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| Syria-Lebanon-Iran |
| Europe paying price of US econ crisis |
| 2008-10-20 |
| Iran's President Mahmoud Ahmadinejad says European countries are paying a high price for Washington's lamentable state of affairs. "The economic crisis gripping European markets and financial institutions is a heavy price to pay for Washington's politically-driven moves," said President Ahmadinejad on Sunday. "Over the past 60 years, Europe has born the burden of Washington's failed policies and financial recklessness," he added. The Iranian President said that European countries should not allow their financial institutions to be devised, led and co-coordinated by the US Government. Washington's financial meltdown has entered the worst phase since the Great Depression in 1920s, taking down global financial institutions and triggering a series of bankruptcies, forced mergers and radical government interventions such as an unprecedented USD 700-billion financial bailout plan. European politicians and economists have criticized Washington's dithering incompetence in handling the financial turmoil. "This problem started in America with irresponsible actions and lending by some institutions. The global financial market has ceased to function," said British Prime Minister Gordon Brown on October 8. "The turmoil that we are facing has originated in the United States. It has become a global problem. The United States has a special responsibility in this situation," EU Commission spokesman Johannes Laitenberger said on October 1. "More than anything, the finance market is an American problem, The US is the source of the crisis and it is the focus of the crisis," said German Finance Minister Peer Steinbruck on September 26. |
| Posted by:Fred |
| #5 tu3031, that's what really worries me about Iran's nuclear weapons program. They just might initiate a war just to keep from collapsing. There's nothing like a war with Isreal to unify a muslim country. |
| Posted by: Deacon Blues 2008-10-20 18:09 |
| #4 And how are you doing, Mahmoud? It appears...not too good. As markets floundered amid the credit crunch, Iran's leadership celebrated the West's economic crisis. On Oct. 11, Iranian President Mahmoud Ahmadinejad declared, "The claim that the free market manages all things is a huge lie and benefits only thieves and criminals." Two days later, Supreme Leader Ali Khamenei decreed that the West's financial crisis was a sign of "the ineffectiveness of liberal democracy-based policies." The Iranian leadership may rue their words. Ahmadinejad has run Iran's economy into the ground. On Oct. 11, just a day after Ahmadinejad declared prices in decline, the Central Bank reported inflation above 30%. Such figures are still likely low. Both Shahab News and Aftab-e Yazd have noted the tendency of Iranian officials to pull numbers from thin air. Non-oil sector production is stagnant. Factories may remain open but many do not pay workers. On Oct. 2, for example, tire factory workers staged a protest in front of the Ministry of Labor seeking six months' unpaid wages. In recent weeks, wildcat strikes have occurred in Tehran, Isfahan, Qazvin and Sanandaj. Purchasing power has plummeted. To mitigate such trends, the government has imposed price controls. On June 11, the daily Resalat reported that the paramilitary Basij, a subdivision of the Islamic Revolutionary Guard Corps, would enforce low prices. Over subsequent days, the Iranian press featured photos of Basij beating merchants whose prices were too high. The combination of high liquidity, sparked by Ahmadinejad's arbitrary decree lowering interest rates to single digits, no-interest banking and inflation has led wealthy Iranians to pour money into real estate. Housing costs have skyrocketed; Tehran real estate prices rival New York's. The average Iranian family now pays 60% of its income for rent, while the Ministry of Housing estimates 1.5 million Iranians are homeless. To fight economic malaise, Ahmadinejad has raided Iran's foreign reserves. In the past two months alone, Iranian papers have reported more than $15 billion in withdrawals from the reserves to import refined gas and several additional billion dollars to subsidize industrial schemes. Ahmadinejad's reinstatement of subsidies has meant Iran once again must import 40% of its refined petroleum needs. He will need to continue spending. Last winter, Iran ran out of gas. Food prices more than doubled and the Revolutionary Guards had to deploy on the streets of towns and cities to keep order. On Oct. 1, the Parliament's Energy Commission