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Sunday, April 19, 2009
Some Important point on International Economics
These should be good times for the "alter-globalisation" movement. The unprecedented combination of crises in the global economy, environment, and governance makes its argument for a just and equal world - "another world" - seem more relevant than ever. Geoffrey Pleyers is a researcher of the Belgian Foundation for Scientific Research at the University of Louvain (UCL) and a visiting fellow at the Centre for the Study of Global Governance, London School of Economics
An extended version of this text will be published in Mary Kaldor, Helmut Anheier, Marlies Glasius, & Jan Aart Scholte, eds., Global Civil Society Yearbook (Sage, 2009)
The author would like to thank Fiona Holland and David Hayes for their efficient and kind help in editing this text
Yet the 100,000 activists expected to assemble at the eighth World Social Forum (WSF) in Belém, Brazil, from 27 January - 1 February 2009 are at a crossroads. The ideas they have been proposing for much of the last decade have in many ways been vindicated by the global financial breakdowns, food riots and elite failures of 2007-09; but even as it celebrates the demise of forces it has unrelentingly challenged the movement itself is divided over its political and organisational direction.
The change within
After its inaugural meeting in January 2001 - a year after the demonstrations in Seattle against the World Trade Organisation (WTO) summit which dynamised the movement - the WSF experienced impressive growth, reflected in increasing participation (from 15,000 to over 170,000 from 2001-05). The forums have become huge meeting-places where people of many nationalities share experiences and discuss local and global issues.
The "alter-globalisation" movement (also called the "anti-corporate-globalisation movement" or the "global social justice movement") has undergone two profound changes since the WSF's last visit to Brazil, in January 2005. That event, in the city of Porto Alegre, remains the most successful forum of all - in terms of the quality and openness of the discussions, and of the size of the event (200,000 people attended the opening demonstration, and 2,500 workshops were run by 5,700 civil-society organisations).
The first great change is in the social geography of the movement, with a notable decline in some of its historical bastions (including most western European countries) but success in important regions such as Africa (where, for example, over sixty national and regional social forums have been organised since 2005) and north America.
The second change is the reorganisation of the movement around new guidelines. The internal quarrels about the forums' objectives and the movement's political orientations are a symptom of this reconfiguration.
The paradox of Geneva
The World Trade Organisation meeting in Geneva on 22-29 July 2008 offered a clear illustration of the current state of the social movement. The purpose of the meeting of thirty delegations from the WTO's most influential member-states was to break the deadlock over the Doha trade-liberalisation process; the failure of negotiations in Seattle (1999), Cancún (2003) and Hong Kong (2005) meant that the credibility of the organisation was at stake.
Europe's "alter-globalisation" organisations had been able to mount large-scale demonstrations at the international summits in Genoa (2001), Gleneagles (2005) and Rostock (2007). Yet despite the importance of the WTO conference - and the fact that it took place in the midst of an evolving global economic crisis - they were unable to mobilise their activists at Geneva.
The evidence of retreat is unmistakable. Major activists' networks - such as the Movimiento de Resistencia Global in Barcelona, the Attac movement and most local social forums - have disappeared or declined; continental forums such as those in Malmö (17-21 September 2008, with 12,000 in attendance) and Guatemala City (7-12 October 2008, with 7,500) attracted far fewer people than previously. Moreover, the movement is much less visible in the mass media than in the 1998-2005 period.
At the same time, the influence of the movement has been felt in other ways. Many of the institutions charged with supervising international trade liberalisation, which encouraged southern countries to adopt neo-liberal policies, now face discredit. Whereas in the 1990s, opening a country to international trade was seen as the only path to greater economic growth, by the late 2000s it had become routine for establishment voices and even state leaders to express support for a new global governance system to contain the destructive tendencies of "casino-", "cowboy-", "hyper-" or "super-" capitalism.
The change of rhetoric reflects a wider ideological shift: the end of three decades marked by the hegemony of neo-liberal ideas. The "alter-globalisation" movement has played an active role in this process, for example by enlarging the space of discussion of trade and economic policies far beyond the realm of international "experts", and by challenging the neo-liberal orthodoxies of the Washington consensus. Thus even in their relative retreat from the mass mobilisations of the past, the social movements have won a kind of ideological victory.
