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What About This Crisis

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October 16th marked the Twenty-Fifth Annual World Food Day, an occasion whose arrival and departure received little media attention or governmental fanfare. Evidently, much of the world media and governments are consumed with an economic crisis of epic proportions, which is perceived in the US as the worst of such upheavals since the Great Depression. In the rest of the world, it’s depicted as the worst economic crisis in recent memory or, as the BBC termed it: “The most tumultuous times on record in the global financial markets.”

Published: Wed 22 Oct 2008, 9:15 PM

Updated: Sun 5 Apr 2015, 4:37 PM

  • By
  • Ramzy Baroud

There is hardly any disagreement that Wall Street’s woes are manmade. Regardless of what terminology one wishes to apply - miscalculations, greed, or wholesale failure in the US capitalist system, rooted in the economic philosophies of Milton Friedman and his ultra Laissez-Faire approach - the fact is the US economic crisis is not a fleeting phenomenon and no quick fixes are to provide a magic remedy.

In an interview with Fox Business Network, US Treasury Secretary Henry Paulson expressed regrets, unusual to any top US official, for the economic ‘mistakes’, which are promising a global recession for years to come. “We’re not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here.”

However, he promised that the US “will mitigate the impact on the real economy and we’ll get this financial system working again.”

There is no reason to doubt Paulson’s commitment to the financial system. In fact, when it’s the rich and powerful, whose wealth and influence are at stake, the US government, if not most world governments, hold true to their word.

While the IMF had repudiated governments in Asia, Africa and South America for many years for any slight intervention in their country’s economies - for a free market economy has to be entirely free in order for the checks and balances to deal with whatever crisis at hand, they were told - the Bush administration, and leading Western powers moved with no hesitation to nationalise some of the largest institutions in their own markets.

Like China’s capitalism operating under communist symbols, the US, the UK and others are becoming increasingly socialist under capitalist symbols. Of course, it’s not socialism for the downtrodden, but corporate welfare in its most stark manifestations.

Consider the size of the entire US GDP for 2007: $13,800bn, to appreciate the awesomeness of the US rescue package of $700bn. Still, in the UK the percentage is much higher as the country’s GDP for 2007 was estimated at $2,457bn, while the government’s rescue package is $680bn. A more astonishing number: the rescue package for the entire Eurozone estimated at: $1,370bn.

The conventional wisdom, as presented by almost every financial expert on most media outlets states that such lofty numbers are simply a reflection of the scale of the crisis at hand. In fact, some argue that the Bush Administration’s greatest fault is only intervening too little too late, by failing to nationalising Lehman Bros as it did Fannie Mae and Freddie Mac.

It’s rather ironic that those who cried foul every time a third world government dared intervene in their national economy - even if to guarantee the welfare of the poorest segments of society - said nothing as the US, the UK and others defied every role in the free market economy, long championed by neo-liberal economists.

Even leading US Republicans who chastised Big Government at every turn - especially to block welfare programmes that mostly benefit the poor - cheered the government on as it moved to bail out the rich, who, as usual, are likely to remain unaccountable for risking the retirement funds and life savings of millions of Americans.

A dominant argument to justify governments’ behaviour is, yet again, the trickle down effect: a term coined by a Ronald Reagan speechwriter, which simply means that what is good for the rich is, eventually, good for the poor. While elites in every society eagerly infuse such ‘Reaganomics’ at every turn, the world poor is yet to feel the trickles, which poses an interesting question: why the unprecedented and historic urgency to bailout the rich (for the sake of the poor, at an imaginary point in the future), while the poor can easily be saved, without such roundabouts plans?

The fact is that neither America’s poor nor Africa’s poor are on the minds of European leaders, nor the Bush Administration as their high officials continue to hold anxious meetings and offer most generous rescue packages. If indeed it’s the plight of humanity that is worrying these governments, then maybe they should consider the following, according to Oxfam, UK: “The number of hungry people now stands at 967 million. And around 24,000 people die daily of hunger-related causes. Around 2.7 billion people live on less than £1 a day; up to 80 per cent of this income goes on food.”

Care International’s calculations are equally bleak that 220 million people of the number above are on the brink of starvation.

According to Oxfam, the main reasons for world poverty are also manmade: “bio-fuel policies, high fuel prices, growing global demand, unfair world trade rules, and climate change.” Long before the Wall Street financial crisis, there existed a much more dangerous crisis, the World Food Crisis, dubbed a ‘Perfect Storm.’ The latter is much more consequential for it affected the very lives, not simply the standard of living, of many millions around the world.

Barbara Stocking wrote in the New Statesman, “According to the latest figures, the food crisis has resulted in an extra 119 million malnourished people, bringing the total to almost one billion - nearly one in seven people now goes hungry. This is hunger on so vast a scale that it is difficult to understand how the world arrived at this point.”

It’s very telling that trillions have already been spent to patch up world leading financial institutions, while out of the comparatively small sum of $12.3bn pledged in Rome, earlier this year, to offset the food crisis, only $1bn has been delivered. The hope that at least extreme poverty can be eradicated by the end of 2015 - as stipulated in the UN’s Millennium Development Goals - seem as unrealistic as ever, not due to lack of resources, but lack of true concern for the world’s poor.

Whether the American, European or any other government infused bailout packages rectify the financial crisis or not, chances are October 16, 2009, will carry out similarly devastating news about the plight of the world’s poor, which is likely to remain at that, mere ‘news’ that require little action, if any at all.

Ramzy Baroud (www.ramzybaroud.net) is an author and editor of PalestineChronicle.com



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