on this site a bit– you need some color, a logo/banner at the top, and a little pizzaz. I realize that economics isn’t the sexiest topic on earth, but this page has the visual charm of a hospital room.
I want to support the suggestion by Gizmo to pretty-up your site a few notches. Since you are at MIT I would imagine that there is a small army of graduate students who know a bit about online media. Hire one! The content here is powerful but it could be far more appealing with just a bit of TLC. Thank you for speaking out and why are you not on Meet the Press?
i saw you yesterday with bill moyers.
it seems to me that thats nothing new. about a year ago i found louis brandeis, thesupreme court judge which is known for his famous quate “the sunlight is the best disinfector”, which fits to this crisis also, internet site which has his books. one of them is “other pepole money”, which is the story of the “money trust”, based on pujo committee from 1913. he spoke of financial oligarchy, interlocking directorates etc. it means we dont learn from history.
maybe because we are under a massive propoganda operation, to care more about reality shows, then learning from the past, or being involved citizen in the present.
you were right its not new, 3rd world countries and emerging markets had it before, as you may be aware of since you were at the IMF.
stanley fischer created the moral hazards when he rescued the G7 banks in the prior crisis at 3rd world countries.
when you bail out a crime suspect, he belives he has imunity.
i think they should be treated like the 3 strikes method for criminals- go to prison for the rest of thier life.
laws are strict when its a black american, and merciful with “white” collar criminals.
after doing it to other countries, they did it in usa. it means they have no moral limits for a long time.
i knew of this crisis in great detail in 2004. its called equity stripping, i knew of cds, tranches etc.
cut the crap about the curtians on the windows (its pretty enough), we need so much light on the matters at hand, it was exceptional 30 minutes of television,
thinking that AGG has it right, let THEM (the 10%ers)eat the curtians that shaded the light and truth of what they were doing in the shadows, stipulate, segregate and solidify these swaps for what they are crap and let THEM eat there cakes, that courts and the increasingly knowledgeable populous have baked for THEM…
Frankly I don’t really see any hope in this situation. I am not a fan of Obama, although I hope that “he is the one” or whatever. Unfortunately I don’t think that anyone is going to step up to be the leader that the world needs to get out of this in a way even close to orderly. Hopefully I am wrong but right now I am trying to figure out the best trades for the possible end of the Euro with the PIIGS, eastern Europe, and just plain demographics killing it over the next few years.
Again with some luck everything will work out to a decent ending and possibly someone actually steps up the the leadership role. I hate being a doom and gloomer but it is hard not to be one as of late.
BTW Your site is great. I differ from a few of your commenters who think you should spice it up. I like clean and simple sites. Other than a logo I don’t think most sites need much. And besides your content is definitely good enough that people will come regardless.
Here’s a glimmer of hope: this crash may be too big to inflate away. Our government may now, finally (and painfully) be forced to confront economic reality. They haven’t yet. But they may have to soon. We may, at long last, be forced to take our medicine.
Consider that in 2001, the Fed papered over the deep recession that we SHOULD have had and supercharged the distortions in the market that drove the asset boom. This crash was assured during boom, as the price signal was broken by run-away inflation in housing, equities and commodities to the tune of 20 million excess homes, $145 oil and the rest. Thanks, Al.
But now, it appears that the Fed’s 9 trillion in inflationary “fixes” have all failed and will continue to fail. The market now broadly recognizes that we are swimming in malinvestment and are wisely saving their money and watching for a real bottom before re-investing.
This bust may finally be too big to fix. That’s what I’m hoping to see. I believe it’s our only way forward. It’s the only way to ensure that future investment is productive and sustainable.
The other bit of hope is that this crisis has destroyed the credibility of the central bank and opened the dialog to real change. I think it’s pretty clear that central banks are no more deserving of their authority than any other price-fixing central planner throughout history. It’s time to trash them. THAT’s the way we’ll break the political power of the banking system.
…but what the hell do I know?
