Here is the Tuesday, May 20th, 2008 of interesting reads from around the world.
German President Calls Bankers “Monsters”
In an interview with the German magazine Stern, the German President Horst Köhler has called upon bankers to confess their guilt for the financial crisis. He is still missing “a clearly audible mea culpa”, Köhler said in the interview. “By now, it must have dawned on everyone who thinks responsibly in the industry that international financial markets have developed into a monster, which must be contained.” Stern only publishes in German. It’s a short interview so here is another short quote for my non-German speaking audience: The industry has “barely any relationship to the real economy remaining. Part of this are also bizarrely high compensations for individual financial managers.” The financial world has “disgraced itself mightily.” Thank God that I am no longer an investment banker otherwise I might feel slighted. The German President while Head of State has only ceremonial duties. Horst Köhler, however, is a man to whom we should listen. He is not exactly some kook in a German palace. As the former head of the International Monetary Fund, German President Horst Köhler is well qualified to comment on the global financial crisis. In an interview last week, he had said that the global financial system “came close to collapse.” Here’s more of this compelling read:
Köhler called for “stricter and more efficient regulation” in response to the market turbulence, which has caused serious fallout (more…) at several German banks. He was critical of the increasingly sophisticated investment vehicles that helped to spark the crisis. “The over-complexity of the financial products, and the possibility of carrying out large leveraged deals with a small amount of capital, have allowed the monster to grow,” Köhler said.
The president had a stark assessment of the severity of the crisis. “I want to hope that the worst is past,” Köhler said. “Nevertheless, we came close to a collapse of the global financial markets.”
The criticism is given added weight by the fact that Köhler is the former head of the International Monetary Fund (IMF). During his illustrious career he has also been a junior minister in the German Finance Ministry, chairman of the association of savings banks in Germany and president of the European Bank for Reconstruction and Development.
German Investor Confidence Unexpectedly Fell in May
On the heels of the above, Bloomberg Financial News reports that investor confidence in Germany unexpectedly fell for a second month in May on concern faster inflation, the stronger euro and fallout from the U.S. housing slump will hurt economic growth. At the moment, the German economy has been enjoying robust growth.
Taiwan Has a New President
Taiwan’s new president took office on Tuesday with a historic offer to reopen dialogue with China, which claims the island as its territory, but pledged to maintain Taipei’s existing self-rule and separate international profile. President Ma Ying-jeou urged China in his inaugural speech to move toward democracy and allow Taiwan a larger international role, testing his relationship with a government that claims sovereignty over the island. More on Taiwan’s new leader from the UK Guardian.
The Zimbabwean Crisis
It is time for the international community to deal with Robert Mugagbe in no uncertain terms. Zimbabwe is drifting periously towards famine and genocide and yet African leaders offer nothing but words of comfort to Mugagbe. It is incumbent upon South African President Mbeki to act and to act now. Now just for the sake of Zimbabwe but also for the sake of his own country. There are three million refugees from Zimbabwe in South Africa growing by at a rate of 1,000 a day. There are another million Zimbabweans scattered across Botwsana, Mozambique and Zambia. Mugagbe must go. Yes he is a hero of independence, the last lion. But at this point his pride is on verge of a calmanity that is affecting the whole of the region. If Mugagbe remains in power much longer, the implications for the region could be severe indeed. The riots in Johannesburg aimed at refugees from Zimbabwe are only the tip of the iceberg. More on the riots and the crisis in Zimbabwe from the UK Guardian-South Africa and the UK Guardian-Zimbabwe.