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Weekend Warriors On World Economy

  • October 17th, 2011
  • Posted by EUEditor

rome-riot-2011-10.jpgWhich weekend gatherings would matter most: those like the G20 Finance Ministers at Paris, again discussing the Eurozone; or the tens of thousands demonstrating over gross failings in global finances?STREET ACTIONS EVERYWHERE

Arguments of the “Occupy Wall Street” movement, which spread to 80 countries in two days of usually peaceful confrontation, are that jobs, healthcare or education matter most.

Targetted were distorted income inequalities, austerity budgets to meet higher interest on state debt, instability brought on by short-term market speculators, and weak intellectuality bringing gross incompetence in the finance and banking industries.

The movement is persistent with one key point of argument: withdrawing the government from the economy will undermine capacity to pay debt further down the line, by stopping spending and growth.

Some 2000 demonstrators in Rome, out of 20000 who turned out (picture), provided a taste of instability of the street variety, with a sudden and violent rampage.

They busted into bank offices or shops, set fire to some luxury cars and threw rocks at police, of whom more than 100 were reported injured, along with some 30 others.

The flare-up followed a tense week in Italy, with organised protests against austerity measures, and another close call in parliament for Prime Minister Silvio Berlusconi, holding onto office after yet another knife-edge vote.

A man with an eye for a strong distraction, he has hopped onto a law and order issue, demanding stiff penalties for the weekend rioters.

Protests in other capitals were numerous, rowdy and non-violent, concentrating on locations such as financial districts, notably this time the City of London.

G20 WANTS ACTION

The Finance Ministers of the leading economies, at Paris, wanted to hear from the Eurozone partners –countries using the Euro currency – what they were going to do about sovereign debt.

Outsiders to that group, like the Ministers from Australia, Britain and the United States, came out saying the signs were positive for an effective plan to be put in place.

The shape of such a plan has been known for some weeks: writing-off of up to 50% of Greece’s state debt, (banks under severe pressure to take large losses over that); recapitalisation of banks, through building their autonomous reserves and possible government backing; and a very big expansion of the reserve fund to support borrowing by national governments, like Greece and at least four others, under heavy pressure.

Some say the reserve, the European Financial Stability Facility (EFSF), might need to be augmented to four times present levels.

The next step will the European Summit set for the end of the week (21.10.11), when a plan may be agreed on.

NOT EASY

Its task will not be easy: Bankers have begun to complain in earnest,(perhaps fearing outcomes like the Franco-Belgian Dexia Bank, so exposed to Greek borrowing it faced insolvency, the Belgian state taking on its most toxic holdings). Even enacting agreed payments under the present EFSF has generated political stress, (on the last occasion, the Slovak parliament last week rejected the next installment, some members wanting to know why they should support Greeks, not too mindful of supports offered by the system to Slovaks; the impasse resolved after some horse-trading with the centre-left Opposition). Where the money might be found for a greatly expanded EFSF is the next huge question.

wayne-swan.jpgThe Australian Treasurer, Wayne Swan, said the world Finance Ministers were watching closely, and had told the Eurozone group concrete action was needed.

“European leaders have to deal with European problems, but there is no doubt the Finance Ministers in the G20 do stand ready to work with Europe to find solutions”, he said.

“It is not just Greece, but banks, financial consolidation, we want to see all these things resolved.”

He said outcomes were expected from the forthcoming European summit.

“That is what the world is waiting to see.”

Reference

BBC News, London, “Rome counts cost of violence after global protests”, 16.10.11.www.bbc.co.uk, (16.10.11).

Francesca Cinelli, “‘Violent Extremists in Rome Have to Be Punished’, Berlusconi Says”, Bloomberg,NY, 16.10.11.http://www.bloomberg.com/news/2011-10-16/violent-extremists-in-rome-have-to-be-punished-berlusconi-says.html, (16.10,11).

PictureBBC

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