ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist®.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style3 { height: 68px; } .MsoNormal {} h1 {margin-bottom:.0001pt; page-break-after:avoid; font-size:12.0pt; font-family:"Times New Roman"; font-weight:normal; text-decoration:underline; text-underline:single; margin-left: 0in; margin-right: 0in; margin-top: 0in; } .style4 { font-size: large; font-weight: bold; font-family: Arial; } .style5 { font-size: x-large; font-weight: bold; } </style> </head> <body bgcolor="white" vlink="black"> <center> &nbsp;<table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr height="79"> <td width="133" height="118" rowspan="2" valign="top" align="left" xpos="0"> <a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" height="79" colspan="2" valign="top" align="left" xpos="140"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" height="79"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr> <td width="624" colspan="6" valign="top" align="left" xpos="0" class="style3"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#8226; <a href="articlesindex.html">ARTICLES</a> &#8226; <a href="books.html">BOOKS</a> &#8226; <a href="teflon.html"> THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#8226; <a href="mailto:letters@onlinecolumnist.com"> REACTIONS</a> &#8226; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td width="133" height="2"></td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style4">Clash of Central Banks</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright Feb. 7, 2010<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class="style5">M</span>eeting in the remote Arctic Canadian outpost of Iqaluit, Nunavut, finance ministers and central bankers from the G-7, including the U.S., Japan, Germany, Britain, Italy and Canada, are trying to deal, once again, with a brewing global financial crisis.<span style="mso-spacerun: yes">&nbsp; </span>Brought about this time by the impending insolvencies of Greece, Spain and Portugal, the G-7 hopes to avert another global economic meltdown.<span style="mso-spacerun: yes">&nbsp; </span> While there s no indication yet that China and India are also at risk, the European Union faces crushing economic burden to bailout Greece, and possibly Spain and Portugal.<span style="mso-spacerun: yes">&nbsp; </span>Representing the U.S. in a remote Canadian tundra village of 7.000 inhabitants, Treasury Secretary Tim Geithner and Federal Reserve Board Chairman Ben S. Bernanke met with their G-7 counterparts to plot strategy in a gathering storm.<span style="mso-spacerun: yes">&nbsp; </span>Bernanke has led the way averting a major U.S. financial crisis.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Working with former Fed chief Paul Volcker, Geithner urged the U.S. Congress to enact tough new regulations reinstating provisions of the 1933 Depression-era Glass-Steagall Act, preventing bank holding companies from engaging in risky stock market investing.<span style="mso-spacerun: yes">&nbsp; </span>Banking reform was at the top of the agenda for finance ministers hoping to prevent a repetition of the U.S. financial meltdown that left banks without cash near insolvency.<span style="mso-spacerun: yes">&nbsp; </span>Finance ministers also dealt with the Haitian cataclysm that left up to 25% of the 9.8 million population homeless.<span style="mso-spacerun: yes">&nbsp; </span> European Union central bankers were concerned about Greece, turning recently to the International Monetary Fund for a possible bailout.<span style="mso-spacerun: yes">&nbsp; </span>EU officials warned Greece that it could not expect a bailout from the European Central Bank.<span style="mso-spacerun: yes">&nbsp; </span>With the U.S. Fed bailing out banks, it put pressure on the European Central Bank to follow suit.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Portuguese s parliament defeated a government austerity plan that would have cut expenses and reduced debt to a manageable fraction of Gross Domestic Product.<span style="mso-spacerun: yes">&nbsp; </span>Portuguese debt expanded to 13% of GDP, 10% more than recommended by European Central Bankers.<span style="mso-spacerun: yes">&nbsp; </span>Currently U.S. budget deficits represent at over 10% of GDP, stand at around $1.57 trillion for a GDP not to exceed $14 trillion.<span style="mso-spacerun: yes">&nbsp; </span>Unlike ECB, Bernanke has expanded the money supply to prevent insolvency of major U.S. financial institutions and individual states.