Sunday, 31 March 2013

Canadian public credit history more needed today than ever!

An Ugently Needed Change in Monetary Policy
Borrowing from Bank of Canada would make governments debt-free
by George H. Crowell
National Office | The Monitor
Issue(s): Government finance
June 1, 2011
Through the publicly-owned Bank of Canada, which was established in 1935, the federal government can borrow money, essentially interest-free, and make such funds available not only for its own use, but also for provincial and municipal governments. Such borrowing helped Canada get out of the Great Depression, and to finance our participation in World War II. Continuation of this practice until the early 1970s played a key role in creating Canada’s post-war prosperity, as well as launching Medicare and other national social programs.

For the past four decades, however, our governments at all levels have increasingly been borrowing instead from the private banks, and paying steep interest on those mounting debts. Each year, governments across Canada now pay some $60 billion in interest on their debts – interest payments that need not be incurred.

This enormous debt burden deprives our governments of revenue that could be used for much-needed improvements to social and economic services – and also to help civil society groups that work for the public welfare. Such organizations depend largely on government funding, but are repeatedly told there is never enough money available.

Governments themselves also use their deliberately incurred borrowing debts as an excuse for cutting public programs and services instead of preserving and expanding them. At the same time, however, they keep cutting the tax rates on wealthy individuals and corporations who don’t need tax relief – and many of whom evade the taxes they owe, anyway, through tax loopholes or by hiding their wealth in offshore tax havens. There also doesn’t seem to be any shortage of funds for unnecessary new prisons, for unjustifiable military interventions, or the wasteful purchase of new weaponry.

One of the organizations that has tirelessly called for a return to government borrowing from the Bank of Canada is the Committee on Monetary and Economic Reform (COMER). Since its formation in the 1980s, COMER has produced reams of statistics, reasons and arguments for reviving the lending powers of the Bank of Canada. It has shown how the massive interest-bearing debt now carried by our federal and provincial governments could gradually be replaced with interest-free debt.

Such a change in monetary policy, combined with crucial changes in tax policy, would make available tens of billions of dollars that are urgently needed to rebuild our public infrastructure, protect our environment, and strengthen Medicare and other social programs so vital in meeting human needs. Such expanded government spending on worthwhile projects would also create jobs, stimulate additional economic activity, and significantly increase tax revenue.

To start a campaign for the monetary reforms needed to achieve these national gains, COMER recently issued a “call for the renaissance of the Bank of Canada.” The call is directed at civil society organizations. It urges them to join with COMER in demanding that the federal government revive the power of the Bank to provide funding to all levels of government, mainly with interest-free loans, as was done between 1935 and the early 1970s. These loans, of course, would be for needed public investments, primarily to protect and improve social programs and repair and build public infrastructure. (Go to the COMER website – -- to read the full text of the call.)

COMER has been dismayed that civil society groups have not pushed for these changes in monetary policy on their own, since it could make abundant funding available to meet a wide range of the social and environmental needs for which they advocate. This is perhaps because they are unaware of this possible answer to their funding shortages. The COMER campaign hopes to raise their awareness as it calls for their endorsements.

Of course the COMER people have to be realistic. They know the monetary policy changes they propose challenge the power of the private banking system, and they know this system has the support of the new majority Harper government. But the enhanced status of the NDP in the new Parliament (and the election of the first Green Party candidate, leader Elizabeth May) heightens the prospect that a revival of the Bank of Canada’s lending powers will be more frequently and effectively raised in the House of Commons. (Maybe every time the Conservatives cite the debt as an excuse for cutting social programs and services.)

Significantly, the NDP convention in 1995 and the Green Party convention last year both passed resolutions calling for a return to government borrowing from the Bank of Canada instead of the private banks. It would be in accordance with those resolutions for both parties to put this key monetary policy reform on their parliamentary agendas.

Indeed, it may be essential for the opposition to take this stand in the House, if only to deter Harper from making the Bank of Canada even less beneficial to the public interest. This could happen if Harper decides to act on his earlier support for the creation of a common U.S.-Canadian currency, or to bring Canada into a proposed new global currency system – both, of course, controlled by the private bankers. Such a loss of monetary policy independence would gravely impair the Canadian campaign for monetary justice.

Right now, however, the renaissance of the Bank of Canada, though very difficult, is not beyond achievement. Particularly if the campaign garners the support it deserves from the civil society groups that now suffer so much from the Bank’s disuse.

(George Crowell is a retired University of Windsor professor who has been working with COMER on monetary policy since 1994.)  

Public credit 'the first step' Federal Reserve Manager says

Robert Hemphill Credit Manager of the Federal Reserve Bank in Atlanta early in the 1930's Great Depression pleaded for the government to spend direly needed debt free money into the economy and his words are just as important today:

“We are rapidly approaching a situation where the government MUST issue additional currency. It will very soon be the only move remaining. IT SHOULD HAVE BEEN THE FIRST STEP IN THE RECOVERY PROGRAM.

“Immediately upon a revival of the demand that the government increase the supply of currency, we shall again be subjected to a barrage of skillfully designed and cunningly circulated propaganda by means of which a small group of international bankers have been able, for two centuries to frighten the peoples of the civilized world against issuing their own good money in sufficient quantities to carry on their necessary commerce. By this simple, but amazingly successful device these `money changers’ — parasites in a busy world intent on creating and exchanging wealth — have been able to preserve for their private and exclusive right the monopoly of manufacturing an inferior substitute for money which they have hypnotized civilized nations into using, because of their pressing need to exchange goods and services.