There is a paradox here: the "alter-globalisation" movement and the organisations and events which compose it seem to have lost much of their capacity at the very time when even prominent policy-makers are coming to believe that the global financial and governance system has in crucial respects failed.
The failure of success
In these circumstances, what is the point of the World Social Forum? It could be argued that it more needed now than ever: that is, to contribute actively to the building of a new and fair global order that can address deep problems of poverty, inequality, food insecurity and ecological crisis. The problem here is that the movement is more united in what it has been against than in what it should now be for. In particular, "alter-globalisation" activists divide into three distinct currents about the way forward.
The local approach
The first current of the alter-globalisation movement) considers that instead of getting involved in a global movement and international forums, the path to social change lies through giving life to horizontal, participatory, convivial and sustainable values in daily practices, personal life and local spaces.
Many urban activists cite the way that, for example, the Zapatistas in Mexico and other Latin American indigenous movements now focus on developing communities' local autonomy via participatory self-government, autonomous education systems and improving the quality of life. They appreciate too the convivial aspect of local initiatives and their promise of small but real alternatives to corporate globalisation and mass consumption.
This approach is exemplified also in initiatives such as the "collective purchase groups" that have multiplied in western Europe and north America. These typically gather small groups of people who buy from local (and often organic) food-producers in the effort to make quality food affordable, create alternatives to the "anonymous supermarket" and promote local social relations. In many Italian social centres, critical-consumption movements have taken the space previously occupied by the alter-globalisation mobilisations. The "convivial de-growth" and "convivial urban" movements belong to a similar, sustainable and environmentally friendly, tendency.
The advocacy approach
The second current of the movement believes that the way forward lies through efficient single-issue networks able to develop coherent arguments in areas such as food sovereignty and developing-world debt; in turn this work can become a route to raising broader questions.
The protection of water-supplies from privatisation, for example, can be used to explore the issues of global public goods, the role of global corporations and "the long-term efficiency of the public sector". After several years of intense exchanges among citizens and experts focusing on the same issue, the quality of arguments has considerably increased to the extent that this form of activity has become the core of the social-forums' dynamic.
There are several examples of the effectiveness of such networks - often without media attention. The European Public Water Network's influence on the city of Paris's decision in November 2008 to restore municipal control over water distribution is just one.
The state approach
The third current of the movement holds that progressive public policies implemented by state leaders and institutions are the key to achieving broad social change.
In the past, "alter-globalisation" activists have struggled to strengthen state agency in social, environmental and economic fields; but now that state intervention has regained legitimacy in the wake of systemic crisis, this more "political" component of the movement believes that the future lies in solidarity with the projects of radical leaders such as Venezuela's Hugo Chávez and Bolivia's Evo Morales.
The national policies of these leaders (social programmes favouring the poor, or taking control of key economic sectors) and their regional alliances and new institutions (the Alternativa Bolivariana por Nuestra América [Alba] coalition, the Banco del Sur) represent a strong pole of attraction for many activists. But if Latin America is the main focus for such identification, similar processes have been at work in western countries too; for example, much of the impetus of the first United States Social Forum in 2007 was redirected towards Barack Obama's presidential campaign.
The shared approach
The participants in the Belém meeting can justly welcome the failure of many aspects of an economic model they long opposed. But as they move beyond critique towards a new role in a transformed global arena, can they find some common ground among these three currents?
An escape from the crises of economy, sustainability and governance is a huge and urgent task that may last a generation. From this perspective, the three trends of the "alter-globalisation" movement could be seen as politically complementary rather than competing strategies. An imaginative understanding of this kind could be the basis of a shared approach that gives the World Social Forum a fresh lease of life.
