NEW YORK - When more than 100 world leaders addressed the General Assembly last week, one of the biggest underlying fears expressed in many of the speeches was the possible impact of the current US financial crisis on the developing world.
As the entire US economic edifice is on the verge 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 a proposed $700 billion bailout by the government to prop up their investment banks and insurance companies.
But the bailout itself is in trouble because most of the members of the ruling Republican Party are opposed to subsidizing -- or "nationalisation" as we call it in our part of the world -- of banks and financial institutions that are collapsing or on the verge of bankruptcies. Is this the beginning of the end of textbook capitalism?
|President Luiz Inacio Lula da Silva of Brazil speaks at the 63rd annual United Nations General Assembly meeting September 23, 2008 at UN headquarters in New York City.
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" -- as it is in the US. 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 privatized, while their losses are invariably socialized." 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."
An economic showpiece of the developing world, Brazil has a vibrant economy, has lifted millions out of poverty, is on the verge of joining the ranks of industrial nations, and is staking its claims for a permanent seat in the Security Council.
As the economic meltdown in the US continues, the casualties are piling up: Lehman Brothers and Washington Mutual (both allowed to collapse with no government bailout); American International Group, Goldman Sachs and Morgan Stanley (all three allowed to survive with emergency financial assistance, including some from the government).
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 made multi-million-dollar salaries, with stock options and perks that set them up in a class by themselves.
According to one report, the lowest salary on Wall Street was around $280,000 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 per year. But once the dust settles, Wall Street will never be the same again.
At a time when the United Nations is seeking increased financial assistance from rich nations to help developing countries meet the much-touted Millennium Development Goals (MDGs), including a 50 percent reduction on extreme poverty and hunger by 2015, the current economic crisis is expected to be a major setback.
At a high-level meeting on MDGs last week, Secretary-General Ban Ki-moon said: "While we are moving in the right direction, we are not moving quickly enough."
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 bailout, proposed by the US administration, to save the high stakes investment banks of New York from bankruptcy and collapse. Even in the US, there are fears of a negative fallout on the entire country -- on consumer spending, housing market and air travel.
Addressing delegates last week, the UN Secretary-General warned that the current financial crisis threatens the well-being of billions of people, none more so than the poorest of the poor. This only compounds the damage being caused by much higher prices for food and fuel, he added.
Ban has called for $72 billion per year in external financing to achieve the MDGs by 2015. "While the figure might seem daunting, it was, in fact affordable, particularly considering the $267 billion spent last year by countries of the Organisation for Economic Cooperation and Development (OECD) on agricultural subsidies alone," he added.
Still the $72 billion is peanuts compared to the $700 billion that the Bush administration wants to dish out to save some of the Wall Street firms from going belly up.