Michael Hudson on GFC , solving by debt jubilee

From the Renegade Economist.

 

 

Hat tip to Red Tory.

Michael Hudson is also a regular contributor to Counterpunch (link on side).

Right-Wing Tabloid says Communist not Communist enough – Need to learn to share

Item republished in the UK Daily Telegraph.

It seems that it is the communists fault. If only they would share more and saved so much money. Premier Wen Jiabao needs to be more caring.

From Edward Hadas at Breakingviews.com

Chinese premier Wen needs to think of the greater global good
Wen Jiabao, the Chinese Prime Minster, has told the Financial Times that “it is completely confusing right and wrong” to blame generous lenders for the problems of reckless borrowers.

He is talking about countries not consumers, and his logic puts China on the moral high ground. His stance is unhelpful.
The comments were a riposte to the charge that China should share some of the blame for the financial crisis, having used too much its vast trade surplus – 6pc of GDP in 2008 and the source of $2 trillion in foreign currency reserves – to buy US government debt.
Those accusing China of bad practice, a group which includes new US Treasury Secretary Tim Geithner, say those funds provided the fuel for the credit boom, now turned bust. China has lent foolishly, they say, and should be punished.
Wen has quite a different understanding of good and bad behaviour. In the interview, he compares profligate borrowers, mainly the US, with Zhu Ba Jie, a fallen deity who is part-human and part-pig. The character in the Chinese epic tale Journey to the West is famously gluttonous and refuses to take good advice.
From a purely Chinese perspective, it’s hard to argue with Wen. A consistently cheap renminbi helped create hundreds of millions of jobs, spread skills and virtually eliminate poverty. The government even let the currency rise by 20pc over three years, only stopping the steady revaluation when the crisis hit in 2008.
But maintaining this China-first attitude will make it harder to find a resolution to the financial mess. However the fault is apportioned, everyone is now involved.
China has much to contribute to a solution which will also be to its own benefit: a commitment to move steadily to eliminate the trade surplus, a promise not to dump dollars on the market and an agreement not to take desperate measures to stop the domestic growth rate from falling.
People and nations can be persuaded to sacrifice short-term self-interest for the greater good. Indeed, industrial prosperity and global trade depend on the widespread willingness to share pains and limit gains. Wen – and his counterparts around the world – should keep their eyes on the greater good.

It looks like no matter what China does it cannot win. Please look at Premier Wen’s Davos speech, he outlines what China is doing but he also said China could not rescue the World alone.

For better article please see China Hand and read – China to Obama:

“Nice T-Bill Auction Ya Got There…Hate to See Anything Happen to It”