No ‘Bailout’ for the world’s poorest
Thalif DEEN
The U.S. economic edifice is in danger of
collapsing, the White House has been called upon to save
some of the biggest financial institutions in the country
and, at the same time, redress the excesses of Wall Street
business tycoons who earned multi-million-dollar salaries
and extravagant bonuses. |
As a spreading financial crisis threatens to deepen the
economic recession in the United States, the news of an unprecedented
700-billion-dollar bailout package reverberated through the corridors of
the United Nations last week as over 100 world leaders gathered in New
York for the annual talk-fest: the 63rd session of the General Assembly.
At a time when the United Nations is seeking increased financial
assistance from rich nations to help developing countries meet the
faltering Millennium Development Goals (MDGs), including a 50-per cent
reduction on extreme poverty and hunger by 2015, the current U.S.
economic crisis and its predictably negative fallout overseas is
expected to be a major setback.
Addressing delegates last week, U.N. Secretary-General Ban Ki-moon
warned that the current gloomy outlook threatens the well-being of
billions of people, “none more so than the poorest of the poor.”
“This only compounds the damage [already] being caused by much higher
prices for food and fuel”, he added.
Ban has called for 72 billion dollars per year in additional external
financing to achieve the MDGs by 2015.
As one Asian delegate put it: “The US$72 billion is peanuts compared
to the US$700 billion the White House wants to dish out to save some of
the Wall Street firms from going belly up.”
US Senate Banking Committee Chairman Senator Chris Dodd, US
Senator Max Baucus, Senate Majority Leader Harry Reid,
Senator Judd Gregg and Senate Minority Leader Mitch
McConnell participate in a news conference as the financial
rescue bill passed in the Senate at the US Capitol October 1
in Washington, DC. The US Senate on Wednesday approved a
700-billion-dollar Wall Street bailout package by a vote of
74-25 amid a widening global crisis sparked by the collapse
of the US housing market. |
“And the urgent needs of developing nations will now be the least of
the priorities of the United States and other Western donors,” he
predicted.
Father Miguel d’Escoto Brockman of Nicaragua, the newly-elected
President of the General Assembly, warned that the current financial
crisis will have “very serious consequences” that will impede the
significant progress, “if indeed any progress is made”, towards the
targets established by the MDGs, “which are themselves insufficient”.
“It is always the poor who pay the price for the unbridled greed and
irresponsibility of the powerful,” he said, taking a passing shot at the
staggering 700-billion-dollar bailout proposed by the administration of
President George W. Bush to save the high-stakes investment banks of New
York from bankruptcy and collapse.
Norwegian Prime Minister Jens Stoltenberg told delegates that “money
doesn’t seem to be a problem, when the problem is money”.
“Let us look for a moment at what is happening on Wall Street and in
financial markets around the world. There, unsound investment threatens
the homes and jobs of the middle class,” he added.
There is something fundamentally wrong, he argued, “when money seems
to be abundant, but funds for investment in people seem so short in
supply”.
Jamaican Prime Minister Bruce Golding told the General Assembly that
the crisis currently rocking the world’s financial markets reflects the
inadequacy of the regulatory structures that are essential to the
effective functioning of any market.
But it is more than that. It represents the failure on the part of
the international financial system to facilitate the flow of resources
into areas where they can produce real wealth — not paper wealth, he
added.
Golding said the world is not short of capital: “What it lacks are
the mechanisms to ensure the efficient utilisation of that capital.”
As the economic meltdown in the United States continues, the
casualties are piling up both among commercial and investment banks:
Bear Stearns, Lehman Brothers and Washington Mutual (allowed to collapse
with no government bailout); American International Group, Goldman Sachs
and Morgan Stanley (allowed to survive with emergency financial
assistance, including some from the government); Merrill Lynch has been
folded into Bank of America and Citigroup has taken over Wachovia Bank.
The outrage against Wall Street, described as the world’s financial
capital, is also directed at the high salaried chief executive officers
and the middle rung bosses who make multi-million-dollar salaries, with
stock options and perks that set them up in a privileged class by
themselves. According to one report, the lowest salary on Wall Street
was around 280,000 dollars a year in a country where the average low or
middle class employee would go home with a pay packet of 50,000 or
75,000 dollars per year.
In 2007, the chief executive officer (CEO) of Goldman Sachs, Lloyd
Blankfein, was paid 68.7 million dollars — described as “the most ever
for a Wall Street CEO.”
As the entire U.S. economic edifice is in danger of collapsing, the
White House has been called upon to save some of the biggest financial
institutions in the country and, at the same time, redress the excesses
of Wall Street business tycoons who earned multi-million-dollar salaries
and extravagant bonuses.
The greed factor in the crisis is that these same tycoons, who are
responsible for mismanaging their companies, still insist on continuing
with their same lavish lifestyles and lofty salaries even after the
massive taxpayer-funded bailout. But these salaries and bonuses are
likely to be curbed as part a return for the bailout package.
Addressing the 192-member General Assembly last week, the President
of Brazil Luiz Inacio Lula da Silva said the economy of any country is
“too serious an undertaking to be left in the hands of speculators”.
Ethics must also apply to the economy, he said. But, unfortunately,
in the race for profits, the ethical factor has ceased to exist.
The President quoted the Brazilian economist Celso Furtado who once
said: “We must not allow speculators’ profits always to be privatised,
while their losses are invariably socialised.”
And as a postscript, the Brazilian president added: “We must not
allow the burden of the boundless greed of a few to be shouldered by
all.”
In the 1987 Hollywood movie ‘Wall Street,’ Oscar-winning actor
Michael Douglas plays the role of a ruthless corporate raider, Gordon
Gekko, who forsakes all business ethics to climb to the highest echelons
of the business world.
His speech to a meeting of stock traders is still considered a
classic on Wall Street: “The point is, ladies and gentleman, that greed,
for lack of a better word, is good. Greed is right, greed works.”
“Greed clarifies, cuts through, and captures the essence of the
evolutionary spirit.
Greed, in all of its forms; greed for life, for money, for love,
knowledge has marked the upward surge of mankind.”
Douglas, who is the U.N.’s goodwill ambassador for disarmament and a
“messenger for peace”, was at the United Nations last week to
participate in the International Day of Peace.
Responding to a reporter who asked him: “Are you saying, Gordon, that
greed is not good?,” a visibly annoyed Douglas shot back: “”I am not
saying that. And my name is not Gordon. He’s a character I played 20
years ago.” |