<span style="mso-spacerun: yes">&nbsp; </span>European Central Bankers can t ignore Greece, Portugal or Spain, pawning them off the IMF.<span style="mso-spacerun: yes">&nbsp; </span>When the EU went to the euro Jan1, 1999 16 of the EU s 27 countries adopted the currency.<span style="mso-spacerun: yes">&nbsp; </span>Less powerful economies like Greece, Portugal and Spain, paid a heavy price financing public debt on an overvalued currency, now facing insolvency.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>European Central Bankers can t ignore the fundamental unfairness of expecting less economically vibrant economies to make it without financial help.<span style="mso-spacerun: yes">&nbsp; </span>Whether it harms Europe s prosperous economies, like Germany, France, Italy, Netherlands, Belgium, etc., European Central Bankers are obligated to print more euros to bail out the weaker economies. Like the U.S. where the Fed was forced to print more money to bailout states and financial institutions, European Central Bankers will be forced to devalue the euro.<span style="mso-spacerun: yes">&nbsp; </span>Bailing out Greece, Portugal, Spain or any other EU state is the obligation of the EU Central Bank, not the IMF, World Bank or any other institution designed for third world development or debt relief.<span style="mso-spacerun: yes">&nbsp; </span> I think we have to be very mindful of the failure or potential failure of domestic economies, said Canadian Finance Minister Jim Flaherty, pushing the EU Central Bank to act.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>European Central Bankers should take a lesson from Depression Era expert Fed Chairman Ben S. Bernanke, who defied conservatives and followed the tradition of the Franklin Delano Roosevelt, printing whatever money was needed to prevent another Great Depression.<span style="mso-spacerun: yes">&nbsp; </span>EU Central Bankers must devalue their currency enough to bailout EU nations in need of immediate cash infusions.<span style="mso-spacerun: yes">&nbsp; </span>While Bernanke won a new four-year term under duress Feb. 3, he faced withering criticism from conservatives for his monetary policy, keeping interest rates at historic lows and providing liquidity to U.S. financial institutions.<span style="mso-spacerun: yes">&nbsp; </span>British Treasury Chief Alistair Darling urged the U.S. Fed to control risky stock market investing that sent international banks into chaos.<span style="mso-spacerun: yes">&nbsp; </span> Beranke and Geithner are facing stiff Wall Street opposition to restricting derivative trading that affects international banking.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>European Central Bankers need to do whatever is necessary to bailout member states facing financial insolvency.<span style="mso-spacerun: yes">&nbsp; </span>It s not less developed countries faults that the overvalued euro placed their economies at risk of insolvency.<span style="mso-spacerun: yes">&nbsp; </span>No international banking institution designed to help third world economic development should bailout or lend money to EU states:<span style="mso-spacerun: yes">&nbsp; </span>That remains the responsibility, like in the U.S., of its central bank.<span style="mso-spacerun: yes">&nbsp; </span>Greedy European countries, like Germany and France, have blocked EU central bankers from adopting monetary policy comparable to the U.S. and Britain, providing adequate stimulus to maintain the solvency of member states.<span style="mso-spacerun: yes">&nbsp; </span>If the EU is really fair to all its member states, the richer countries must share the burden and pay the price to save more stressed economies.<span style="mso-spacerun: yes">&nbsp; </span> European Central Banker must follow their U.S. British counterparts and cough up the money.</p> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <p class="MsoNormal"> <b>John M. Curtis</b> writes politically neutral commentary analyzing spin in national and global news.<span style="mso-spacerun: yes">&nbsp; </span>He s editor of OnlineColumnist.com and author <i>of <a href="books.html">Dodging The Bullet</a></i> and <i><a href="books.html">Operation Charisma</a></i>.</p> <p class="MsoNormal"> &nbsp;</p> <p class="MsoNormal"> &nbsp;</p> <p class="MsoNormal"> &nbsp;</p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Homecobolos> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>