News : International Last Updated: Feb 2, 2009 - 4:50:35 AM
Davos World Economic Forum 2009: Trichet warns financial markets to stop putting pressure on banks to hold more capital; Risk of making global recession worseBy Finfacts TeamJan 30, 2009 - 6:13:34 AM Email this article Printer friendly page
DAVOS-KLOSTERS/SWITZERLAND, 29JAN09 - Josef Ackermann, Chairman of the Management Board and the Group Executive Committee, Deutsche Bank, Germany; Member of the Foundation Board of the World Economic Forum (FLTR), JosÈ Manuel Barroso, President, European Commission, Brussels, Fredrik Reinfeldt, Prime Minister of Sweden, Jean-Claude Trichet, President, European Central Bank, Frankfurt, Giulio Tremonti, Minister of Economy and Finance of Italy during the session 'The Economic Governance of Europe' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 29, 2009. Copyright by World Economic Forum swiss-image.ch/Photo by Sebastian Derungs
Davos World Economic Forum 2009:Jean-Claude Trichet warned financial markets on Thursday to stop putting pressure on banks to hold more capital, insisting that such proposals were exacerbating the global recession, in particular the risk of falling international capital flows to emerging markets.
The President of the European Central Bank said the view that banks should hoard funds provided non-financial companies with incentives to postpone investment. His comments, made in Davos, came as top bankers and policymakers warned Thursday that the bank bail-outs in Europe and the US could trigger a new era of financial protectionism that could deepen the global economic downturn.Asked by Josef Ackermann, CEO of Germany's biggest bank Deutsche Bank, whether the markets were right to press banks to hold more capital, the ECB president said three times that“what the markets are suggesting is not appropriate”.
DAVOS-KLOSTERS/SWITZERLAND, 29JAN09 - Josef Ackermann, Chairman of the Management Board and the Group Executive Committee, Deutsche Bank, Germany; Member of the Foundation Board of the World Economic Forum gives an interview at the congress centre during the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 29, 2009. Copyright by World Economic Forum swiss-image.ch/Photo by Christof Sonderegger
It was “very important as far as the authorities are concerned”, he added, that the route forward was“not in line with the ideas that [banks] should now augment capital ratios”.Trichet’s support for bank lending and business investment came at a time of political pressure on banks to reduce their business activities overseas while maintaining lending to domestic consumers and companies, could worsen the slump by slashing in international capital flows. “One lesson we must learn is that we can not turn the clock back (in finance),” said Stephen Green, Chairman of HSBC, the global bank which is a big player in Asia.“If we do, the casualties will be emerging markets which depend on international capital movements.”
Valerie Jarrett, a confidant of President Obama, reinforced the president’s call on leaders from all nations to “seize gladly” the duties of collaborating and boldly embrace -“a new era of global financial responsibility” to each other, to our families, to our communities, to our country and to the world.Jarrett, Assistant to the President for Intergovernmental Relations and Public Liaison, asserted in Davos, that the spirit of her “hometown” of Chicago shaped the outlook of President Obama and the First Lady through four underlying principles – timeless values, diversity, opportunity and hope – which inform all decisions that will be coming from the White House.She said the US President was determined that while“our challenges may be new. The instruments with which we meet them may be honesty and hard-new. But those values upon which our success depends work, courage and fair play, tolerance and curiosity, loyalty and these things are old. These things are true.”-patriotism “President Obama appreciates and respects those from different backgrounds and cultures,” she said, because his own family draws relatives from four continents. He “instinctively seeks common ground and builds on it.”President Obama has “inspired people to believe that we could keep the US the land of opportunity,” she said, and that “despite the burden of our time,” he believed “this generation, like previous generations before it, can and will meet the challenge.”Finally, Jarrett argued that his “improbable journey to the presidency,” was driven by “not blind optimism but rather a hard-earned hope borne out of realism and a deep understanding of how we have overcome so much in the past.”Those four principles will be marshalled to “rebuild trust” in addressing a host of serious challenges, from the global economic crisis to nuclear proliferation.Arguing that shared security depends on cooperation, Jarrett emphasized the president’s “commitment to an active diplomacy” with all nations, his intention to roll back the scourge of diseases and, in particular, his plans to check global climate change through raising efficiency standards and engaging with other nations in negotiations.“Listening to you even, and especially, when we disagree.”In these arenas, by engaging stakeholders and unleashing creativity, Jarrett concluded,“America stands ready to lead again.”