I was going to post some policy suggestions but ask a question here. In deflationary conditions with interest rates very low the Fed needs to be buying up debt from all sources as well as issuing credit in the amount necessary to do the job. Other than political opposition which may be substantial what is to prevent the Fed and Treasury from cooperating financing any deficit which may occur. If the Federal Reserve owns Gargantuan amounts of Treasuries it can simply collect the interest due by having the treasury printing more and buying up the debt. Paying interest to oneself has little economic effect. This would be an problem in a inflationary environment but given the deflation out there whats the difficulty? In short in a deflationary environment where productive resources are unemployed what is the limit on the Federal Open Market Committee and monetizing the debt.?
Other than not discussion the very serious problem the US has of lopsided income and wealth, (its Gini coefficient matches that of the Ivory Coast and may surpass them), I cannot agree with this site more. I live in Boston so if you are still offering a seminar series on the crisis then it would be good to attend.
”If you see any other – even slight – glimmer of hope in this situation, post it as a comment here.”
The glimmer of hope in this situation can be found right here, in the quantity and quality of discussion that you are stimulating. Because the other remarkable phenomenon going on now – beside a global economic crisis – is that explosion of feedback and communication via blogs, forums, email, YouTube, social networking, twitter over the internet.
By formulating good questions you encourage us all (who will have to pick up the pieces) to think more deeply and creatively about what to do and where to start.
For example, by highlighting the issue of US government willingness and ability to challenge the power of the banking oligarchy, you stimulated one commentator to couple the words evil and banker, which set me thinking. Is evil an appropriate adjective for those whose crime was mostly thoughtlessness?
Susan Neiman’s “Evil in Modern Thought” sheds some light on this question. She points out that action does not need to be demonic to be evil; it can be quite banal. The lesson from Auschwitz is that “the greatest crimes can be committed by people less likely to arouse terror and awe than contempt and disgust. Thoughtlessness can be more dangerous than malice: we are more often threatened by self-serving refusal to see the consequences of conventional actions than by defiant destruction.”
In which case, forget “the axis of evil”, Warren Buffet’s “economic weapons of mass destruction”, and those that proliferated them, are the real terrorism on which to wage war.
Maybe you need to express your crusade as unequivocally.
Here’s a glimmer of hope, look around you. We are a wealthy country, lots of roads, farmland, timber, incredible human resources, the only thing we lack is the organization and will and honesty to solve the problems created by our greed (or at least the greed of the oligarchy) and political corruptness.
In other words, it is entirely within our power to dig out of this mess. Who knows if we can really get ahead of global warming enough to limit its more catastrophic effects, but fixing this financial problem is entirely within the realm of known solutions. Yes, they are difficult solutions. Greedy, arrogant people who made willful and terribly selfish choices have to be held to account by a political system that is largely under their control.
Still, it is to the long term benefit of the oligarchs and the rest of us to have the worst offenders punished (severely, I hope) and to modify the system (or at least apply the existing regulations) to avoid the danger of a repeat.
And yes, ultimately, the wealthy are going to have to get poorer to fund rebuilding a system that benefits them the most. And obviously part of the rebuild will have to be a more equitable distribution of wealth and the responsibilities that come with wealth. These are doable things. They require honesty, transparency and accountability, qualities that are in short supply just where they are need most these days, but its not like we have to invent something new.
What are the global consequences of an Ireland default?
excellent interview with moyers, and thanks for the fine website
i dont understand why it is advisable or even do-able for the federal government to bailout and otherwise support (at the many “fed windows”) the broken banks and investment institutions BEFORE the economy hits bottom
doesnt the government, as rescuer, get better bang for the buck after the financial system has crashed rather than trying to halt the acceleration to the bottom?
So much “blah,blah,blah” on this site.
There is only one way to fix this problem once and for all: CALL IN ALL THE DEBT!” Everyone with a mortgage gets to re-fi it at 4%/30yr fixed. Those that don’t come in for a re-fi and who are of the 2004 – 2008 vintage are written down to zero. All the paper gets retired one way or the other. All those acronyms (CDS,MBS,SIV etc.) disappear forever. Case closed.
The Problem is not Uniformly Global Let me List American Aspects which are clearly unique to US. I will concentrate on short term reversal of fortune here. The political power of finance and the long run climate change problems are large independent. We do have a climate change // resource depletion problem on our hands which are severe but not as bad as the running out of Fixable Nitrogren which Carl Bosch and Fritz Haber solved around 1920. We do need a plan to manage it but its not the same as the plan for economic recovery. Related is a plan for American redevelopment
1. Unemployment insurance needs to be brought in the US up to Swedish levels with some attention to moral hazard. This will avert the worst effects that cascading layoffs could cause.
