Flaws in the financial system: socializing risk, privatizing profits.

• Author: Dutta, Aakangshita

On the 30 October 2008, six eminent economists and sociologists at an Interactive Panel on the Global Financial Crisis, convened at UN Headquarters by the President of the sixty-third General Assembly session, Miguel d' Escoto Brockmann, spoke of the unfolding financial crisis and its macroeconomic and social impacts. The panelists included Joseph Stiglitz, 2001 Nobel Laureate in Economic Sciences and former Chief Economist of the World Bank; Francois Houtart, Chief Editor of the International Journal of Sociology of Religion, Social Compass; Prabhat Patnaik, Professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University; Sakiko Fukuda-Parr, Professor of International Affairs at the New School University; Calestous Juma, Professor of the Practice of International Development at Harvard Kennedy School of Government; and Pedro Paez Perez, Minister for Economic Policy Corrdination of Ecuador and President of the Economic Policy Coorditation of Ecuador and President of the Ecauadorian Presidential Commission for the New Regional Financial Architecture-Banco del Sur.

In his opening address, Mr Brockmann said that what was once benignly described as "irational exuberance" had now been exposed for what it was: "unbridled greed and pervasive corruption, enabled by Governments that lost sight of their responsibility to protect their citizens". He expected the panel of experts to identify steps for adoption by Member States in order to secure a more stable and sustainable global economic order.

Spearheading the discussion, Mr Stiglitz said that any response to the crisis should be consistent with social justice and solidrity. He added that solutions must go beyond national borders to be inclusive of both developed and developing nations, suggesting massive reforms for the economic policies of developed countries. He pointed out that regulations would have to address issues of consumer protection, as well as access to financial markets by all, noting that Central Banks would have to change their mandates, and countries would have to develop regulatory organizations that are immune to vested interests. Mr Stiglitz states he had less confidence that the International Monetary Fund (IMF) was the appropriate place to respond to the crisis, although, he added, the world may have no choice in the long run but to rely on it. IMF had not anticipated or prevented the problem, and so far it had not proposed adequate regulatory reforms...