On 30 October 2008, six eminent economists and sociologists at an Interactive Panel on the Global Financial Crisis, convened at 缅北禁地Headquarters by the President of the sixty-third General Assembly session, Miguel d'Escoto Brockmann, spoke of the unfolding financial crisis and its macroeconomic and social impacts. The panelists included Joseph Stiglitz, 2001 Nobel Laureate in Economic Sciences and former Chief Economist of the World Bank; Fran?ois Houtart, Chief Editor of the International Journal of Sociology of Religion, Social Compass; Prabhat Patnaik, Professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University; Sakiko Fukuda-Parr, Professor of International Affairs at the New School University; Calestous Juma, Professor of the Practice of International Development at Harvard Kennedy School of Government; and Pedro Páez Pérez, Minister for Economic Policy Coordination of Ecuador and President of the Ecuadorian Presidential Commission for the New Regional Financial Architecture-Banco del Sur.
In his opening address, Mr Brockmann said that what was once benignly described as "irrational exuberance" had now been exposed for what it was: "unbridled greed and pervasive corruption, enabled by Governments that lost sight of their responsibility to protect their citizens". He expected the panel of experts to identify steps for adoption by Member States in order to secure a more stable and sustainable global economic order.
Spearheading the discussion, Mr Stiglitz said that any response to the crisis should be consistent with social justice and solidarity. He added that solutions must go beyond national borders to be inclusive of both developed and developing nations, suggesting massive reforms for the economic policies of developed countries. He pointed out that regulations would have to address issues of consumer protection, as well as access to financial markets by all, noting that Central Banks would have to change their mandates, and countries would have to develop regulatory organizations that are immune to vested interests. Mr Stiglitz stated he had less confidence that the International Monetary Fund (IMF) was the appropriate place to respond to the crisis, although, he added, the world may have no choice in the long run but to rely on it. IMF had not anticipated or prevented the problem, and so far it had not proposed adequate regulatory reforms to prevent a recurrence, he said. "How could the imf be viewed as the solution, when they are so linked to the financial markets that are the cause and the philosophy behind the markets which are the cause of the problem?"
Ms Fukuda-Parr spoke of the devastation faced by poorer countries: "The developing countries will be affected primarily due to the recession in the real economy, rather than the financial crisis in the markets. This is a major threat, as it may reverse the gains of several years of growth and development." She said that the lives of the poor would be impacted due to a decline in private capital flows, severe economic retrenchment and a fall in government welfare-spending on health care, education and transport. She pointed out that imbalanced livelihood and rapid devaluation leading to inflation would wipe out the value of household incomes and assets. Ms Fukuda-Parr also recognized that the economic crisis would lead to an increase in the gender divide, as women would spend more time producing and processing food when household incomes declined. She emphasized the need for policy reforms, with specific attention to maintaining development aid budgets, combating global warming and addressing the food and energy crisis.
Prabhat Patnaik, having spent many years understanding the dynamics of a developing economy, said the current crisis would affect food flows across the world, especially among developing nations. He said: "While the explosion of the housing bubble in the United States may have been the immediate cause for the financial crisis, the fundamental problem lies in the 'speculative' nature of such bubbles." Mr Patnaik pointed out that injecting liquidity into the economy would not solve the problem, primarily because access to liquidity would not enable a credit flow. There would have to be adequate demand for credit for viable projects by solvent and worthwhile borrowers. Injection of liquidity does not solve the problem of solvency, and the anticipation of a depression would make borrowers wary of borrowing and lenders wary of lending; therefore, it was necessary to inject demand into the economy directly. Taking the examples of India, China and other developing countries, Mr Patnaik said that in addition to States' welfare measures, larger government expenditure would have to be oriented towards a substantial increase in agriculture, especially food grains output. This would have to be undertaken through revamping peasant agriculture.
Mr Páez Pérez of Ecuador proposed a new regional financial architecture based on three main characteristics: (1) democratic and transparent governance sustained with proportional and equitable responsibility; (2) the creation of a new process, integrating the Bank of the South as a core for the alternative development banking network; and (3) the strengthening of a regional central bank system and a common monetary system linked to regional drawing rights and electronic regional currency. According to Mr Páez Pérez, the proposal would open doors for several countries with diverse political and economic realities to fit into this new impulse towards integration, whose key reference point is The Union of South American Nations.
Calestous Juma of the Kennedy School of Government proposed that the United Nations become a platform for dialogue and negotiations among countries, in order to enable transparency in global markets, establish early warning systems and help developing countries build financial institutions in line with international operating standards. He said that while most universities in developing countries were designed to support nation-building, the challenge today was community development. As a result, he recommended setting up universities that would integrate in various communities, specifically seeking to promote economic transformations in their locales.
The final panelist to take the floor, Francois Houtart, said that the world needed alternative choices and not just regulation. It was not enough to rearrange the system; the system must be transformed, he said. This was a moral duty, and in order to understand that, one must adopt the viewpoint of victims. When 850 million people were living below the poverty threshold, and climate change had increasingly deteriorated the environment, it was not possible to talk only about the financial crisis -- all systemic breakdowns have led to a real societal crisis. He spoke of the need for a long-term vision based on a renewable, rational use of natural resources, which pre-implied a different approach to nature, respecting the source of life rather than the unlimited exploitation of raw materials.
Speaking on behalf of the European Union, the Permanent Representative of France to the UN, Jean-Maurice Ripert, noted that imbalances within the international economic system and failures in international regulation led to the crises. He said that Europe had already taken action by consolidating the European financial sector, reinforcing transparency, accountability and oversight of financial actors. Speaking on behalf of the Group of 77 and China, Deputy Permanent Representative to the United Nations Byron Blake of Antigua and Barbuda declared that the crisis was on top of a structurally and fundamentally weak system of global governance. He emphasized the role of the United Nations as an institution that cut across borders and which was multidimensional in its principles to undertake efforts in an integrated and coherent manner.
United States Ambassador and Representative to the 缅北禁地Economic and Social Council T. Vance McMahan acknowledged that the financial system in his country was in need of reform, stating that his Government had worked to implement the recommendations by United States experts in the President's Working Group on Financial Markets, as well as by international experts in the Financial Stability Forum on transparency, prudential regulation, risk-management and market discipline.
In the evening discussions, representatives of Argentina, Belarus, Bolivia, Brazil, Canada, Chile, China, Ecuador, Egypt, Germany, Honduras, India, Indonesia, Jamaica, Japan, Kenya, Mexico (on behalf of the Rio Group), Morocco, Nicaragua, the Philippines, Portugal, Qatar, the Republic of Korea, Singapore, Spain, the United Kingdom and Venezuela also spoke.
In his closing statement, General Assembly President Brockmann said that only with democratization could the United Nations fulfil the trust that so many people had placed on it to represent them in the process of constructing a new international financial architecture.
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