2. Banks need to be put into receivership if they are not solvent, ditto with brokerage houses.
3. Long range formulation of plans with a couple of months public debate (on the Web of documents posted there in detail by the administration to deal with economic regulation, the power of finance, Campaign finance reform, Corporate Governance and other serious public issues.
While direct democracy is cumbersome we have reached the point where the whole country, not the largely useless media can discuss issues based on the best available public information when an immediate crisis situation is not at hand. A very broadly based discussion based on evidence of what is proposed and why would be instructive for all and lead to better solutions.
I do not see any glimmer of hope. I’m Italian and I see the weakness of Italy – in particular – and of Europe in general…
I, personally, have the feeling that we will not get out fom this crisis until people won’t discover that what they’re doing makes sense. Does make money in the way they did until now make any sense? I’m not sure: people made money on money selling money to people who couldn’t buy it. Those people (with a MBA in Harvard) spent their life in a 2 a squared meters box trying to earn money forgetting they’re human beings. This is the problem, for me.
Bankers and financial institutions are holding the world hostage. Call their bluff. Give them 30 days to put their houses in order, and start lending, since they all claimed they didn’t need the TARP money. After 30 days send in FDIC close them down, and and form a new banks, from what remains of the good assets.
Remaining TARP money should be used to create green jobs, and to resolve the foreclosure problem.
Congress needs to regulate the financial system. Any financial instrument not regulated, should never get bail-out money from taxpayers.
Bankers gambled with monopoly money and now want to exchange their fantasy dollars into real money at the expense of taxpayers.
The local pharmacist believes that there is a small, secret cabal of gnomes who secretly rule the entire world. I have laughed at his “crazy theories” for some years. But now I begin to wonder.
Why do we allow the bankers (like Geither) that caused the present mess to take total control? It makes no sense. The bank executives Adan the employees of the Fed and Treasury (including Geither) obviously cannot do their jobs and are absolutely incompetent; they have destroyed their own companies and the world company.
Here’s an analogy. Whether or not GM makes cars withe engines that perform well or not, when they are new most of their cars start running when the key is turned, because they at least do have an engine in them.
Citibank, Chase, Morgan and their equivalents in Europe are like car manufacturers that have sold us cares that have NO ENGINE AT ALL.
In a decent society, all of the chief officers of the 100 largest banks would be exterminated. Why can’t at some some of the world’s political presidents and prime ministers at least fire them?
Since he is part of the Daley political machine in Chicago, one can ask what do the bankers have on Obama?
Do they have photos of him with his hand on the penis of an 6 or 8 year old boy? Clinton proved that no one is offended when the President has sex with a young girl, but maybe young boys might still offend someone. Do toge have proof that he is a “Holocaust denier”?
What precisely is it that the banks have on Obama that keeps Obama from even trying to do his job?
Simon Johnson seems to have a lot in common with Jan Rogozinski’s pharmacist – they both believe in conspiracies of gnomes. It’s the political power of the big bankers that’s the problem, according to Prof. Johnson. And I just love his belief that if only big existing banks are recapitalised by the taxpayer, private investors will leap in and buy the Govts. warrants then break up the banks and run them honestly. Why on Earth would that happen? Oh, because Prof. Johnson airily supports his proposal by saying “antitrust safeguards should be strengthened to make sure banks are not sold for their monopoly rents”. If ever I heard a deus ex machina argument, this is it.
But we can save this much from the wreck; Prof. Johnson sees that somehow there is a regulatory problem. I don’t think “antitrust” is the answer, because the US’ antitrust performance has been dismal and I see no reason for that to change. But “We supersized our banking systems, allowed them to load up on risk that could threaten the macroeconomy, and gave them a mindboggling put option…”. Yes, there’s a problem all right.
But regulatory change will be stymied by the gnomes. At least, if you believe in powerful gnomes, you have to believe that it will. Unless you can simultaneously believe in the gnomes and also that antitrust safeguards can be strengthened. Sort of like believing that you can enjoy a nice cup of tea from your grandmother’s lovely old tea set while in a zero-G environment. I’m afraid you couldn’t even pour the tea out of the pot.
