Opening Statement by Charles Santiago at the Asian Conference on the International Financial Crisis: Analysis, Alternatives, Action held in Port Dickson on Wednesday, 15th April 2009:
Global crisis is slowly becoming a human crisis in Asia and the Developing World
The head of the US intelligence Admiral Denis Blair recently indicated that the global financial crisis and not al-Qaeda is the greatest threat to global security including the US.
What he forgot to mention is that the biggest threat to human security including job security is the highly deregulated financial sector in the US, Europe and Asia.
The global crisis is slowly becoming a human crisis in Asia and the Developing World.
About 25 million working people have been laid-off as a result of the crisis. The ILO estimates that about 50 million people will be out of a job during the crisis. Countries are decreasing state expenditure and subsidies on education, food, health care, and other utilities to the detriment of millions of people.
The United Nation High Level Task Force On the Global Food crisis notes that “Already before the rapid rise in food prices, some 854 million people worldwide were estimated to be undernourished. The crisis may drive another 100 million more people into poverty and hunger”.
Migrant remittance to home countries will decrease and more migrant workers will be sent back to source countries.
Child labour is set to increase in Asia
In fact, the ILO in February 2009 estimated that the number of people out of work in Asia could surge by 23.3 million this year. The Asia-Pacific region is expected to slide back to 2004 poverty levels and experience sharp inequities in many countries, wiping away broad gains made over the last 3-4 years.
In the face of the human crisis we ask, what are our governments doing in the face of the financial crisis?
A study by the ILO Institute examining rescue efforts in 32 countries, including all members of the G 20 demonstrated that the stimulus packages are largely directed towards financial bailouts and tax cuts instead of job creation and social protection. In fact the report noted that on average, fiscal stimulus packages for the real economy are five times smaller than financial bailout packages.
The bail-out of the financial sector is staggering.
The US government has already spent, lent or guaranteed USD 12.8 trillion (RM 45.7 trillion) to stimulate the economy, especially the financial sector.
Analysts have noted that “investment banks like Bear Sterns, Leman and Goldman Sachs routinely lent US 35-50 per dollar of assets. Banks borrowed money at one per cent and invested in billions worth of fraudulent sub prime mortgages at 4 percent, netting three percent. Money was made from money not productivity”.
In fact, toxic assets were sold as high yielding financial instruments across the globe thereby distributing risk across nations.
Enough analysis have shown including the business media, that bankers, brokerage firms, rating agencies and accounting agencies are responsible for causing the largest financial fraud in US history, if not in the world.
Why then has there been no attempt to make these toxic banks, rating agencies, accountancy companies including toxic bankers to come clean?
One reason is because the US financial industry has become very powerful. At present, the financial sector is a leading industry at about 24 percent overtaking manufacturing which has reduced to 12 percent.
Profits accruing to the financial sector accounted for 30 per cent of total profits in the US in 2004.
But more importantly, it appears that the US government is under the influence of Wall Street. And in return for Wall Streets support for US Presidential campaign, the US government does the bidding for Wall Street in preserving the existing global financial and economic order as in the recently concluded G 20 meeting in London.
Thus, we are in a situation that the real threat to human security is the well organized and politically powerful financial sector whose advisors are busy advising President Obama and other world leaders.
* Charles Santiago, Selangor DAP Vice Chairman & MP for Klang