[The Independent, U.K.]

 

 

Yomiuri Shimbun, Japan

U.S., Canadian Self-Interest Hinder G-8 Action on Speculation

 

"The United States is especially keen on protecting the investment options of speculative funds, because of the many U.S. organizations, including pension trusts, invest in such vehicles. … But if this uncontrollable flow of money continues, it will further destabilize the global economy."

 

By Senior Writer Junichi Abe

 

July 10, 2008

 

Japan - Yomiuri Shimbun - Original Article (English)

RUSUTSUMURA, Hokkaido: The Group of Eight powers again failed to confront problems stemming from speculative money flows, despite obvious and common recognition that the global economy will never regain stable growth if such practices are left unregulated.

 

Soaring prices for crude oil recently topped $140 per barrel, while surging food prices have triggered rioting in many parts of the world. Among the issues on the G-8 agenda in Toyakocho, Hokkaido, rising oil and food prices which are associated with global inflation likely garnered more attention than any others, since they so directly affect peoples' livelihoods.

 

In a statement issued on Tuesday, G-8 leaders expressed "strong concern" about the rise in oil and food prices and vowed to take coordinated measures to tackle the problem, including expanding oil-production.

 

But when it came to funds that engage in speculation, the declaration of G-8 leaders parroted statements made by G-8 finance ministers who met last month in Osaka, which asked the International Monetary Fund and International Energy Agency to report on these funds and offer an analysis of their impact on the global economy.

 

The oil industry believes that crude oil prices should be between $70 and $80 per barrel based on the costs of production and management, and says that speculative funds are responsible for pushing prices far beyond that range. Meanwhile, the volume of trade in wheat at the Chicago Board of Trade has risen to 2.5 times above what is should given the actual commercial demand.

 

Clearly, the biggest factor behind skyrocketing prices are these the speculative funds, which were deprived of investment options after the U.S. sub-prime mortgage loan fiasco occurred.

 

Nevertheless, the matter was discussed to some extent at the G-8 summit.

During outreach sessions with other nations on Monday, the first day of the three-day summit, leaders from seven African states called for the regulation of the flow of speculative money.  

Posted by WORLDMEETS.US

 

But during the main session, however, G-8 leaders failed to discuss the issue in depth, although Italy was reportedly in favor of similar restrictions. And behind this lack of in-depth discussion - triggered by domestic self-interest - was the cautious stance of the United States and Britain.

 

The United States is especially keen on protecting the investment options of speculative funds, because of the many U.S. organizations, including pension trusts, invest in such vehicles.

 

Even surgically-targeted U.S. reforms in this sector might adversely affect the pension system. Additionally, a stagnating U.S. economy could shake the underpinnings of the global economy. That is why most G-8 countries are cautious about the introduction of these regulations.

 

But speculative money continues to flow into financial products - and the oil and food sectors. If this uncontrollable flow of money continues, it will further destabilize the global economy.

 

The time has come for G-8 nations to hold serious discussions about the ways and means of controlling speculative funds to ensure that there is a soft landing to this crisis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Posted by WORLDMEETS.US July 9, 9:59pm]