In the meantime, while we’re wrestling with the gnomes, we could start up a Government bank, as suggested by Prof. Romer or here at Angry Bear.
You rightly make the point that our best hope lies with Obama. You asked for hope, and I hope I can offer it to you.
The MOST productive thing you could do to help would be to call up Rahm Emanuel NOW and ask him to meet with you and some active colleagues from the IMF.
Time is short; from the article in the Economist this week, it appears that the Bankers are gearing up to give us one last big shafting before “Bailout Fatigue” prevents them from getting more flesh out of us.
Tonight, I also posted a request to you to give us a concise LIST OF DEMANDS that we want from our Senators and Congressmen. Perhaps one of them would be to demand that their Senators read a three page executive summary and recommendation (Nationalize the Bastards Now!) from your site.
I also asked my Uncle to call up his old Chicago buddy Rahm Emanuel, and asked him to urge Rahm and the President to watch your interview with Moyers, and to check out Baseline Scenario.
This is all a very sad testimony of humanity’s intelligence, isn’t it… From my perspective as a mathematician and system analyst, I had to come to the conclusion that economics, as a soft science, was created to camouflage what bankers are doing – in the wake of unaccountable central banks.
Now they’ve successfully undermined the sovereignty of nation states and their law making processes, we, the taxpayers, are ‘economic victims’, while they are ‘just doing their job’…
That is possible only due to money, as it is institutionalised now! With long-term thinking in mind, one therefore has to look at the institutions in whose names people are acting.
In the UK, we’ve been advised to go for Parliamentary scrutiny via the Treasury Select Committee. Online, we’ve got a petition going to investigate the Cash : Credit ratio in the money supply. See http://tinyurl.com/666rwd
But that’s one of the economic blind spots…
Organiser, Forum for Stable Currencies
The Anglo Saxon Chronicle records that in 1125 the money men had debased the coinage and ruined the land, so King Henry had their right hands and testicles removed.
If you can persuade somebody in Congress to quote that passage to the banksters then maybe they will see the light! If not, they’ll see their testicles.
Glimmers of hope – if Ireland are in serious trouble it will mobilise the Euro Zone countries and the UK.
Also, I’m no great fan of the UK’s Conservative party but now Ken Clarke is back in the fold I fancy he may take the bankers on more directly than most senior world politicians and he has the experience to be taken seriously. He also has the popularity necessary to galvanise popular support for drastic action…
Simon et al,
If we are to prevent Wall Street from making us pay the freight for Socialism for the Rich (“Lemon Socialism”), then we must use all our Creativity.
Can you post a response on this blog that evaluates the proposal by Jeffrey Sachs (“A Proposal on How to Clean Up the Banks”)? To my relatively untrained eye, his proposal seems to make eminent sense as a way to free up the Banks to lend without rewarding the Thieves and Rascals who did this to Us.
it is a superfluous and extraneous myth that we need banks to lend us money. Governments used to ‘print money’ as notes and coin, without interest. In the UK, the ratio was around 50/50 between government created money and bank created money after WWII.
Now, bank created money is around 97%. Every credit is therefore only used to pay interest on credit. That’s the unsustainable exponentiality of compounding interest on interest.
EVERYBODY needs to wake up rather than despair!
Re “Bankers Conspiracy”, the Center for Responsive politics reports about 15% of Presidential Monies come from finance, insurance, banking donors and for Congressional elections the amount seems to be a little over 1/3. Do not believe for a moment that these industrial groups have gotten nothing for their investment. They got the Geithner Put, an enormous commitment to preserve management and keep firms intact in the event of insolvency. On the upside they have freedom of hedge fund managers for outrageous salaries which are largely tax free.
While Campaign finance reform has been blocked in large part by the conservative Supreme Court there is an easy method to solve the problem. Require largely free air time and press space for candidates that meet a relatively low threshold. This should be part of the cost of an FCC license which gives very lucrative bandwidth monopolies to Broadcasters largely for free. With time in the media cheap you might see more individuals making the lower cutoff for campaigns and less collusion.