DAVOS-KLOSTERS/SWITZERLAND, 29JAN09 - Bill Clinton, Founder, William Jefferson Clinton Foundation; President of the United States (1993-2001) shakes hands after the session 'A Conversation with' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 29, 2009. Copyright by World Economic Forum swiss-image.ch/Photo by Monika Flueckiger
Former US President Bill Clinton called for urgent US leadership to stem the current financial crisis and restore the global economy. Clinton highlighted the opportunities afforded by a fundamental review of the global financial system, predicting an explosion of jobs from government stimulus-fuelled investments in alternative energy technologies. However, “the main thing is to get through this as fast as we can,” said Clinton.Clinton also stressed the interdependence in the world economy, reminding governments that when they finance the US recovery by buying US Treasuries they are investing in their own export economies. “This financial crisis proves, as nothing else should – or could, the fundamental fact that global interdependence is more important than anything else in the world today. We cannot escape each other. Divorce is not an option.” And the former president applauded what he predicted would be a coming reassessment of global trading and development policies, in particular a return to supporting agricultural programmes in the developing world.“People are frightened out there,” said Clinton. “There's a lot of fear out there in the economy. So, I don't think that now is the best time in the world to get new trade agreements. But I also believe that intelligent people all over the world will see that it is not necessarily the time to pick new fights, either. We have to get out of this together.”
An extended version of this text will be published in Mary Kaldor, Helmut Anheier, Marlies Glasius, & Jan Aart Scholte, eds., Global Civil Society Yearbook (Sage, 2009)
The author would like to thank Fiona Holland and David Hayes for their efficient and kind help in editing this text
Yet the 100,000 activists expected to assemble at the eighth World Social Forum (WSF) in Belém, Brazil, from 27 January - 1 February 2009 are at a crossroads. The ideas they have been proposing for much of the last decade have in many ways been vindicated by the global financial breakdowns, food riots and elite failures of 2007-09; but even as it celebrates the demise of forces it has unrelentingly challenged the movement itself is divided over its political and organisational direction.
The change within
After its inaugural meeting in January 2001 - a year after the demonstrations in Seattle against the World Trade Organisation (WTO) summit which dynamised the movement - the WSF experienced impressive growth, reflected in increasing participation (from 15,000 to over 170,000 from 2001-05). The forums have become huge meeting-places where people of many nationalities share experiences and discuss local and global issues.
The "alter-globalisation" movement (also called the "anti-corporate-globalisation movement" or the "global social justice movement") has undergone two profound changes since the WSF's last visit to Brazil, in January 2005. That event, in the city of Porto Alegre, remains the most successful forum of all - in terms of the quality and openness of the discussions, and of the size of the event (200,000 people attended the opening demonstration, and 2,500 workshops were run by 5,700 civil-society organisations).
The first great change is in the social geography of the movement, with a notable decline in some of its historical bastions (including most western European countries) but success in important regions such as Africa (where, for example, over sixty national and regional social forums have been organised since 2005) and north America.
The second change is the reorganisation of the movement around new guidelines. The internal quarrels about the forums' objectives and the movement's political orientations are a symptom of this reconfiguration.
The paradox of Geneva
The World Trade Organisation meeting in Geneva on 22-29 July 2008 offered a clear illustration of the current state of the social movement. The purpose of the meeting of thirty delegations from the WTO's most influential member-states was to break the deadlock over the Doha trade-liberalisation process; the failure of negotiations in Seattle (1999), Cancún (2003) and Hong Kong (2005) meant that the credibility of the organisation was at stake.
Europe's "alter-globalisation" organisations had been able to mount large-scale demonstrations at the international summits in Genoa (2001), Gleneagles (2005) and Rostock (2007). Yet despite the importance of the WTO conference - and the fact that it took place in the midst of an evolving global economic crisis - they were unable to mobilise their activists at Geneva.