“In our present situation the issue of additional currency is the only way out. Is there any good reason that Congress cannot or should not do this now? How long, OH GOD WILL THE AMERICAN PEOPLE STAND FOR SUCH A CONDITION; when all they need is a safe, sane, reasonable plan of economic security and “United Action” to put it into operation?"

Is China turning away from 'Greed is good'

Michael Hudson who is mentioned in this article below, is one of the biggest brains in international economics. He has been to the very core of the international supply side of money and has been saying for a very long time there must be reform of the current private owned central banking pyramid scam or it will be a threat to civilization itself;

[9.00] Back in the 1960s, I was Chase Manhattan Bank’s balance of payments analyst, and my job was to focus on the Latin American countries: Argentina, Brazil, and Chile, and my job was to calculate how much of a balance of payments surplus they could generate, and the idea of the bank marketing department was the entire economic surplus could be used to pay debt service to the seven major American banks.
[9:40] And pretty quickly we found out that there wasn’t any surplus to pay the banks, and there was an international department that got very upset because he said “Look, I get promoted for making loans, and the real estate guys are making all the loans, you’re telling us they can’t afford to repay!” And he took it up to David Rockefeller, we went across the street to the Federal Reserve bank, and the Federal Reserve bank said “It’s in America’s interest to make these loans to Latin America. Mr. Hudson, according to your calculations, Britain can’t afford to repay any more.” I said “That’s right. I don’t see any way in which it can get the money to repay the debt.” And the Federal Reserve man said “Ah! But did you take into account the fact that the US Treasury is always going to lend Britain the money to pay? We will never let it go down.” I said, “Well, that’s a deus ex machina from outside the system. Yes, you can lend them the money to repay.”

When I read (below) that the Chinese administration find credible the views of Michael Hudson my hopes lift that oneday a diplomatic revival of common decency supplanting the current profiteers of economic oppression and destruction might not be just a dream!

Economic Policy Deception
March 8, 2013

Another in the series of interviews on the Renegade Economists radio show (Australia), a wide ranging analysis of the advantages to wealth that money printing and poor tax policy produce. Topics include land and housing policy, German gold repatriation, Occupy, Bradley Manning, Iran, Obama and Kruegar.

Listen here

Subscribe to the show (itunes)
Transcription 06.03.2013:

Karl Fitzgerald (KF): It’s seems that the most exciting things happening around the planet are not happening in a democracy, they’re happening in China. The new Premier there Xi Jinping has a real reformist agenda.

Michael Hudson (MH): I think there’s a whole new generation coming in. I think they do things collectively in China, and then I was there a few years ago I was really happy to see how there’s a feeling of, uh, there are people in their 20s and 30s that they can really change society. That they really can get the reforms that they want to make it a really fair and prosperous society and I haven’t seen that degree of optimism in any other country. When I go to Russia for instance all the people could say is “Can you get me out of here? Can you get me to the United States?”. When I go to Germany they’re very down. But in China they’re very optimistic that they can change the whole structure of the system. And they just announced they’re publishing something later this month called “China in the next thirty years” where they have my article leading off, I’m told, and it’s about the need now to begin to tax land. The one thing that they haven’t done so far is address the tax problem.
What are you going to do to prevent Chinese putting all their money into real estate and just turning China away from a productive factory-based economy producing things into a speculative economy like the United States? They realise that’s what they’re trying to avoid. There’s been a shift in emphasis away from Shanghai which was sort of Thatcherite Marxism, if you can imagine that, towards Beijing and towards the west and there’s an attempt now to begin reviving or building up the western regions and the southern regions and they realise they don’t want this to become just a real estate promotion project, they want it to enrich the entire people and they want the tax basis basically to fall on the value of the land the government is building up by it’s enormous expenditure on transportation, it’s capital investment in roads and railroads, in new buildings. And so it’s what the followers of Henry George used to dream about! And in fact in China they’re aware of the fact that it goes back all the way to Sun Yat Sen, although they’re doing it they realise in the last hundred years there’s been a symbiosis between banking and real estate. And they certainly don’t want real estate to be bid up in prices by borrowed money and just meaning more debt and more debt for society as occurs in the western nations.

KF: Well they are opening up their financial sector there and there has been some concerns about these new developments. What do you see there?

MH: I don’t see them opening it up. There’s talk in America, the accusations by the Obama administrations that China has artificially been keeping its currency down and urging them to open their capital markets. But there’s so much liquidity in China, so many savings that if China did open there would be a huge outflow, of a diversification of investment outside of China, especially away from Chinese real estate into Western stocks and bonds, real estate, mining and Chinese currency – the RNB – would actually go down, rather than rise. So I don’t see their loosening these controls any time soon.

KF: One of the things they doing is really jacking up the deposits required for anyone buying a second home so that maybe is putting some dampener on the market. But really you can’t help but wonder just how easily they’ll be able to work their way around it. All of a sudden their kids and grandkids’ll be buying properties before they know it.

MH: Well, that’s the fight between Western China and Eastern China especially Shanghai, as I mentioned. The banks would like to find their major market in real estate but that’s a distortion of industrial banking. So the question is whether you’re going to have banking in China evolve to Industrial banking or whether industry itself is going to be financialised as it is in the west and turned into a financial operation instead of an industrial operation. That really is the decision that China’s going to have to make and of course it is the same choice that is having to be made in the western countries, including the United States.

