U.N. study savages U.S., European economic policy

Reuters reports:

The pursuit of austerity measures and deficit cuts is pushing the world economy toward disaster in a misguided attempt to please global financial markets, the annual report of the United Nations economic thinktank UNCTAD said on Tuesday.

The report, entitled “Post-crisis policy challenges in the world economy,” savaged U.S. and European economic policies and called for wage increases, stricter regulation of financial markets, including a return to a system of managed exchange rates, and a conscious break with market-led thinking.

“The message here is very pragmatic: we need to reverse our course quickly,” said UNCTAD Secretary General Supachai Panitchpakdi.

Supachai, a former head of the World Trade Organization, said the policy response to the crisis, with an emphasis on fiscal tightening, was misconceived and inept.

The report’s lead author Heiner Flassbeck said the global economic situation was extremely dangerous and, without more stimulus, a decade of stagnation was the best-case scenario.

The current policies were a disaster, said Flassbeck, head of the globalization and development strategies division at the U.N. Conference on Trade and Development, and a former deputy finance minister in Germany.

“If interests rates everywhere are zero, and if governments stick to the policy of not only keeping fiscal deficits where they are but retrenching, cutting public expenditure, then we will end up in permanent recession,” he said.

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2 thoughts on “U.N. study savages U.S., European economic policy

  1. Christopher Hoare

    The US and European policies are austerity for the middle class and workers, while the speculators and other finance sharks are allowed complete freedom to beggar their countries and their people. More than what is suggested here, there must be a complete restriction on speculation in such commodities as foodstuffs, the spread of industrial farming, the patenting of genetic information; and a new international system of food distribution that reduces waste and profiteering must be developed.

    Commodity speculators are society’s bottom feeders. There is very little problem with hedging of commodities by corporations that use the commodities, but no one should be permitted to speculate on margin in any product they will never take delivery of.

    The US and Britain are the two biggest obstacles to the proper regulation of world financial markets—mainly because they no longer possess a large enough trained and experienced work force nor competent industry to compete in the world on an equal basis. They no longer contribute to the world’s wellbeing, they live parasitically off the labour of others.

  2. delia ruhe

    Decent economists think that reason is somehow gonna appeal to these irrational politicians, whose sole purpose in life is retaining power or grabbing for it. Stiglitz has a whole menu of ways to kickstart the economy, all of which make perfect sense:

    http://www.politico.com/news/stories/0911/62847.html

    and Roubini is so irritated that he’s quoting Marx. Krugman has given up.

    The only thing that’s gonna have any effect is a double-dip, but one that goes right into Depression. And that’s what Dr. Doom, a.k.a. Cassandra, is forecasting.

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