demandside

And a progressive framework for fixing it from PERI, Political Economy Research Institute

Link to Progressive Program for Economic Recovery and Financial Reconstruction:

http://www.peri.umass.edu/fileadmin/pdf/other_publication_types/PERI_SCEPA_full_statement.pdf

Stiglitz

Deutche Welle

The Institute of International Finance estimates that the private flow of capital to developing countries will shrink by about two-thirds. Are we facing a situation where we could see a total collapse of many developing countries?

I think many governments of emerging nations actually have a much better central banking system than the United States. They realized the risks of excessive leverage, excessive dependance on real estate lending and so they took much more prudent actions. Many developing countries also built up large reserves and are in a better position to meet this crisis than they were a decade ago.

But some will face very difficult times, potentially defaults. Some of these countries are suffering from having paid too much attention to what has gone on in the United States.

Should steps be taken to help these developing countries?

Very definitely. I think it is absolutely imperative not just for the interest of these countries, not just from a humanitarian perspective, but from the perspective of global stability. It is not possible to have a strong global economy when there are large pockets of economic turmoil.

The World Bank has called for advanced industrial countries as they are bailing out their own industries and provide subsidies, to set aside some amounts for the developing countries, who can’t compete on this uneven playing field.

From The Times: Driven down by debt, Dubai expats give new meaning to long-stay car park (hat tip James)[F]aced with crippling debts as a result of their high living and Dubai’s fading fortunes, many expatriates are abandoning their cars at the airport and fleeing home rather than risk jail for defaulting on loans.

Police have found more than 3,000 cars outside Dubai’s international airport in recent months. Most of the cars – four-wheel drives, saloons and “a few” Mercedes – had keys left in the ignition. … Those who flee the emirate are known as skips. … “There is no way of tracking actual numbers, but the anecdotal evidence is overwhelming. Dubai is emptying out,” said a Western diplomat.

George Soros: My Outlook for 2009

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