KF: In terms of their reforms to housing, they’re talking about a 1% capital gains tax, there’s also been increases in sales taxes on some fronts as well. But with all this hot money being printed up in America and zooming around the world it seems like Asia is really facing the brunt of this sort of currency overflow.

MH: Well the reason is because most American military spending is in Asia. The source of all of these dollars that are being pumped into the global monetary system is basically the balance of payments deficit of the United State and the balance of payments deficit is largely military and Mr. Obama is now reorienting his whole military towards China. He’s announced that China is our number one enemy and he is trying to do a lot of mischief in the China Sea. And Mr. Obama is turning out the be more right wing than Dick Cheney and in fact his administration instead of being the hope and change that they talked about is the Bush/Cheney number three, it’s the third term of that. Obama decried the fact a week ago that now that we have sequestration limiting the amount of money that can be spent, that America cannot put a second atomic destroyer near Iran. Nobody thought that Obama could be such a vicious war monger.

KF: So, talking about Obama, we haven’t heard much about his new chief economist Alan Krueger.

MH: All of the people that Obama is appointing are the same followers of Reuben at Citibank that dominated the Clinton administration, so he is sort of reappointing all the most predatory right-wing economists who emerged under the Clinton administration to de-regulate banking to break up Glass-Steagall and enable banking to do the gambling it’s been doing. So whoever he appoints has been part of the Citibank/Wall St nexus and it’s not good news. The [indecipherable] in business, and the most recent move on the legal front occurred yesterday in the trial of Bradley Manning the army officer who turned in the reports of America’s illegal murders in Iraq. Obama is now saying that any person who leaks or is the recipient of a leak can be thrown in jail without charges and tortured without any charges.

KF: So at the same time as we’ve got unemployment at 9% we’ve got record US corporate profits storming ahead, we’ve got huge cash balances held by everyone from JP Morgan to Apple. Is this possible the most deceiving period of economic policy ever?

MH: Yeah, I think so, most of the corporate profits are actually financial profit. They’re Wall St and they’re the large monopolies that Wall St is backing. So they’re not profits from industrial production, they’re no profits made by producing things to sell on the market. They are financial profits in and rentiere profits, that is monopolies, real estate and they’re speculative profits. So what is being left behind if industry and the employment sector. There are entire cities now that are near going broke. Detroit used to be the fourth largest city in America and that’s more than half of it’s population and is emptying out and is facing bankruptcy. So you’re having shopping malls here empty out, you’re having the big retail stores and streets empty out. You’re having economic shrinkage. The student loan debt is burdening many graduates so that they are having to live at home with their parents rather than buy a new home for themselves. Marriage rates are declining, family formation is declining. Student loan arrears are up to 20% now. Defaults are rising on houses, homes. It’s not good financial news here. But, as you say, the financial profits are soaring.

KF: And there’s the Dow Jones at a new record high.

MH: Well, part of that is sequestration, they realised that what Obama has done is declare war on the poor. He’s very sharply increased taxes on the poorest, the lowest incomes groups, by increasing the social security set-asides from the wages. That happened on January 2nd. And Obama intends to use the sequestration budget crisis in order to cut back social security, cut back Medicare, and Medicaid, cut back social spending so as to leave more funding available for the banks. And, of course, for the US government to do what the European governments are doing. To finance their deficits by borrowing from the banks and governments run deficits mainly by cutting taxes on the financial and real estate sectors. So again you’re having just a continuation of the Clinton administrations pro-real estate and pro-financial give-aways.

KF: Michael, we had the Dow Jones at record levels, QE4’s well underway and many countries around the world are feeling the brunt of what’s been seen as a currency war and it’s almost like with Japan declaring they’re going to join the money-printing race, that it’s a race to the bottom in terms of the worst economic policy, so they can push down their exchange rate, and now that the GATT rules are outlawed as a form of protectionism, this seems to be the latest way to do it, to push your currency down so you have some sort of export advantage.

MH: Flooding the economy with money – the effect is not so much to give industry an advantage. It raises stock and bond prices. The lower the interest rate, the more money there is – most money is used to buy stocks and bonds and packages of real estate mortgages. Every day an entire year’s national income or GDP goes through the New York clearing house and the Chicago Mercantile exchange and I think it’s probably the same in Australia. Probably every day more money is spent on Australian stocks, bonds and securities than is spent on goods and services in an entire year. So all of this monetary easing in Japan, the United States and Europe is an attempt to just flood the capital markets so that the one per cent who own about 60% of the stocks and bonds can make a killing and take their money and run.
Lower currency values don’t right away change trade patterns, because it takes time to build a factory, it takes time to hire people, it takes time to produce more. And also people tend to stick with the same suppliers and prices go up. So what’s going to happen when a currency goes down, its going to raise the cost of imports to it’s population, it’s going to raise the living costs and it’s going to squeeze labour even more, causing even more defaults, and lowering the government budget, pushing it more into deficit, forcing more privatisation sell offs, again to the stock and bond markets that are being flooded with money. So basically what we’re seeing is a financial grab, not so much an attempt to rebuild trade and exports and employment.

KF: Industrial banking, that seems to be one of the angles that’s had quite some popularity online (for you) and particularly in Germany, looking at this Saint-Simonian-type banking frontier. Are you seeing any small banks – there’s a peer-to-peer banking movement that’s building up now – is there anything that’s opening up to allow small business and industrial producers to access some of this credit? Or is it all just being locked off and thrown into the financial markets.

