|
||
|
||
Stiglitz criticises multiple shortcomings of the G20 agenda Speaking on the eve
of the G20 summit at THE key problems in the world economy and financial markets that have led to the deepest recession since the Great Depression have not yet been effectively addressed by the Group of 20 (G20). Instead, the world is witnessing how the very banks that were deemed 'too big to fail' are only getting bigger, having been offered carte blanche by the world's most powerful leaders, Nobel laureate Joseph Stiglitz has said. This view was voiced
by Stiglitz at an event in
According to Stiglitz, one of the major problems with the international financial system is big banks. 'Our "too big to fail" banks are only bigger today, and meanwhile, we did not give enough funds to the smaller banks who lend money and create jobs,' said Stiglitz. The 'I call the bank bailouts an "ersatz capitalism," marked by the privatising of gains and the socialising of losses,' said Stiglitz. The Obama administration's
way of dealing with The financial sector
regulation enacted so far has not been enough, he stressed, noting that
there are five lobbyists from Wall Street institutions for every Congressman
in the There is a valid fear
that these lobbyists will drive the crisis-response agenda in Congress.
While One of the key questions is how to get financial institutions to do what they are supposed to do, which is to provide financial assistance to taxpayers and communities. While the G20 has been trying to stop risk-taking, they are still not directing banks to provide taxpayers and homeowners with, for example, mortgage assistance. Other countries have sound systems in place for doing so, Stiglitz told the gathering. The Stiglitz said that
while the G20 is marginally better than the G8 or the G7, there is still
only a little more possibility of democratic accountability than previously.
Although it is easier to organise 20 leaders than 192 on a practical
level, there is not a single representative for sub-Saharan Africa in
the G20 other than
Stiglitz stressed the
need for global governance. In economics, there is the concept of externalities,
in that what one person does affects another. The 'The global economic recession is not over, and it is not likely to be over for a very long time,’ Stiglitz told the gathering. The emerging 'green shoots' are not strong enough to provide the legs needed for a substantial boost in global and national employment. 'That means if we are not growing by a GDP rate of at least 3.2%, employment will not reach pre-crisis level. This is not time to be talking about an exit strategy.' The poorest of the
middle class in the However, he added,
that model has now been broken. Most Americans have to accept that their
standard of living is going to go down, and nobody has been talking
about that so far. The issue of global imbalances, the surpluses of
emerging market and developed nations juxtaposed with the deep deficit
of the One response to addressing
A global response is now necessary from the G20. ‘Developing countries have been much worse affected than even the United States, and they do not possess the resources that we in the United States have,’ said Stiglitz. At the previous G20
summit held in 'This is a problem,’ said Stiglitz, ‘because most developing countries are just recently getting out of a major debt overhang, and the IMF's loans exacerbate debt problems. Second, the IMF is the very institution that promoted free capital markets and economic and financial liberalisation.’ The fact that the G20 allocated its funds almost entirely to the IMF means in part that the world does not yet have the right kind of institutions for effective crisis response. However, this does not mean that countries have to rely completely on the IMF. He noted that other global institutions, such as the International Labour Organisation, should be among the institutions given responsibility to implement some of these solutions. Bhumika Muchhala
is a researcher with the *Third World Resurgence No. 228/229, August-September 2009, pp 14-15 |
||
|