Reflections of FIDEL:

Agonies of capitalism

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China can lead the world out of the economic crisis thanks to its healthy foreign exchange reserves, robust trade surplus and massive investments round the globe

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Today I read the cables from March 11th. Information is continuing to rain down on the international economic crisis. This time, it was Joseph Stiglitz, the well-known economist and recipient of the Nobel Prize in Economic Sciences speaking; the press and academia regularly quote him. The French AFP news agency refers to his statement made yesterday in Sao Paulo, Brazil. “‘President Barack Obama’s economic rescue package of $700 billion-plus is much better than Bush’s response in 2008... but it is not enough and the crisis will worsen.

“‘We need to see things in perspective. (President George W.) Bush was paralyzed and things got worse every day while he did nothing.’ “Stiglitz noted that many emerging countries have become the innocent victims of the crisis. ‘The irony is that while the U.S. government was giving lessons on rules and institutions in emerging countries, its policies were a total disaster’.

“‘As a result of that, the crisis today is severe throughout the world and countries like Brazil are really going to suffer’, Stiglitz informed the newspaper, which had consulted him about the 3.6 per cent drop in the Brazilian economy in the last quarter, the heaviest since the same period in 1996, and reported on Tuesday. “He also warned that despite the fact that ‘there is a global agreement not to turn to protectionism,’ many of the aid packages ‘have protectionist measures at their base and it will be the developing countries that will suffer the most.’” Reuters informs us that “Severstal, Russia’s largest steel company, announced on Wednesday that it is to cut 9,000 to 9,500 jobs in its country’s steel mills in response to weak world demand, and that it is also laying off workers in its coal and iron ore mines.

“The Russian steel companies joined their rivals in other countries in cutting back production in the last quarter although, to date, they have avoided mass layoffs due to the politically sensitive nature of such a measure.

“‘Additional cut-backs are in the pipeline for their coal and iron ore mines in Russia,’ Mordashov stated. “Severstal has reduced production in several plants in Russia, Italy and the United States in the last few months, due to a decreased demand for steel. In February, it was reported that crude steel production in the last quarter fell by around 4 per cent as compared to the previous period.” In a cable dispatched from Dar Es Salaam, the same agency noted: “‘China can lead the world out of the economic crisis thanks to its healthy foreign exchange reserves, robust trade surplus and massive investments round the globe,’ an adviser to the U.N. Secretary General said.

“China has so far withstood the economic downturn better than Europe or the United States, though the slump in the United States and Europe has hurt its export sector hard, causing factory shutdowns and job losses. “‘I hope that China can lead the world out of this crisis first,’ said Jeffrey Sachs, adviser to U.N. Secretary General Ban Ki-moon, in an interview with Reuters on Tuesday afternoon.

“‘They did not have as big a bubble as in the United States or Europe. China has got lots of foreign exchange reserves, it’s got a trade surplus, it’s got lots of investment. China has the wherewithal to start the recovery first. If that succeeds in this year, then that would spread to other economies.’ “China, the world’s third largest economy, usually runs a large current account surplus, with vast exports and relatively contained imports.

“Economic data released on Wednesday showed that China’s exports tumbled in February as the world’s third-largest economy felt the full force of the global financial crisis, but capital spending accelerated with the help of the government’s massive stimulus package. “The country holds about $2 trillion in foreign exchange reserves. Its current account surplus stood at $440 billion as of end of 2008, up 20 per cent over the previous year, according to government statistics...” “The United Nations has said that it would take $72 billion a year to help Africa, a fraction of what governments in Europe and the United States have put into resuscitating their economies.” No hope for the countries of the Third World is forthcoming from New York or Washington.