MH: Almost all small business in the United States is in real estate investment. So the small business administration makes loans mainly to buy real estate. The community banks in America, the small, local banks, basically provide mortgage money for businesses, not any other forms of loans. So I don’t see much of the banking moving beyond the finance and insurance and real estate sector. The fire sector.

KF: Can you explain how insurance fits into your (FIRE) finance, insurance and real estate analysis?

MH: Insurance has always been part of the banking sector, providing large amount of money. In the United States, certainly, it’s a monopoly. Health insurance has been growing more rapidly than any other sector, and it’s a bonanza, because they have a captive audience they can charge whatever they want. Real estate insurance, you had AIG moving it’s insurance largely into insuring default risk for junk mortgages and packaged bank loans. So the insurance has always been basically a financial operation, but in the form of a company, and companies have always been closely associated with banks and real estate.

KF: It seems like they would be the weak link in the trifecta of powerful interests there (FIRE) because they must be feeling so much pain because of these climate change events coming through. $60-odd billion for New York’s Hurricane Sandy and the list goes on and on each week. Is there much talk of reform in the insurance industry?

MH: Not at all, in fact as a result of the climate change they’ve been sharply raising their premiums, so it’s a bonanza for them. The more risk there is, the higher the premium they can charge, and they haven’t paid out a single claim, I don’t think, on Hurricane Sandy or the others yet. The insurance companies insist that if you’re collecting a claim in America, certainly in my case, you have to sue them. And there are so many insurance companies that are not paying claims, that the courts are all backed up. So if you’re suing an insurance company trying to collect your claim, then you have to wait five years before you even get into court. And during the five years the insurance company, as soon as you make the claim, the insurance company’s allowed by the tax authorities in America to write it off as if it were a real expense. So they get to show that they’re low-profits, as if they’ve paid claims and then they hope not to pay the claims, but just to be in the jerk-around business. The insurance industry is probably the most hated industry in the United States.

KF: We’ve seen the uprising of concern with the occupy movements. eighteen months to two years ago now. Are you seeing anything positive from that or are people just bunkered down reading so we actually get some policy alternatives on the table the next time that people raise their heads?

MH: Well the FBI has claimed that the Occupy Wall St movement is a threat to national security. They’ve sent policemen around to begin beating up the Occupy Wall St people. They’ve made Occupy Wall st look like Tahir Square in Egypt. For instance in New York they came in at one o’clock in the morning they descended, they began whacking people over the head with billy clubs. They would take their computers, put them into the garbage truck and crush them and then give them back the crushed computer. There were some musicians there with guitars they’d take the guitar out of the case, they’d smash it into a hundred pieces in the compactor, they’d give it back. In New York they let the criminals out of Riker’s Island, which is the jail, and told them go to Occupy Wall St. They sent the homeless people to Occupy Wall St. So there’s an attempt to treat them as if they’re the enemy and most people don’t want their heads smashed in or their computers wrecked and they don’t want to be beaten up by the police.

KF: It seems like a race to the bottom in terms of economic policy. Are we just going to take it?

MH: Greece is the experiment, they tried the experiment in Latvia of saying “how much can you lower a population’s living standards and raise the taxes before they fight back?”. And in Latvia they didn’t fight back because they were told it’s much better than communism and Russia. And now they’re trying in Greece and the Greeks are not going as quietly. In Spain you have the indignants protesting, so we’re seeing really how Portugal, Greece and Spain’s dress rehearsals are going to go. I don’t think there’s going to be much of a fight back in America.

KF: It sounds like the only form of protest left is with our dollars. Our dollar is our vote and we must make sure that we move our money out of these major financial banks, out of these insurance companies and start supporting the small, ethical-type movements that are billowing around the world.

MH: Well, I don’t know many and there aren’t enough movements to absorb all this money that’s being created because literally an infinite amount of money can be created by the government. Unfortunately the government is not creating this money – all this quantitative easing – they could be creating it for public investment, they could be creating it to build infrastructure, they could be creating it to break down debts but they’re only giving it to Wall St. That’s what people have to realise, the money that’s being created is only going to the banks, almost entirely to the one per cent, not to the 99%.

KF: And what about Germany repatriating their gold, that must have been a big start to 2013? And, seems that with all this money printing, more question marks are coming about for the American way of finance?

MH: Well, this is Germany’s gold that it had left here at the time when gold was used to settle balance of payments suplusses and deficits. And now it decides why leave it here anymore. This is more a techinical movement, I guess the Germans are wondering really why was all that gold there and what had happened to it. So that’s a very positive development. I think every country should have it’s gold and especially I think it’s a good idea to move it out of New York. 

BRICS Public banking nations forming a block

New BRICS Development Bank Announced

In September 2006, four original BRIC nations met in New York. On May 16, 2008, Yekaterinburg, Russia hosted a full-scale diplomatic meeting.