The evidence of retreat is unmistakable. Major activists' networks - such as the Movimiento de Resistencia Global in Barcelona, the Attac movement and most local social forums - have disappeared or declined; continental forums such as those in Malmö (17-21 September 2008, with 12,000 in attendance) and Guatemala City (7-12 October 2008, with 7,500) attracted far fewer people than previously. Moreover, the movement is much less visible in the mass media than in the 1998-2005 period.
At the same time, the influence of the movement has been felt in other ways. Many of the institutions charged with supervising international trade liberalisation, which encouraged southern countries to adopt neo-liberal policies, now face discredit. Whereas in the 1990s, opening a country to international trade was seen as the only path to greater economic growth, by the late 2000s it had become routine for establishment voices and even state leaders to express support for a new global governance system to contain the destructive tendencies of "casino-", "cowboy-", "hyper-" or "super-" capitalism.
The change of rhetoric reflects a wider ideological shift: the end of three decades marked by the hegemony of neo-liberal ideas. The "alter-globalisation" movement has played an active role in this process, for example by enlarging the space of discussion of trade and economic policies far beyond the realm of international "experts", and by challenging the neo-liberal orthodoxies of the Washington consensus. Thus even in their relative retreat from the mass mobilisations of the past, the social movements have won a kind of ideological victory.
There is a paradox here: the "alter-globalisation" movement and the organisations and events which compose it seem to have lost much of their capacity at the very time when even prominent policy-makers are coming to believe that the global financial and governance system has in crucial respects failed.
The failure of success
In these circumstances, what is the point of the World Social Forum? It could be argued that it more needed now than ever: that is, to contribute actively to the building of a new and fair global order that can address deep problems of poverty, inequality, food insecurity and ecological crisis. The problem here is that the movement is more united in what it has been against than in what it should now be for. In particular, "alter-globalisation" activists divide into three distinct currents about the way forward.
The local approach
The first current of the alter-globalisation movement) considers that instead of getting involved in a global movement and international forums, the path to social change lies through giving life to horizontal, participatory, convivial and sustainable values in daily practices, personal life and local spaces.
Many urban activists cite the way that, for example, the Zapatistas in Mexico and other Latin American indigenous movements now focus on developing communities' local autonomy via participatory self-government, autonomous education systems and improving the quality of life. They appreciate too the convivial aspect of local initiatives and their promise of small but real alternatives to corporate globalisation and mass consumption.
This approach is exemplified also in initiatives such as the "collective purchase groups" that have multiplied in western Europe and north America. These typically gather small groups of people who buy from local (and often organic) food-producers in the effort to make quality food affordable, create alternatives to the "anonymous supermarket" and promote local social relations. In many Italian social centres, critical-consumption movements have taken the space previously occupied by the alter-globalisation mobilisations. The "convivial de-growth" and "convivial urban" movements belong to a similar, sustainable and environmentally friendly, tendency.
The advocacy approach
The second current of the movement believes that the way forward lies through efficient single-issue networks able to develop coherent arguments in areas such as food sovereignty and developing-world debt; in turn this work can become a route to raising broader questions.
The protection of water-supplies from privatisation, for example, can be used to explore the issues of global public goods, the role of global corporations and "the long-term efficiency of the public sector". After several years of intense exchanges among citizens and experts focusing on the same issue, the quality of arguments has considerably increased to the extent that this form of activity has become the core of the social-forums' dynamic.
There are several examples of the effectiveness of such networks - often without media attention. The European Public Water Network's influence on the city of Paris's decision in November 2008 to restore municipal control over water distribution is just one.
The state approach
The third current of the movement holds that progressive public policies implemented by state leaders and institutions are the key to achieving broad social change.
In the past, "alter-globalisation" activists have struggled to strengthen state agency in social, environmental and economic fields; but now that state intervention has regained legitimacy in the wake of systemic crisis, this more "political" component of the movement believes that the future lies in solidarity with the projects of radical leaders such as Venezuela's Hugo Chávez and Bolivia's Evo Morales.
