Western Experts Fearful of Anti-crisis Measures

Business Materials 30 October 2008 17:16 (UTC +04:00)

Azerbaijan, Baku, 30 October / Trend corr. A.Badalova/ The measures taken to improve the global financial situation are still in the centre of attention. Western experts take more sceptically the upcoming anti-crisis summit of the G-20 in Washington which will involve the representatives of the industrially developed countries.

The experts believe the decisions to be made at the summit will not bring the expected results.  

Pascal Salin, Professor of economics, University Paris-Dauphine, and former president of the Mont Pelerin Society fears that dome measures to fight the crisis will be decided at the summit.

"I believe (or I fear...) that some measures will be decided," Salin said to Trend via e-mail on 30 October. "The reason is that politicians want to give the feeling to opinion that they are able to cure the problems and, in order to justify their meeting, they have to take decisions."

"Moreover, in such a meeting there are always negotiations in which the one who is opposed to a given decision finally accepts at least a part of it, either for geopolitical reasons or to obtain something in exchange," Salin said.

"I just believe that referring to "effective and complex measures" means that the states do not really know what to do and which are the most important causes of the crisis, which seems to be the case," he said.

According to Salin, the reforms to be adopted may be taxes (for instance on some operations considered as too much speculative) or limits to securitization, or constraints on the benefits of managers, obligations to deliver information, etc...

"There is the risk that these measures be costly and put a brake on financial innovations and the good allocation of capital through the world," he said.

"And these measures do not address the only important thing which would consist in avoiding the volatility of monetary policy and interest rates," he said.

James Wilson, the director-founder of the EU Ukraine Business Council, believes it is hard to predict the outcome of the summit.

"We have a chain of debt that has to be picked up by someone. There must be losers," Wilson said to Trend via e-mail on 30 October. "The summit on 15 November will see some hard horse trading on how to share those losses, and restore confidence between banks so that they will start lending to one another again."

"I suspect that they may be trying to imitate the 1944 Bretton Woods meetings that resulted in the establishment of the IMF and World Bank to deal with world financial arrangements," said James C. W. Ahiakpor, Professor at the Department of Economics, California State University, East Bay.

The Bretton Woods system was adopted at the UN conference attended by 44 countries in Bretton Woods city, USA, in 1944. The conference established a new format of financial system envisaging development of the global economy in further 30 years. Fixed exchange rates of world currencies was one of the provisions of the system.

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