More losses from Banks...Rewrite Bretton Woods

Thursday, October 16, 2008

Merrill Lynch and Citibank reported multi-billion dollar losses for the third quarter. First, I wonder if Merrill is done with these losses? Citi is just getting started on the consumer credit side of the losses so the bad news will probably get much worse.

I am exhausted by these losses..they are not nicks but gunshots in the middle of a nuclear explosion. All the senses are now dulled.

So on to something completely different.

The developed world wrote the 'Bretton Woods agreement' in the wake of its destructive two wars with itself. Most of the world was silent during these wars. They did not know what the conflict was about and did not really care as it was a family dispute between a bunch of Europeans. But the 'Bretton Woods agreement' affected all of these people.

The US dollar was made pre-eminent and a number of institutions rose up such as the World Bank, IMF etc...These institutions, for the most part, have been successfully used to get at the resources in the 'third world' for a pittance and of course created in some measure the incredible wealth of the developed world.

Now, out of the 'third world', nations have risen up, namely China and India, that demand a seat at every negotiating table. Besides having the workforce and skill sets for the 21st century, these countries have learned to use the 'Bretton woods institutions' to their advantage. The developed world is having to treat as equals those it had thought subservient and those it did not understand.

So out of this economic conflict we get a bolt out of the blue. A new 'Bretton Woods' is required..of course a full seat and vote will not be available to China and India at this negotiating table. I mean, more than token representation to hear what the group has decided about the 'global financial system'.

Here is the excerpt:

EU leaders called for a global summit as soon as next month to rewrite the 1944 Bretton Woods accord that paved the way for Europe's post-World War II reconstruction and set up the institutions that oversee the world economy today.

Bankers make ridiclous credit decisions; these are magnified through the lens of credit derivatives and securitization. Again a conflict between a bunch of Europeans (including Americans) is giving rise to something which may affect the whole world. Instead of dealing with the specific causes of the problems, they now want to rewrite the mandate of the World Bank and IMF amongst others.

I cannot begin to imagine what these countries have in mind to maintain their unsustainable standard of living; US is 5% of the world population and consumes over 50% of the planets energy. This is not sustainable; China and India are stirring and rumbling. Something has to give; I think someone has to be robbed in order for the 'developed world' to maintain its standard of living. A new 'Bretton Woods' sounds like a good place to start.

I live in the developing world and " Methinks something is rotten in the state of Denmark".

And now for the 'Joke of the Day' and its a real quote:

Italian Prime Minister Silvio Berlusconi said that political leaders are discussing the idea of closing the world's finanical markets while they "Rewrite the rules of international finance... The idea of suspending the markets for the time it takes to rewrite the rules is being dicussed."

I laughed so hard and for so long I had tears in my eyes; until I realized this guy has a seat at the table and I do not...then I was scared.

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