The national policies of these leaders (social programmes favouring the poor, or taking control of key economic sectors) and their regional alliances and new institutions (the Alternativa Bolivariana por Nuestra América [Alba] coalition, the Banco del Sur) represent a strong pole of attraction for many activists. But if Latin America is the main focus for such identification, similar processes have been at work in western countries too; for example, much of the impetus of the first United States Social Forum in 2007 was redirected towards Barack Obama's presidential campaign.
The shared approach
The participants in the Belém meeting can justly welcome the failure of many aspects of an economic model they long opposed. But as they move beyond critique towards a new role in a transformed global arena, can they find some common ground among these three currents?
An escape from the crises of economy, sustainability and governance is a huge and urgent task that may last a generation. From this perspective, the three trends of the "alter-globalisation" movement could be seen as politically complementary rather than competing strategies. An imaginative understanding of this kind could be the basis of a shared approach that gives the World Social Forum a fresh lease of life.
News : International Last Updated: Feb 2, 2009 - 4:50:35 AM
Davos World Economic Forum 2009: Trichet warns financial markets to stop putting pressure on banks to hold more capital; Risk of making global recession worseBy Finfacts TeamJan 30, 2009 - 6:13:34 AM Email this article Printer friendly page
DAVOS-KLOSTERS/SWITZERLAND, 29JAN09 - Josef Ackermann, Chairman of the Management Board and the Group Executive Committee, Deutsche Bank, Germany; Member of the Foundation Board of the World Economic Forum (FLTR), JosÈ Manuel Barroso, President, European Commission, Brussels, Fredrik Reinfeldt, Prime Minister of Sweden, Jean-Claude Trichet, President, European Central Bank, Frankfurt, Giulio Tremonti, Minister of Economy and Finance of Italy during the session 'The Economic Governance of Europe' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 29, 2009. Copyright by World Economic Forum swiss-image.ch/Photo by Sebastian Derungs
Davos World Economic Forum 2009:Jean-Claude Trichet warned financial markets on Thursday to stop putting pressure on banks to hold more capital, insisting that such proposals were exacerbating the global recession, in particular the risk of falling international capital flows to emerging markets.
The President of the European Central Bank said the view that banks should hoard funds provided non-financial companies with incentives to postpone investment. His comments, made in Davos, came as top bankers and policymakers warned Thursday that the bank bail-outs in Europe and the US could trigger a new era of financial protectionism that could deepen the global economic downturn.Asked by Josef Ackermann, CEO of Germany's biggest bank Deutsche Bank, whether the markets were right to press banks to hold more capital, the ECB president said three times that“what the markets are suggesting is not appropriate”.
DAVOS-KLOSTERS/SWITZERLAND, 29JAN09 - Josef Ackermann, Chairman of the Management Board and the Group Executive Committee, Deutsche Bank, Germany; Member of the Foundation Board of the World Economic Forum gives an interview at the congress centre during the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 29, 2009. Copyright by World Economic Forum swiss-image.ch/Photo by Christof Sonderegger
It was “very important as far as the authorities are concerned”, he added, that the route forward was“not in line with the ideas that [banks] should now augment capital ratios”.Trichet’s support for bank lending and business investment came at a time of political pressure on banks to reduce their business activities overseas while maintaining lending to domestic consumers and companies, could worsen the slump by slashing in international capital flows. “One lesson we must learn is that we can not turn the clock back (in finance),” said Stephen Green, Chairman of HSBC, the global bank which is a big player in Asia.“If we do, the casualties will be emerging markets which depend on international capital movements.”