While solutions to political problems are relatively easy to design the difficulties of an idea reaching the public and being seriously considered in our system unless funded by a large vested interest is almost nil. Aside from Civil Rights where there was a mass movement. Try to think of one publicly adopted political idea which came from an unfunded citizen.
I second what BarryS said above, 16 Feb 09 at 12:59am. You need to get ahold of Rahm Emanuel right now and ask him to meet with you.
And a concise list of demands for our Senators and Congressmen is an excellent idea.
I will be calling my Senator’s and Representative’s offices today.
As for Obama’s preparation, I don’t think anyone would have been prepared for this crisis. It’s too broad in scope.
The best hope we have is that his policies will swing the favor more toward the 95% of people who did not benefit from the policies of the last administration.
I have no faith in either of these parties, or the political system in general. The people always vote for whomever will steal from the other party’s constituents and give to them.
The need is for greater regulation in the international markets. Obama, Sarkozy an co need to do something about that. If such ideological madness continues, capitalism (as we know it) might end :
And I support the increse of taxes in the USA in times like these. Their problem is of deficits and low savings rather than of low expenditure!
*rather than low expenditure BY THE PEOPLE. The government needs to increase spending of course.
Paul Krugman has stated the obvious with respect to the Obama economic advisory team: you can’t cook a gourmet meal with canned goods. The president’s current team are canned goods and the country needs a fresh approach which Simon Johnson has detailed in this blog. The person to trust in this crisis is FDIC Chairman Sheila Bair, who can reorganize the banks through the process of intervention. It’s not simple, but the Japanese experience in the 1990s should show that it’s the best strategy. So, if the world is waiting on the US, then the G7 and Obama needs to be courageous enough to adopt Simon’s plan.
Let’s get to the real cause of the demise of our country. That being the cancerous derivatives. The funny paper…Credit Swaps, CDOs, SIVs, ETC’s etc…They were created for the sole purpose to massage and manipulate the markets for the benefit of the Oligarchs. Without these toxic vehicles we would not be in the mess we are in. Thank the FED,the SEC and all the lobbied politicians in Washington for turning their focus away from regulation and transparency and following their Constitutional responsibility to the US citizens. I believe that Mr. Obama would like Change but, the people he selected for his cabinet are just the pawns of the Oligarchs who want the complete control of our once Great Country.
The way to stop this meltdown is to get rid of the garbage derivatives by a government edict making them NULL and VOID and to hell with the crooks who created them for their blood money!
I will digress just a bit. This Blood Letting we are now going through is a boon for the Conservative Governments in Canada to dig into their long waiting list for privatization and start doing it!
A list of Crown Corporations and crown owned buildings and assets are being lined up for the block to be sold at fire sale prices all in the name of getting more cash. This, when prices are at their lowest in half a century and their friends are flush with cash looking for safe haven.
This down turn is the Conservatives dream. There is no dark side for them. God help us all.
Ideological stances have led to this avoidable crisis. India was relatively unhurt by the crisis because of well regulated finance markets.
However, it is now emerging that even children in rural India are becoming victims of the crisis: http://bigotblog.wordpress.com/2009/02/19/the-global-slowdown-affects-education-in-rural-india/
And it is India’s much criticised nature of hoarding gold that’s coming o the rescue.
One reason that the G7 are less active in dealing with the problem is their much stronger safety net. Unemployment is 50% in Italy and France, 80% in Sweden up to 70% in Germany with the Scandinavian countries the best. In the event of a financial disaster employment issignificantly decoupled from employment something that the US was always in favor of lecturing the Europeans when talking about their weak capitalist incentives. Given they will suffer a good deal less than we will they can take their time fixing the crisis. One would think now Anti-Americanism would be at a peak for economic reasons but it seems the European elites accept the idea of a shell game in the econmy where getting rich at everyone else’s expense is a good idea.
Urgency in the US needs to be placed in the consequence of our 15% to 30% unemployment benefits strucutre with Massachusetts being 30% nearly the most generous. We get the more “dynamic” economy because of this but the downside deficit of massive suffering gets discussed less often than our dysfunctional health care system. Cynically I think this is because the health care mess is very costly to business as well as to all, hence the desire of the business community to fix it.
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