Is The U.S. Economy Being Tanked By Mistake or By Intent? 'The government wants Americans to believe the greatest economic collapse in history was the result of ineptness and mistakes yet still have confidence in their financial institutions. Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to "mistakes"? Not malfeasance – just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe? Oh well, it’s just 18 million American homes that now lay empty in the wake of unprecedented foreclosures, and the bankers have collected obscene bonuses for reckless lending of their depositors’ money. It’s like the captain and crew of a ship saying, not to worry, twenty-percent of the passengers were lost overboard, but this was due to unavoidable mistakes, and then being rewarded with bonuses when they reach port.' Mervyn King said that unless politicians act to create an international body with the authority to reform the monetary system, the world would be consigned to another crisis in a matter of years. He warned that although much attention was being paid to efforts to overhaul the financial sector, in the meantime the global economic imbalances which fuelled the crisis were worsening. The Governor has often voiced concern about these imbalances, under which rich countries have been reliant on borrowing to pay for cheap exports from overseas. In his speech at Exeter University last night, he indicated that in order to fix them, politicians would have to transform the multilateral institutions responsible for monitoring the global economy. Pointing out that with so many economies involved in the global trading system, the idea of another Bretton Woods conference is "wholly impractical". Mr King suggested the G20 may be the ideal forum to push through the necessary reforms, urging exporters to spend more and deficit economies such as the UK and US to save more. He said: "The legitimacy and leadership of the G20 would be enhanced if it were seen as representing views of other countries too. That could be achieved if the G20 were to metamorphose into a Governing Council for the IMF, and at the same time acquire a procedure for voting on decisions." Mr King has frequently expressed his frustration with the IMF, which repeatedly warned about the scale of global imbalances in the years running up to the crisis, without achieving any notable reforms in creditor or debtor nations. However, his plan may be opposed by the US, which holds the balance of power at the IMF. David Blanchflower has called for the Monetary Policy Committee (MPC) he formerly sat on to be "disbanded". In a column in the New Statesman, he claimed that it failed to see the recession coming and made it worse by acting too late. "The MPC's days are numbered, certainly in terms of its remit and probably its membership," he said. "After the election we are going to have to reconsider who sets monetary policy." He added that the committee had failed adequately to communicate quantitative easing. The Bank declined to comment. Iran Ordered Convoy Attack 'An attack on an Israeli diplomatic convoy in Jordan was carried out on instructions from Iran, Jordanian intelligence sources say. Citing sources close to Jordan's General Intelligence Department, The Jerusalem Post reported Tuesday the GID was looking into suspicions the explosives used in last week's failed assassination attempt were smuggled into Jordan by Iranian diplomats. The Post's sources said the attack was apparently perpetrated by local al-Qaida figures who received money and explosives from Tehran, and was likely in retaliation for the assassination of Iranian scientist Massoud Ali Muhammad in Tehran last week. IMF to Haiti: Freeze Public Wages 'Haiti's vulnerability to natural disasters, its food shortages, poverty, deforestation and lack of infrastructure, are not accidental. To say that it is the poorest nation in the Western hemisphere is to miss the point; Haiti was made poor--by France, the United States, Great Britain, other Western powers and by the IMF and the World Bank. Now, in its attempts to help Haiti, the IMF is pursuing the same kinds of policies that made Haiti a geography of precariousness even before the quake. To great fanfare, the IMF announced a new $100 million loan to Haiti on Thursday. In one crucial way, the loan is a good thing; Haiti is in dire straits and needs a massive cash infusion. But the new loan was made through the IMF's extended credit facility, to which Haiti already has $165 million in debt. Debt relief activists tell me that these loans came with conditions, including raising prices for electricity, refusing pay increases to all public employees except those making minimum wage and keeping inflation low. They say that the new loans would impose these same conditions. In other words, in the face of this latest tragedy, the IMF is still using crisis and debt as leverage to compel neoliberal reforms.'Bank of England Governor Mervyn King calls for merger of G20 and IMF
The G20 should effectively merge with the International Monetary Fund, under a radical proposal to overhaul management of the international economy issued by the Bank of England Governor.
Wednesday, 20 January 2010
Posts