In June 2009, Brazil, Russia, India and China again met in Yekaterinburg.
Early steps were taken to end dollar supremacy. Eventual plans may replace it with a global currency or basket of major ones.
In 2010, South Africa joined the BRIC alliance. It was formally invited to do so. The group was renamed BRICS. Annual summits are held.
On March 26 and 27, Durban, South Africa hosted the group’s fifth one. More on that below.
Their “mechanism aims to achieve peace, security, development and cooperation. It also seeks to contribute significantly to the development of humanity and establish a more equitable and fair world.”
America’s economic supremacy is declining. BRICS countries are some of the world’s fastest growing.
They comprise a significant economic and political block. They account for over 20% of world GDP.
They’re on three continents. They cover more than one-fourth of the world’s land mass.
Their population exceeds 2.8 billion. It’s 40% of the world total. By 2020 or earlier, China may become the world’s largest economy.
By mid-century or sooner, India’s predicted to be number three, Brazil number five and Russia number six.
Between 2000 and 2008, BRICS contributed about half of global growth. In the late 1990s, Russia’s debt default and Brazil’s currency crisis rocked world economies. Today they have vast foreign exchange reserves.
BRICS have more global trade than America. China’s the world’s largest exporter. India’s an information technology powerhouse.
Brazil’s a dominant agricultural exporter. It’s highly competitive. It has vast amounts of fertile land. It’s known as “the world’s biggest farm.” Russia is oil and gas rich.
South Africa holds resources worth an estimated $2.5 trillion. It’s rich in gold, platinum, uranium, chrome and manganese ore, zirconium, vanadium, and titanium.
Two key institutions emerged from Durban’s summit. A BRICS Joint Business Council (JBC) and Development Bank were announced.
JBC formerly functioned as a forum. It encourages free trade and investment. Two meetings will be held annually. Rotating chairmen will head them.
Each BRICS country chose five top business executives to represent them. They’ll coordinate relations between member states and private sector players.
Separately, China and Brazil agreed to a bilateral currency swap line. It permits them to trade up to $30 billion annually in their own currencies.
Doing so moves almost half their trade out of US dollars. It suggests other BRICS partners will make similar moves.
They endorsed plans to create a joint foreign exchange reserves pool. Initially it’ll include $100 billion. It’s called a self-managed contingent reserve arrangement (CRA).
It’s a safety net precaution. It’s to strengthen financial stability. It’s an additional line of defense.
They agreed to establish a new Development Bank. The idea was proposed last year in New Delhi.
“It’s done,” said South African Finance Minister Pravin Gordhan. BRICS leaders “will announce the details,” he added.
South African President Jacob Zuma said:
“We have agreed to establish the new development bank. The initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure.”
Ahead of the summit, officials said each country may contribute $10 billion for starters. It’s aim is to fund infrastructure and other development projects.
It’ll operate separately from Western international lending agencies. It’ll challenge their global dominance. It’ll test how they do business. They prioritize neoliberal harshness.
It includes privatizing state enterprises, selling them at a fraction of their worth, mass layoffs, deregulation, deep social spending cuts, wage freezes or cuts, unrestricted market access for Western corporations, business-friendly tax cuts, trade unionism marginalized or crushed, and harsh recrimination against non-believers.
It strip mines nations for profit. It shifts wealth from public to private hands. It destroys middle class societies. It turns workers into serfs.
It substitutes debt peonage for freedom. A race to the bottom follows. An elite few benefit at the expense of most others. It sacrifices economic growth for private gain. It’s the worst of all possible worlds. Nations are transformed into dystopian backwaters.
BRICS have other ideas in mind. They seek a multipolar world. Much work remains to be done. Agreement on details must be finalized. It’ll take time to begin operations.
It’ll be a second alternative to Western debt bondage. In December 2006, Hugo Chavez proposed a Bank of the South (Banco del Sur).
A November 2007 summit launched it. In September 2009, it was established. Its members include Venezuela, Brazil, Argentina, Ecuador, Bolivia, Uruguay and Paraguay. Plans are to increase initial capitalization.
Member countries pledge to contribute. Full operations are expected to begin later this year. At issue is representing the needs of the South. It’ll contribute to its development. It’ll do so free from debt bondage.
BRICS Development Bank intends no one country to dominate. Voting rights will reflect equality. Economic growth matters most.
India’s Minister of Commerce, Industry and Textiles, Anand Sharma, said:
“Our countries are making their own statement that we are proactively engaged in balancing the global economy.”
“We are creating new axis of global development. The global economic order created several decades ago is now undergoing change and we believe for the better to make it more representative.”
BRICS trade today exceeds $360 billion. By 2015, it should reach $500 billion. Continued longterm growth is expected. Mutual cooperation helps sustain it. Each member country benefits.
It remains to be seen how plans unfold. Hopefully global changes for the better will follow. They’re long overdue. Dominant emerging economies will play leading roles. They’re laying the groundwork to do so.

Russia & India two sovereign dollar nation partnership

Russian sovereign wealth fund SBI to form dollar 2 bn consortium

26 dec 2012

Russian sovereign wealth fund SBI to form dollar 2 bn consortium
Russian sovereign wealth fund Russian Direct InvestmentFund (RDIF) on Monday signed an agreement to set up a $ 200 million dollar investment consortium, State Bank of India(SBI), to promote investment between the two countries.

Consortium the RDIF and SBI will invest up to $ 1 billion, said a statement released by the Russian sovereign wealth funds.
Long-term capital
The agency will team to facilitate long-term capital in Russia and India actively promote mutual investment.
RDIF CEO Kirill Dmitriev, SBI Chairman Pratip. Chowdhury Prime Minister Manmohan Singh in the establishment of the consortium with Russian President Vladimir Putin signed a memorandum of understanding, the memorandum of understanding (MoU) here.
"Basically, we are establishing this platform, interesting industry synergy between India and Russia, high-return projects to allocate funds, Mr. Dmitriev said.
The focus will be for higher purchasing power of the population, to create value addition in the mining and processing of natural resources and the development of manufacturing enterprises and service enterprises project. Joint investment consortium, government support, help mitigate possible risks from the global economic situation,'' he said.
Mr. Chowdhury said the partnership, from an investment point of view, the banks will have the opportunity to obtain interesting and attractive projects.