predicted another "severe gas shortage" again within months. As oil prices plummet, Iranian pessimism grows. In 2006, Tehran planned its budget assuming an oil price of $60/barrel. High oil prices masked Ahmadinejad's incompetence. While Iran's budgetary process has grown more opaque, it appears that Ahmadinejad constructed his budget with the assumption of oil price stability. Now that oil has plummeted, the Islamic Republic is in trouble. On Oct. 7, Asr-e Iran asked, "How much did we save from the period when oil price was up to $130 per barrel? Did we build up a foreign exchange reserve? The authorities don't provide us with a clear and official answer about the foreign currency reserveÂ…and there is some fear that the entire reserve has gone to imports of junk." The paper's fear is justified. While Qatar, Saudi Arabia, the United Arab Emirates and Kuwait now boast Sovereign Wealth Funds worth hundreds of billions of dollars, on Sept. 15 an unreleased Central Bank report leaked by an Iranian parliamentarian estimated the Islamic Republic's own future fund to be only $7 billion. Iran's strategic challenge and nuclear ambitions will be the most immediate foreign policy challenge facing the new administration. The National Iranian American Council, Tehran's de facto lobby in Washington, urges a relaxation of sanctions. So too does the Council on Foreign Relations. Condoleezza Rice offers a defiant Tehran financial incentives. Such strategies are wrong. Throwing an economic lifeline to a terror-sponsoring regime dedicated to the acquisition of nuclear weapons capability would be nothing short of diplomatic malpractice on a Carter-esque scale. Not only has the Islamic Republic squandered billions on nuclear weapons, destabilizing Iraq and Afghanistan, and sponsoring terrorism, but it has also pitched itself to countries like Venezuela, Nicaragua, Bolivia, Sudan and Senegal as a pillar of an ideology that will defeat liberal Western democracy. Nothing would be a more powerful signal to those applauding Ahmadinejad's rhetoric than watching the Islamic Republic collapse under the weight of its own follies. |
| Posted by: tu3031 2008-10-20 16:47 |
| #3 Which all gets back to the very inconvenient truth that Euro stasis socialist economic policies drove their capital into American speculative markets to get a return on their investments. |
| Posted by: Procopius2k 2008-10-20 08:20 |
| #2 Source for Der Spiegel interview with Steinbruck |
| Posted by: Anguper Hupomosing9418 2008-10-20 03:13 |
| #1 There are other European opinions. This from Ambrose Evans-Pritchard 19 Oct: " I suspect that Bundesbank chief Axel Weber and German finance minister Peer Steinbruck were quite simply too arrogant to listen to anybody. Mr Steinbruck insisted that “German banks are far less vulnerable than US banks” just days before the collapse of [German lender]Hypo Real with €400bn (£311bn) of liabilities. Had he not read the IMF reports showing that German and European lenders have an even thinner Tier 1 capital base than American banks? " Then there was this interchange between Der Spiegel & Steinbruck 29 Sept: "SPIEGEL: And what about the fact that KfW [Kreditanstalt für Wiederaufbau, a bank owned by the German government] just happened to transfer €319 million ($463 million) to Lehman Brothers, the US investment bank that declared bankruptcy that very same day? This sort of thing doesn't exactly create confidence in state-owned banks. Steinbrück: That was an awful mistake, of course. A grotesque error. But it was a mistake made by bank executives, not the administrative board, which includes politicians among its members. SPIEGEL: It proves that normal risk management procedures failed completely -- directly under the nose of the finance minister. Steinbrück: No, it proves that an inexcusably wrong decision was made. Do you think I wasn't livid about this? The entire crisis we are talking about here is incomprehensible for the normal citizen. But such an idiotic transfer -- even my 89-year-old mother is outraged about it. All 80 million German citizens understand this… SPIEGEL: …and suddenly you had the tabloid Bild calling the KfW "Germany's stupidest bank." Steinbrück: Okay, okay. But it's also worth noting that KfW passed all tests and checks regarding its risk management procedures that were performed by the federal audit court and auditors last year. Of course, I know that the bottom line is that what happened was completely ridiculous." It's not just in the USA that politicians can always find someone else to blame. |
| Posted by: Anguper Hupomosing9418 2008-10-20 03:11 |