By Olivia LaRosa
November 16, 2008
The Washington Post article, World Leaders Agree to Seek Major Reform, claims that the action plan they developed would “begin to reshape international financial institutions and reform worldwide regulatory and accounting rules.” I wondered what was wrong with actually reshaping these institutions and rules, since they have so clearly brought a financial tsunami to most of the planet’s inhabitants. “The leaders…agreed that the dramatic failure of market oversight in some advanced countries was among the root causes of the financial crisis.” So, what should be done, according to the G20?
Let’s examine these major points of agreement.
• China, Brazil, India and other such countries would gain power and responsibility as part of the restructuring of the international financial system.
• European leaders won a commitment to new regulations and controls on banks, rating agencies, and exotic financial securities.
• A “College of Supervisors,” a new regulatory body, will examine the books of major financial institutions that operate across national borders. In this way, regulators can obtain a more complete picture of these banks’ operations.
• Greater scrutiny of hedge funds
• A clearinghouse system to standardize and limit risk on opaque and risky financial derivatives.
• Allowing the IMF to conduct regular, vigorous reviews of national financial systems.
• Curbs on executive pay schemes that reward excessive risk-taking.
And finally, the IMF is calling for more growth stimulation. “Dominque Strauss-Kahn, managing director of the IMF, called on nations to approve a fiscal stimulus equal to 2 percent of gross domestic product.”
We do not need growth. We need a steady-state economy
. Capitalism requires growth to survive, by definition. The quest for constant growth is the CAUSE of the current global economic disaster. Organisms and organizations that must grow or die consume their hosts eventually. I see no real solutions presented here and I predict that these initiatives will fail to stop the global financial catastrophe.
And finally, shame on the US government for not even being brave enough to take responsibility for this disaster.
“The communique minced no words in outlining the causes of the crisis, blaming “weak underwriting standards, unsound risk-management practices, increasingly complex and opaque financial products and consequent excessive leverage.” While many nations have blamed the United States for failing to monitor excesses in the securities markets, the communique diplomatically did not.
“A British official, speaking on condition of anonymity because he was not authorized to speak publicly, said U.S officials privately acknowledged their role in the crisis. ‘The U.S. threw up their hands and said that our subprime mortgage industry left a lot to be desired,’ the official said. ‘But there was determination not to have any finger-pointing.’”
We threw up our hands about the subprime mortgage industry? We, the “greatest nation”, the “shining city on the hill”, cannot even stand up and take responsibility for our catastrophic negligence, recklessness, and intent to funnel every dime to the top 1%? Obvious scapegoating of only one part of the systematic meltdown is making other nations happy? Well, I am not happy. I call on every single policy official and every single CEO and COO to acknowledge their complicity in this horror.
Every single person on the planet will be damaged somehow by their laissez-faire attitude. They owe us an acknowledgment of their responsibility, and they owe us their support for an economic system that is not guaranteed to immiserate the world every few decades.