Financial Crisis Alters Russian Banks

Financial Crisis Alters Russian Banks
Oxford Analytica 03.16.10, 6:00 AM ET

The financial crisis brought to an end the rapid expansion of the Russian banking sector. As sources of external finance dried up and trust suffered, state support was necessary to stabilize the system. State banks have been an important mechanism for channeling financial assistance to other institutions and maintaining the flow of lending.
The aftermath of the crisis has created a new environment for banking in Russia, with reduced funding possibilities and diminished growth prospects. There will be no immediate return to the rapid development that characterized the precrisis period, with a doubling of banks' assets (as a share of GDP) in 2000–08. However, the country remains underbanked: Only about one-third of households have a bank account and just 10% of fixed investments are financed by loans.
State banks. The ownership structure of the Russian banking system differs from those in other emerging eastern European markets. It more closely resembles China's: Both markets are characterized by the dominance of state institutions and the relatively small role of foreign banks.
In the precrisis period the authorities sought to improve the system through better regulation--while simultaneously preserving strong state control and not relying on foreign ownership to transform the sector. As in other countries, the crisis prompted the state to take on a greater role in the banking system. State-owned systemic banks, in particular Vneshekonombank (VEB), have been used to carry out anticrisis measures, such as driving growth in lending (however limited) and supporting private institutions.
State-controlled banks' share of total assets rose from about 30% to 45% in the 10 years prior to 2008. As a result of the crisis state banks are now estimated to control 60% of total assets. So far there do not appear to be any plans to roll back the state's increased presence.
Consolidation. Extreme fragmentation is a structural feature of the Russian banking system. Of more than 1,000 banks, only the top 50 are significant. Such a large number of banks makes supervision more difficult. Higher capital requirements entered into force this year, with the minimum set at 90 million rubles (just over $3 million at the current exchange rate); this will double by 2012. Unlike previous initiatives this measure will apply to existing banks, therefore contributing to the consolidation of the sector. However, the extent to which regulatory pressures will reduce fragmentation remains uncertain.
Privatization. Past equity offerings increased private ownership in state-owned Sberbank and Vneshtorgbank (VTB). There are now conflicting views regarding further privatization, though none of the plans under consideration would entail a loss of state control:
--Sberbank Chief Executive Officer German Gref has stated that privatizing his bank--in which the state has a 57.6% stake--would help finance the budget deficit.
--By contrast, Finance Minister Aleksei Kudrin has stressed that the immediate focus should be on improving regulation and reestablishing the flow of lending.

--In any case VTB--where the state's stake rose to 85.5% during the crisis--is likely to be the first candidate for partial privatization.
Outlook. In the postcrisis context banking strategies will remain focused on financial restructuring, working out problem loans and reassessing funding alternatives:
--Asset quality. Asset quality is one of the main sources of uncertainty; this will require continued attention to loss provisioning.
--Lending. Banks have excess short-term liquidity and have increased capital to absorb losses, but high-quality borrowers remain scarce.
--Financing. Future banking sector growth will have to rely to a larger extent on domestic funding. During the crisis state funds and deposits alleviated banks' lack of access to external capital markets, with an interbank market that remains highly dependent on nonresidents for foreign currency resources. However, higher deposit rates have squeezed banks' margins.

Saturday, 30 March 2013

International High Finance Dictates Education Curriculum of New Zealand!

International High Finance Dictates Education Curriculum of New Zealand!

Compiled by Iain Parker Sunday 9 August 2009

Information as to the top down influence of international institutions upon our tertiary curriculum and the serious implications if the ideologies those institutes promote are flawed, i.e. Global Credit Crisis, I will supply my usual supporting evidence from the mouths of the major players:

The below linked statement from RBNZ made Victoria University’s School of Economics and Finance the focal point for higher learning of NZ and many foreign students. Its curriculum has very much been unfettered free market laissez-faire monetarist economics overseen by external advisors from IMF etc or IMF etc foreign trained Kiwi's:

Current Foreign Fellow: Brief biography
Eric Leeper is a Professor of Economics at the Indiana University. He also holds positions as a director of the Centre for Applied Economics and Policy Research at the Indiana University, Research Associate at the National Bureau of Economic Research, External Advisor to the Sveriges Riksbank, and he has also been a visiting scholar at the Federal Reserve Board.
His area of expertise covers monetary theory and policy, and interactions between monetary and fiscal policy. He has published extensively in top academic journals like the American Economic Review, Journal of Political Economy, Journal of Monetary Economics, or Journal of Money, Credit and Banking.
Future Foreign Fellow:
Brief biography
Professor Michael Bordo will be visiting the Reserve Bank in 2009 as Professorial Fellow in Monetary and Financial Economics. In 2006-2007 he was Pitt Professor of American History and Institutions at Cambridge University.
Michael Bordo is a Professor of Economics and Director of the Center for Monetary and Financial History at Rutgers University in New Brunswick, New Jersey. He is a Research Associate of the National Bureau of Economic Research in the United States, and has spent time as a Visiting Scholar, Professor or Consultant at the IMF, the World Bank, central banks and distinguished universities both in the USA where he now lives and around the world.
Professor Bordo's primary research interests are in monetary and financial history. In recent years he has written on current and historical topics in financial stability and financial crises, monetary policy and central banking, exchange rate regimes, and globalisation.

