EU-DIGEST

Europe ( as a result of British Generalities) unable to unite in credit crisis - by John Huizing

French President Nicolas Sarkozy, who currently holds the European presidency, has called on his European colleagues to reconvene in Brussels to tackle the credit crisis. During a lunch arranged at the last minute, the European leaders formulated a common position on Friday for the G20 summit, due next week in Washington. But Europe is not expected to play a strong leading role. "They are hardly long-term solutions," says Karel Lannoo from the Brussels think tank CEPS. He also questions the idea to give the International Monetary Fund (IMF) a larger role. If the IMF really wants to act as a financial policeman, then national governments would more or less have to be obliged to adopt its recommendations. And for this to happen the structure of the IMF itself would have to change radically. The US already has trouble accepting interference by international organizations in its national politics, warns Mr Lannoo. And there's another difficulty.the IMF is largely controlled by Europe. But the United States and the newer industrialized countries might prefer to see the voting positions and the capital chairs within the IMF rearranged. Something European countries may not like. Dutch Finance Minister Wouter Bos said: "We should watch out that we don't just formulate a general ambition, a general agenda for things that need to happen across the globe. In the worst case, it would result in endless discussions about what needs to be done in the world, while we forget there's a couple of things we need to do right now in Europe." It was a deliberate sneer at the British. They would like to arrange everything globally in the hope that London's financial center, the City, stays free of strict European regulation.

Labels: Britain, Council of Europe, G20, IMF, the Financial crises

"Poverty and a failing economy is created by the system not the people"

The current financial crisis is a direct result of the utterly unregulated derivatives and other speculation driven markets combined with large scale lending and borrowing which have choked the system to the point of no return. As average income of all economic units are usually equivalent to the average wage of all working people, only a few can draw very high salaries at the expense of the majority drawing less than average. In order to deal with this inequality and the potential opposition to it, the corporate powers developed a multi-layered income structure whereby income can be widely distributed in a trickle down fashion among people, without endangering the income levels of the top 1.5 percent of the people at the top. The ones who control more than 90 % of the wealth.

Nobel Peace Prize winner Muhammad Yunus says: "Globalization is not working for people who are poor. ... Sometimes, it acts like a 20-lane highway running across the world. But the problem is the big trucks from the USA are taking over all the lanes. No lane is safe for rickshaws. ... So if that image is correct, why don't we have traffic rules? This lane is reserved for rickshaws ... that lane is for heavy vehicles. Today, heavy vehicles are taking over everything. ... So we need traffic rules and traffic police". Today, in globalization, there are no traffic police.

But the system is not only creating more poor people in the developing world. Even the US considered the worlds economic powerhouse has had the most unequal distribution of wealth in the past 30 years. opinion polls show that a substantial majority of Americans say the rich don't pay their fair share of taxes. A growing number also say the U.S. is becoming a nation of haves and have-nots. The public's concerns reflect a shifting dynamic in recent years, as an increasing share of the wealth has gone to people at the top of the income scale. The top tenth of U.S. households now earn an average of 11.2 times what those in the bottom tenth make, according to the Census Bureau. That's up from a ratio of 8.7 three decades ago. The wealthiest fifth of U.S. households now take in 50 percent of all income, up from 44 percent in 1977. The differences are even more pronounced in analyzes of incomes for the top 1 percent of households. Already in 2005 the then Federal Reserve Chairman Alan Greenspan said: "The income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself." Today at the end 2008 the economic system as we know it is broken on a world-wide scale and needs urgent repair. Bandages in the form of tax breaks or economic stimulus programs, or propping up failed banks just won't solve the problem anymore.

Labels: G20, the Financial crises, The Financial Meltdown, World Economic Order, World Economy

THE SORCERER’S APPRENTICE AND THE CREDIT CRISES - by Mrs .I.K. Koutstaal

"The original Walt Disney ‘Phantasia’ production, released in the nineteen thirties, contains a magnificent episode in which Mickey Mouse, accompanied by the inflaming music of Paul Dukas, plays the sorcerer’s apprentice. The story is well-known: the great sorcerer has an appointment elsewhere. Before he leaves he orders his apprentice to mop down the floors. Mickey really does not feel like it. He comes up with a trick. From the conjuring books of his master he recovers a magic spell that will have the brooms do all the work without his actual interference. He casts the spell, the brooms fetch the water and mop the floors. Mickey leans back lazily. Somewhat later he realizes that he has summoned powers that he can no longer control. A major flooding is the result. Whatever he tries, he cannot find the spell to break the enchantment. When things were at their worst the great sorcerer returns home. He averts the disaster and Mickey gets a good beating. This image of the unfortunate Mickey regularly comes to my mind when I read about the way in which the diverse financial authorities react to credit crisis. An inspiring image for a column."

Labels: Credit Meltdown, the Financial crises, World Economy