Wen and Putin blame ‘blind pursuit of profit’ for crisis

SWITZERLAND: Chinese and Russian leaders Wen Jiabao and Vladimir Putin hit out at US capitalist excesses for sparking the economic crisis as the Davos political and business summit made a gloomy start.

Chinese premier Wen said the “blind pursuit of profit” had led to the worst recession since the Great Depression as he opened the World Economic Forum late Wednesday.

Putin said “this pyramid of expectations would have collapsed sooner or later. In fact it is happening right before our eyes.”

Wen blamed “inappropriate macroeconomic policies of some economies” and “prolonged low savings and high consumption,” in a barely veiled attack on the United States.

He blasted the “excessive expansion of financial institutions in blind pursuit of profit and the lack of self-discipline among financial institutions and ratings agencies” while the “failure” of regulators had allowed the spread of toxic derivatives.

The Chinese leader called for faster reform of international financial institutions and for a “new world order” for the economy.

The Russian prime minister followed him to the podium and said the crisis had been a “perfect storm”. He also took aim at capitalist excesses.

“Although the crisis was simply hanging in the air, the majority strove to get their share of the pie, be it one dollar or one billion, and did not want to notice the rising wave.”

Putin insisted he would not criticise the United States, but added: “I just want to remind you that just a year ago, American delegates speaking from this rostrum emphasised the US economy’s fundamental stability and its cloudless prospects.”

“Today investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism,” said Putin.

“The existing financial system has failed. Substandard regulation has contributed to the crisis, failing to duly heed tremendous risks.”

Wen said the crisis had posed “severe challenges” for China and that it needed 8.0 percent growth in 2009 to maintain social stability while the International Monetary Fund predicted 6.7 percent for this year.

Davos, Thursday, AFP