Past Foreign Fellows, take your pick:
Then just go and investigate most every staff member of VIC, you will soon get the feeling that we have replaced the London and Chicago Schools of Economics as the training ground for the modern banking system drones:

Dawn comes to us from an extensive operational background in both the commercial and educational environments. She ran the swaps and capital markets desk for Barclays Bank in the Sydney markets. Prior to this, she worked with Challenge Bank in Perth, specialising in financial risk management and corporate planning, including structured tax deals. She has consulted for a number of major Australasian corporates, including the Sydney Electricity Corporation in debt management and Boral Australia as a specialist member of their Treasury review operation.

Executive Director and Professor, NZ Institute for the Study of Competition and Regulation,
Victoria University of Wellington, March 2004 - present
PBRF Grade: A
Professor of Finance, Otago University, January 1991-February 2004
Head of Department, Finance and Quantitative Analysis, Otago University, 1991 - 1996
Assistant Professor of Finance, Louisiana State University, June 1987- December 1990
Assistant Instructor of Finance, University of Texas. September 1986-May 1987
Teaching Assistant in Finance, University of Texas. September 1984- August 1986
Tutor of Economics, University of Canterbury. March 1981- November 1981
Visiting Scholar, University of Westminster, June-August 1999
Visiting Scholar, Georgia State University, August-October 1999
Visiting Scholar, Louisiana State University, October-November 1999
Visiting Scholar, Federal Reserve Bank of Atlanta, October 1996

Or Past Victoria Alumni, such lovely people:
Roderick Deane
In the past Dr Deane has been involved in the executive branch of Government, as Chairman of the State Services Commission, Deputy Governor of the Reserve Bank of New Zealand (and previously Chief Economist of the Bank), and an Alternate Executive Director of the International Monetary Fund. He was Chief Executive of the Electricity Corporation of New Zealand Limited from 1987 to October 1992 and then until 1999, Chief Executive Officer and Managing Director of Telecom Corporation of NZ Limited.
He has also been Professor of Economics and Management at Victoria University of Wellington, a Director of TransAlta Corporation Limited in Canada, Chairman of the Mayoral Business Advisory Group in Wellington, and a member of the Prime Minister's Enterprise Council.

Then if you wish to learn, from the most credible senior inside sources, the questionable intentions of the international institutes BIS, IMF, Worldbank etc, read these from former recent Chief Economists of IMF, Worldbank, who after failing in attempting to reform those institutions from within are now telling all of their disgusting activities:

Former IMF Cheif Economist Simon Johnson;
"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, (2007-8) is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

The Hospital that makes you Sicker
Joseph Stiglitz won the Nobel Prize for Economics in 2001. He was Chief Economist of the World Bank between 1997 and 2000. So when he says that the IMF are ‘free-market fundamentalists’ working in the interests of Wall Street, the world ought to sit up and listen. The NI interviewed him in London.

An Insight Into The New Zealand Debt Management Office

Excerpt from the United Nation Economic and Social Commission for Asia and the Pacific re the structures and influence of the New Zealand Debt Management Office. (please note the information this link did take you to has been removed - but - if you now go to this link it will download a pdf file from the same institution - that on document pg 26 - pdf pg 34 - ESCAP Manual On Effective Debt Management 2006 makes very clear the same structures.
Take special note of the Reserve Bank Of New Zealand only being an agent of the NZDMO;
New Zealand
In New Zealand the Minister of Finance has the power to borrow on behalf of the government. The day-to-day operations arising from this authority have been delegated to the New Zealand Debt Management Office (NZDMO), a unit of the Treasury since 1988. government borrowing and debt management have been the responsibility of this Office, based on guidelines that are approved by the Minister of Finance. The NZDMO is headed by the Treasurer who reports through the Manager of the Asset and Liability Branch to the Secretary to the Treasury, who in turn is responsible to the Minister. The Advisory Board, consisting of private sector representatives, assists the Secretary to supervise the performance of the NZDMO and provides advice on a range of operational and strategic issues.
The objective of the NZDMO is to "maximize the long-term economic return on the government's financial assets and debt in the context of its fiscal strategy, particularly its aversion to risk". It pursues this objective while managing the government's gross borrowing and cash requirements and interest bearing assets within a risk management framework covering the six principal types of risk. It also lends to government organizations and State enterprises and provides advice on capital markets to other branches of the New Zealand Treasury and other government departments and agencies.
(i) Structure and Functions 
The structure of the NZDMO follows that of a private sector financial institution with functions that correspond broadly to those of the front, middle and back offices. It has groups responsible for portfolio management, risk policy and technology, and accounting and transactional services.
The Portfolio Management Group:
  1. Handles the dealing operations of the NZDMO and all borrowings of the government
  2. Manages the government's investment portfolio and cash needs in New Zealand dollars
  3. Finances the foreign currency intervention reserves of the reserve bank
  4. Promotes investment in government securities
  5. Provides advice on capital markets to other government agencies
  6. Manages relations with investors and rating agencies and compliance requirements of international markets
The Risk Policy and Technology Group:
  1. Advises on and continually improves the risk management framework of the NZDMO
  2. Measures the performance of the Office in adding value, measuring risk and monitoring compliance with approved policies for managing the government loan portfolio
  3. Maintains the information technology systems
The Accounting and Transactional Services Group:
  1. Accounts for government loan operations
  2. Prepares debt service forecasts and makes debt service payments arising from government borrowing on time
  3. Ensures that the above are recorded without any security breaches
While the NZDMO is responsible for managing the government's domestic borrowing programme, some administrative functions have been delegated to the reserve bank through an agency agreement. Under this arrangement, the bank is responsible for the tenders and transactions arising from treasury bills and government bonds.
Government Securities Tendering Operations
Page updated 30 Jan 2009 (please toggle down to first pdf Feb 2008 to see how original wording has been altered since new National Party Government was elected Nov 2008)
The original from 7 April 2007 stated this; 
New Zealand Debt Management Office (NZDMO) has assumed responsibility for the tendering of New Zealand Government Bonds and Treasury Bills from the Reserve Bank of New Zealand (RBNZ), which had previously acted as an agent for the NZDMO for many years.
This transfer is solely of the tendering of the primary issuance of government securities and does not include any of the other tendering operations currently conducted by the RBNZ.
From the market’s perspective, little has changed:
  1. Austraclear will continue to be used to place bids and settle successful bids.
  2. The NZDMO will continue to make all decisions on offerings for each tender and on the allotment of bids.
Some changes have been made to simplify the OperatingRules and Guidelines and registration criteria:
  1. Bid limits and bid deposits have been eliminated.
  2. The process for placing telephone bids has been simplified.
  3. The registration process has been simplified.
Registration as a Bidding Counterparty
New institutions wishing to bid in government securities tenders will need to register as a bidding counterparty with the NZDMO.
To qualify for registration as a bidding counterparty with the NZDMO, applicant institutions must have a minimum credit rating of A-/A3, or have their obligations guaranteed by a parent entity with a minimum credit rating of A-/A3, or be a Crown financial institution. Please see Applicationfor Registration as a Bidding Counterparty for further details.

