Commentaries are reflections on current affairs, afterthoughts on the articles posted on this site, notes requiring further elaboration and inclusion in future articles, or letters-to-the-editor on newspaper articles posted here as a blog.
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10 April 2009
SDR as supersovereign reserve currency
Turning IMF's SDR (Special Drawing Right) in its present form into a supersovereign reserve currency, as it is being currently contemplated, will not be foolproof. DSR is presently based on a basket of dominant currencies including dollar, euro, yen and pound. Some of these currencies are not, at present, sitting on sound grounds.
The basket of a supersovereign reserve currency that is reliable, flexible and dynamic, should be filled with "sound" currencies. For that, IMF will need to monitor currencies and establish an electronic chart
15 March 2009
New York Times, Week in Review, "Are We There Yet":
Stocks, Home Prices, and Consumer Spending are not the appropriate indicators to measure the health of our economy.
To find out whether our economy is healthy, we should measure our:
1. GDP (Gross Domestic Product -- are we producing more goods or more hot-air services?)
2. Current Account (our international balance of payment, and whether we are exporting enough to counter-balance our appetite for imports in order to reduce our international debt?)
3. Jobs and salaries (to put money in consumers' pockets to spend -- "consumer confidence" is not enough -- you cannot play poker with someone who has no money.)
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9 October 2008
You want liberal economy to survive? Let its actors take responsibility.
It is the financial institutions that have created the mess. Of course, because political institutions, by deregulating, let the financial institutions do it -- expecting that the latter would self-regulate, self-censor and use their good judgement. They did not.
It is the financial institutions that should now be made responsible to fix their own mess, not political institutions -- lobbied by financial institutions behind the scene.
Get the major financial institutions together (presently that would be about ten in the United States) and make them examine each others' balance-sheet and practices in full transparency. They should create a mutual rescue fund, also accessible to smaller banks, and review and re-establish rules for inter-bank lending. They should be put in front of the fact that if they don't lend to each other, they will all go under.
They should not be allowed to adjourn until they have laid down basic rules of ethics, transparency and accountability for the conduct of their affairs. Political and public powers would closely monitor the meeting and review the rules and procedures that the financial institutions have laid down. If adequate and reasonable, the financial institutions would be held responsible to strictly follow and implement those rules.
In my "Financial Imperium" article the operative key in the first sentence of its conclusion is "...with the broad participation of global actors." That is not only governments but also those who pull their strings -- NGOs, global corporations, banks (there are about fifty major banks around the world.)
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