THIRD WORLD RESURGENCE #203/204 (JULY/AUGUST 2007)

This issue’s contents:

COVER: Global Financial Fragility and the Spectre of Recession

Uncertainty rules as financial volatility spreads worldwide
By Martin Khor

Global financial markets are in a state of turmoil as a result of a mortgage loan crisis originating from the US. Uncertainty prevails as no one knows how massive the losses in the US housing market will be and how extensively it has affected (and will affect) financial institutions across the globe. It remains to be seen how this financial crisis will play out and whether it will trigger a global economic downturn.

The fundamentals of the sub-prime crisis
By D  Murali

Sub-prime is prime news. If, like many, you are clueless about sub-prime, here is Dr Sunil Rongala, Group Economist of India's Murugappa Group, answering a few elementary questions posed by D Murali on the subject.

Financial entanglement and emerging markets
By CP Chandrasekhar

The fact that a crisis in the US housing finance market could cause so much chaos to the global financial system is a reflection of the extent of the vulnerability of the whole system. It demonstrates that countries which have a more open and integrated financial system are prone to such contagion effects, however remote the origin of the crisis may be.

The US market's pyramid of lies
By Philip Bowring

The current market chaos is not a random event but the direct consequence of the pyramid of debt and deception created by Wall Street, contends Philip Bowring.

The 'carry trade' and the current financial turmoil
By Michael MH Lim

The volatility in the financial markets caused by the sub-prime crisis has been compounded by the speculative trade known as the 'carry trade'. In this article, Michael MH Lim explains how this practice of borrowing money in one currency with low or no interest and investing in another currency or financial instrument with a higher yield adds to the turmoil.

Private equity, pecuniary logic and enterprise restructuring
By Andrew Cornford

Private equity firms, which in recent decades have become an important avenue for financial transactions in the US and UK markets, are being hard hit by the sub-prime crisis as they are unable to source their funding from investors. The resulting credit crunch and financial turmoil may also pose a threat to developing-country financial markets where they have become significant investors, particularly in Asia. The danger, according to a warning issued by the Reserve Bank of India, is that these equity funds could pull out from these markets in the face of the credit crisis in the US mortgage market, thereby causing greater financial  volatility. But what is the creature called private equity? Andrew Cornford explains its

character, history and role in financial markets.

Emerging markets need national solutions on hedge funds
By Andrew Cornford

Although the current financial turmoil has its origins in US sub-prime mortgage loans, it was reports that some major hedge funds involved in this crisis had been closed down or had sustained huge losses, that actually sparked a US and global market selldown. There has long been a debate on the need to regulate hedge funds as their practices have been perceived as threats to the stability of the financial markets. Andrew Cornford reviews recent proposals to regulate them.

The 'black hole' of the financial crisis
By James Petras

'Nobody knows who's got a turd (worthless investment) in his briefcase.' Without knowledge of the size and scope of the investments rendered worthless by the mortgage loan crisis, investments and loans will continue to remain frozen and the financial system paralysed, says James Petras.

ECOLOGY  

A new war on the planet?
By John Bellamy Foster

A real solution to the planetary environmental crisis cannot be accomplished simply through new technologies, or through turning nature into a market, says John Bellamy Foster. It is necessary to go to the root of the problem by addressing the social relations of production.

HEALTH & SAFETY

New first-line AIDS drugs 500% more costly, says MSF
By Kanaga Raja

The use of newer, less-toxic first-line HIV/AIDS anti-retroviral (ARV) treatments, now recommended by the World Health Organisation (WHO), has raised the cost for patients by nearly 500%, according to a new report by the international medical humanitarian group Medecins Sans Frontieres (MSF).

Indian High Court dismisses Novartis claim
By KM Gopakumar

The Madras High Court has dismissed a claim by the Swiss pharmaceutical giant Novartis that India's Patents Act is not in conformity with the intellectual property rules of the World Trade Organisation.  KM Gopakumar discusses the case and significance of the decision.

