GLOBAL CRISIS NEEDS NEW SOLUTIONS, SOROS SAYS
SOFIA, Bulgaria — International financier George Soros said Monday that new economic instruments are needed to fight financial turmoil gripping the globe in a summary of his book The Crisis of Global Capitalism soon to be issued.
Lecturing in the Balkan capital, he accused international institutions of failing to fend off the economic crisis which has spread across Asia and Russia, prompting huge investment withdrawal from emerging markets.
"International financial authorities are inadequate. They were not designed to deal with these tremendous and rapid flows of capital.
"The methods they used were inappropriate and unsuccessful in arresting the spread of the collapse ... I am not against the IMF [International Monetary Fund], but I think it should change its policies," Soros said.
He accused organizations of applying double standards in attempting to resolve the crisis. "There is an asymmetry in treatment of debtors and creditors in crisis situations."
The IMF urged Thailand and South Korea to hike interest rates and curb government spending to strengthen the currency and pay off debts. But when the crisis affected the United States, the Federal Reserve helped markets recover by boosting liquidity with lower interest rates, Soros said.
"Capital will not flow to the countries that need capital from countries which collect capital. This so far has been the case, but now there is a reverse flow, which is liable to continue.
"That is why I propose finding some mechanism to pump liquidity into the periphery. Society can be endangered by excessive reliance on market fundamentalism — the belief that markets can take care of everything. This is a false idea, which is a bigger threat today than any totalitarian ideology," Soros said.
His critique of global capitalism rests on assertions such as "financial markets are inherently unstable, which can cause tremendous damage to society," and "it is impossible to have a global economy without having a global society with common values and institutions to protect these values."
Louis Proyect (http://www.panix.com/~lnp3/marxism.html)