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"First world debt crisis": ignoring lessons of history by Jubilee Network Australia We often hear and are led to believe that we are powerless to impact the system – how things are decided and the way things are done in our world. But we are also in amazing and implausible times. The Arab Spring has shown us that sometimes right beats might. Occupy Wall Street protests are confronting the mightiest of the mighty with the simplest of messages: the status quo is unfair and unacceptable; we’re not leaving til you fix it. Injustice and inequity are becoming downright unfashionable! It’s a time that seems to have enormous potential. Debt cancellation for the poorest countries was at one time the preserve of radicals, dismissed by governments and international institutions alike. Only mass public pressure had the power to force debt cancellation onto the mainstream agenda and eventually into international policy. The leaders of the nations comprising the G-20 have just concluded their gathering in Cannes, France for the annual meeting. There were two topics on the table for discussion that Jubilee has worked very hard, in concert with others, to bring from obscurity into the fore: Ending Tax Haven Secrecy. Last week the G20 named 11 tax havens. While they continue to ignore that the biggest tax havens are in the G8 countries (especially London), this crucial issue is growing in profile and we are making significant progress on what seemed an impossible task. Financial Transactions Tax Outrightly dismissed not so long ago as economically irresponsible and politically unfeasible, after last week''s G20 meeting the FTT has no more opponents in the eurozone, and these supporters are joined by Brazil and Argentina, South Africa, the African Union, Ethiopia, and Ban Ki Moon, UN Secretary General. Whilst not yet supportive, President Obama agreed the financial sector must contribute more to the cost of the crisis. The times do genuinely seem to have enormous potential – let’s keep our leaders on their toes to make sure it’s not opportunity squandered. Jun-2011 "First world debt crisis": ignoring lessons of history. The global financial crisis or the “credit crunch” as it has been labelled has sent shock waves around the world. Plunging share prices and record market lows have many analysts convinced that a US and European recession is virtually assured. The chaos in financial markets has been explained as a lack of credit available to banks on the international markets. Inject liquidity, restore lenders’ confidence to start lending again, and everything will come right. Hence the $700 billion US bail out. But is this really about lack of credit, or about massive over-accumulation of debt? Driven by greed, many of the largest and oldest investment banks in the world embarked on irresponsible and reckless lending practices in the sub-prime mortgage market, giving loans to people with no capacity to repay their debt. Using a complicated web of financial instruments, these debts were repackaged and resold onto brokers and investors around the world. The crisis of debt in the North bears frightening resemblance to the debt crisis that poor countries have faced since the early 1980s. Today developing countries’ debt stocks stands at a staggering US$2.9 trillion and every day the poorest countries pay the rich world almost $100 million in debt repayments. But compare and contrast how developing countries are treated by rich governments to how international banks are being treated. The former are told to get their house in order before they receive financial support. Meanwhile they are left paying. The latter are being bailed out with incomprehensible sums. And where are the conditionalities to these bail outs? The current crisis provides an opportunity for these issues to come centre stage. May-2011 European debt crisis urges a reexamination of sovereign debt management. As a series of bailout packages have been negotiated with Greece, Ireland and soon Portugal, it is time to examine the global orthodoxy in dealing with debt. In mid-May a bailout, expected to equal approximately €80 billion, with the European Union and the International Monetary Fund, is set to be agreed upon with Portugal. The package will see ordinary people bear the greater burden of reform as a program of shock therapy, involving large spending cuts, tax increases and labour market reforms, is introduced. Those banks largely responsible for the reckless private lending which spawned the current crisis are set to be the largest benefactors. Increasing resistance to the bailouts has been felt across Europe as nationals express their opposition to paying for the excesses of their banking elite. In Iceland, voters recently rejected a government-backed deal to repay Britain and the Netherlands following the collapse of Icelandic banks in 2008. The decision will not be without consequence for the country, which faces an impending court case by the UK and the Netherlands, the potential block to its bid to join the European Union and a lowering of its credit rating on international markets. In Greece, hundreds of academics, politicians and activists have called for a debt audit commission to examine the legitimacy of the country’s debt, in the hope of holding to account those responsible. The European debt crisis points to a greater systemic problem of dealing with debt. Across the Global South, the IMF has repeatedly negotiated ‘emergency’ packages, which have seen foreign banks bailed out, while the governments themselves spiral down deeper into debt, at great cost to citizens who had nothing to do with causing the crisis. The European crisis is an opportunity for leaders to challenge the global mechanism for dealing with debt. Visit the related web page |
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Women''s World Banking by Mary Ellen Iskenderian Women''s World Banking is the only microfinance network with an explicit focus on women. Our network of 39 financial organizations from 27 countries—also known as microfinance institutions—located around the world provide small loans, sometimes as modest as $100, to people to start their businesses. Women''s World Banking is focused on ensuring women have access to these microloans. Customers use these loans in different ways: some purchase a cycle to transport vegetables to a market, or use the money to buy raw materials; others buy fertilizer for their crops, or a sewing machine to start a tailoring business. However, they all have one goal: to make a decent living and support their families'' basic needs. Many are able to send their kids to school for the first time, eat three square meals a day or make seemingly small home improvements that can actually have a significant effect on the household such as move from a mud floor home to a cement floor. Microfinance is about more than credit and has the capacity to help more than entrepreneurs. WWB helps microfinance institutions move away from a strictly credit-led approach toward providing a broader array of financial products and services, including savings and insurance to help the poor build comprehensive financial safety nets. WWB, serves as an umbrella organization to the 39 local microfinance organizations. We advocate for the benefits of microfinance and for the need to serve women, conduct research and share best practices. But most importantly, we develop vital financial products to enable microfinance organizations to better serve their clients and achieve their mission to bring people out of poverty. Visit the related web page |
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