ECONOMICS  

The multilateral trading system: Need for basic reform
By Bhagirath Lal Das

The impasse in the current round of World Trade Organisation talks is the result of fundamental flaws in the multilateral trading system, says Bhagirath Lal Das.

The Monsanto vs. Argentina dispute on GM soybean
By Carlos M Correa

Requests for the detainment of Argentine soymeal shipments at the ports of Denmark, the Netherlands, Spain and the UK, a multi-million-dollar claim for royalties, and suits against European importers are some of the visible facts in an unusual dispute between the US biotechnology multinational Monsanto, on the one hand, and farmers and the Argentine government, on the other. Curiously enough, the legal battle is taking place in Europe rather than where the exported soybean was grown and processed. This article explains the reasons behind as well as the possible consequences of this transnational litigation.

WORLD AFFAIRS

Politics, science and hysteria
By Tom Fawthrop

The failure of orthodox drug enforcement strategies in so many countries underscores the need for a frank and honest debate on policy and strategy to address the drug problem.

Bush's new war drums for Iran
By Ray McGovern

With the US caught in a quagmire in Iraq, President Bush appears to have intensified his moves to provoke a war with Iran. Ray McGovern, an ex-CIA operative, examines the evidence pointing to a new disastrous US adventure in the Middle East.

Ignominious defeat for British in Basra
By Sukant Chandan

After making grandiose claims that their experience in Northern Ireland would see them through, Britain is now beating a humiliating retreat from Basra in southern Iraq.

Pro-war group launches $15 million ad blitz
By Mike Allen

In a desperate attempt to swing public opinion as the US Congress debates the crucial Iraq progress report of General David Petraeus, President Bush's pporters, led by some high-profile Republicans, have launched a $15 million media blitz to ensure that Congress continues funding of the war.

European hypocrisy on Palestine
By Saifedean Ammous

Saifedean Ammous says that whatever Europe does, its complicity in the abhorrent oppression of Palestinians will remain to blight any claim it has to moral authority.

The high cost of US subservience to Israel
By Paul Findley

An ex-US Congressman says that the US is paying an unacceptably high price for its policy of unconditional support for Israel arising from the extraordinary influence wielded by that country's powerful lobby.

COMMEMORATION

History from below: The Indian Revolt of 1857
By Irfan Habib

This year marks not only the 60th anniversary of the independence of both India and Pakistan, but also the 150th anniversary of a revolt which shook the foundations of the British empire in India. The Revolt of 1857 (belittled in colonial historiography as the 'Indian Mutiny') was the largest anti-colonial revolt in the world. A leading historian explains the popular character of the revolt and its real significance.

HUMAN RIGHTS

Forced evictions in Chongqing

Urban development in China, often driven by real estate companies working hand in glove with local government authorities, tends to ride roughshod over the rights of city dwellers. The case of Chongqing illustrates this disturbing phenomenon.

WOMEN

Latin America: Political parity for women still a long way off
By Kintto Lucas

Legislation in the countries of Latin America and the Caribbean has not succeeded in ending discrimination against women in political and public life, concluded participants at the 10th Regional Conference on Women held in the Ecuadorean capital Quito.

ACTION & ALTERNATIVES

Indonesian anti-nuclear activists visit Japan/Korea
By Philip White

Member states of the Association of South-East Asian Nations (ASEAN) are clearly turning to nuclear energy as an alternative and in August, ASEAN energy ministers held a one-day meeting in Singapore where the issue of nuclear energy safety was the key topic on the agenda. Indonesian activists have particular reason to be concerned about the announcement by their government of a plan to construct a nuclear power plant. Since Indonesia, like Japan, is in an earthquake-prone region, two Indonesian activists recently visited Japan and Korea to lobby the Japanese government and industry not to support the project and establish links of solidarity with activists in these two countries. Hopefully, this marks the beginning of an international campaign against nuclear power in South-East Asia.

For subscriptions and enquiries:

THIRD WORLD NETWORK
131 Jalan Macalister,
10400 Penang,
Malaysia.

Tel: 60-4-2266728/2266159; Fax: 60-4-2264505;

Email: twnet@po.jaring.my

Third World Resurgence Page