Northern Trust appointed global custodian for New Zealand Debt Management Office
MELBOURNE, January 12, 2009 —Northern Trust today announced it has been appointed global custodian to the New Zealand Debt Management Office (NZDMO). Northern Trust will be responsible for the provision of core custody and related services to NZDMO's book of Fixed Income assets valued at around NZ$4.0 billion.
"NZDMO is a prestigious and significant client in New Zealand, and in the Asia Pacific region overall. A key aspect of Northern Trust's successful tender was the service model and client focus we offer, as well as a commitment to develop and grow our business in the region with large, sophisticated investors," said Jeremy Hester, Head of Business Development for Northern Trust in Australasia. "We are particularly delighted to have the opportunity to work with the NZDMO in building a relationship that delivers significant value to the client."
The appointment follows a comprehensive tender exercise which was completed in July 2008. NZDMO, established in 1988, is part of the New Zealand Treasury and is responsible for the efficient management of the Crown's debt and associated assets within an appropriate risk management framework. NZDMO's strategic objective is to maximise the long-term economic return on the Crown's financial assets and debt in the context of the Government's fiscal strategy, particularly its aversion to risk.
NZDMO's major responsibilities involve:
  1. financing the Crown's borrowing requirement and managing a portfolio of assets and liabilities
  2. disbursing cash to departments
  3. advancing funds to government entities in accordance with government policy
  4. providing capital markets services and derivative transactions for departments and Crown entities.
NZDMO managed $20.5 billion of assets, $36.9 billion of liabilities, $1.0 billion of revenue and $1.7 billion of expenses on behalf of the Crown for the year ended 30 June 2008. More information on NZDMO can be found at
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, fiduciary and banking solutions for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has a growing network of 85 offices in 18 U.S. states and has international offices in 15 locations in North America, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2008, Northern Trust had assets under custody of US$3.5 trillion, and assets under investment management of US$652.4 billion. Northern Trust, founded in 1889, has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit
Northern Trust operates in Australia as a foreign authorised deposit-taking institution (foreign ADI) and is regulated by the Australian Prudential Regulation Authority.
Northern Trust in Hong Kong is a securities company regulated by the Securities and Futures Commission.
Northern Trust in Singapore is a foreign wholesale bank regulated by the Monetary Authority of Singapore.
Where Northern Trust's UK entities undertake regulated business, they are authorised and regulated in the United Kingdom by the Financial Services Authority.
o Northern Trust (Guernsey) Limited, Northern Trust Fiduciary Services (Guernsey) Limited, Northern Trust Fiduciary Company (Guernsey) Limited and Northern Trust International Fund Administration Services (Guernsey) Limited are licensed by the Guernsey Financial Services Commission
o Northern Trust International Fund Administrators (Jersey) Limited and Northern Trust Fiduciary Services (Jersey) Limited are regulated by the Jersey Financial Services Commission
o Northern Trust Ireland is authorised by The Financial Regulator under the Investment Intermediaries Act 1995

o Northern Trust Global Services is authorised and regulated in the Netherlands by De Nederlandsche Bank
o Northern Trust Global Services Limited Luxembourg Branch is authorised and regulated by the Financial Services Authority and in Luxembourg by the Commission de Surveillance du Secteur Financier (CSSF) and Northern Trust Luxembourg Management Company S.A. is regulated by the CSSF
o Northern Trust Global Services Limited - Abu Dhabi. Representative Office, Licence number 13/238/2008