Valerie Jarrett, a confidant of President Obama, reinforced the president’s call on leaders from all nations to “seize gladly” the duties of collaborating and boldly embrace -“a new era of global financial responsibility” to each other, to our families, to our communities, to our country and to the world.Jarrett, Assistant to the President for Intergovernmental Relations and Public Liaison, asserted in Davos, that the spirit of her “hometown” of Chicago shaped the outlook of President Obama and the First Lady through four underlying principles – timeless values, diversity, opportunity and hope – which inform all decisions that will be coming from the White House.She said the US President was determined that while“our challenges may be new. The instruments with which we meet them may be honesty and hard-new. But those values upon which our success depends work, courage and fair play, tolerance and curiosity, loyalty and these things are old. These things are true.”-patriotism “President Obama appreciates and respects those from different backgrounds and cultures,” she said, because his own family draws relatives from four continents. He “instinctively seeks common ground and builds on it.”President Obama has “inspired people to believe that we could keep the US the land of opportunity,” she said, and that “despite the burden of our time,” he believed “this generation, like previous generations before it, can and will meet the challenge.”Finally, Jarrett argued that his “improbable journey to the presidency,” was driven by “not blind optimism but rather a hard-earned hope borne out of realism and a deep understanding of how we have overcome so much in the past.”Those four principles will be marshalled to “rebuild trust” in addressing a host of serious challenges, from the global economic crisis to nuclear proliferation.Arguing that shared security depends on cooperation, Jarrett emphasized the president’s “commitment to an active diplomacy” with all nations, his intention to roll back the scourge of diseases and, in particular, his plans to check global climate change through raising efficiency standards and engaging with other nations in negotiations.“Listening to you even, and especially, when we disagree.”In these arenas, by engaging stakeholders and unleashing creativity, Jarrett concluded,“America stands ready to lead again.”
DAVOS-KLOSTERS/SWITZERLAND, 29JAN09 - Bill Clinton, Founder, William Jefferson Clinton Foundation; President of the United States (1993-2001) shakes hands after the session 'A Conversation with' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 29, 2009. Copyright by World Economic Forum swiss-image.ch/Photo by Monika Flueckiger
Former US President Bill Clinton called for urgent US leadership to stem the current financial crisis and restore the global economy. Clinton highlighted the opportunities afforded by a fundamental review of the global financial system, predicting an explosion of jobs from government stimulus-fuelled investments in alternative energy technologies. However, “the main thing is to get through this as fast as we can,” said Clinton.Clinton also stressed the interdependence in the world economy, reminding governments that when they finance the US recovery by buying US Treasuries they are investing in their own export economies. “This financial crisis proves, as nothing else should – or could, the fundamental fact that global interdependence is more important than anything else in the world today. We cannot escape each other. Divorce is not an option.” And the former president applauded what he predicted would be a coming reassessment of global trading and development policies, in particular a return to supporting agricultural programmes in the developing world.“People are frightened out there,” said Clinton. “There's a lot of fear out there in the economy. So, I don't think that now is the best time in the world to get new trade agreements. But I also believe that intelligent people all over the world will see that it is not necessarily the time to pick new fights, either. We have to get out of this together.”
Sunday, March 30, 2008
INSURANCE
Principles of insuranceCommercially insurable risks typically share seven common characteristics.[1]A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example,
covered about 175 million automobiles in the United States in 2004.[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. iki/Lloyd%27s_of_London">Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory.
Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards (See FAS 113 for example), the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance.Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 /wiki/Percentage">percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.[edit] IndemnificationThe technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1) an "indemnity" policy and 2) a "pay on behalf" or "on behalf of"[3] policy. The difference is significant on paper, but rarely material in practice.An "indemnity" policy will not pay claims until the insured has paid out of pocket to some third party; i.e. a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitors fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000)[4].Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket anything. Most modern liability insurance is written on the basis of "pay on behalf" language
/wiki/Insurance#_note-4">[5].An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss events covered in the policy.When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.[edit] When is a policy really insurance?
covered about 175 million automobiles in the United States in 2004.[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. iki/Lloyd%27s_of_London">Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory.
Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards (See FAS 113 for example), the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance.Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 /wiki/Percentage">percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.[edit] IndemnificationThe technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1) an "indemnity" policy and 2) a "pay on behalf" or "on behalf of"[3] policy. The difference is significant on paper, but rarely material in practice.An "indemnity" policy will not pay claims until the insured has paid out of pocket to some third party; i.e. a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitors fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000)[4].Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket anything. Most modern liability insurance is written on the basis of "pay on behalf" language
/wiki/Insurance#_note-4">[5].An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss events covered in the policy.When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.[edit] When is a policy really insurance?
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