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At UN, Stiglitz Hits Subprime, Says 1% of Bailout Straight to Poor Countries

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, March 27 -- In the run-up to the G20 meeting in London, economist Joseph Stiglitz spoke at the UN against irrational incentives in the financial services field -- read, the AIG and Citigroup bonus -- and in favor of the idea of a Financial Products Safety Commission, like the agencies conducting pre-release reviews of medicines and even electronics such as toasters.

 Stiglitz noted that banks rush to exploit lower income and minority Americans with subprime loans has now damaged economies all over the world. And, we note, rather than accountability, those who engaged in predatory lending and securitizing have received bailouts. Whether any of this will be meaningfully addressed by the G20 is not known.

  The UN's main pitch at the G20 is, with some vagueness and confusion, a request for $1 trillion. Secretary-General Ban Ki-moon made the request in a March 20 letter to G20 participants, then found himself unable to repeat the number when standing on camera next to UK Prime Minister Gordon Brown.

   The next day, however, when Inner City Press asked Ban's spokesperson Michele Montas is despite the seeming backtrack Ban stands behind the $1 million figure, she said yes. She acknowledged that most of the $1 trillion is money already promised, but noted that Ban is asking for $25 billion on top of pre-existing ODA commitments of $100 billion, and that the rest of the trillion includes, for example, lending by the International Monetary Fund.

Stiglitz at UN on March 26, trillion dollar call not shown

  The Secretary of what's become known as the Stiglitz Commission, appointed by President of the UN General Assembly Miguel d'Escoto Brockman, answered Inner City Press' question to Stiglitz about Ban's $1 trillion idea. He did not address the number, but rather to whom such money should go: directly to lower income countries, he said, and not to intermediaries like the World Bank -- or the UN or UN Development Program.

  What Stiglitz' views are on providing cash with no conditions to governments like those of Myanmar or North Korea is not known. The IMF has been asked about conditions on a $1.9 billion loan it is negotiating with Sri Lanka, the proceeds of which the government has said may be used for camps for internally displaced people from which the IDPs cannot leave or receive visitors, even from family members: detention camps. Using a percentage of the bailouts to fund interment would give a new meaning to the UN system phrase, "Vulnerability Fund." To be continued.

Footnote: several reporters at Stiglitz's March 26 press conference joked afterwards about his lines that he not only predicted the financial meltdown, but also wrote the first academic paper supporting micro-lending. This last claim seems dubious, unless one discounts academics in, for example, Bangladesh. Maybe with whatever turns out to be their share of the requested $1 trillion, Bangladesh can more widely promote its scholars. 

Click here for Inner City Press March 12 UN (and AIG bailout) debate

Click here for Inner City Press' Feb 26 UN debate

Click here for Feb. 12 debate on Sri Lanka

Click here for Inner City Press' Jan. 16, 2009 debate about Gaza

Click here for Inner City Press' review-of-2008 UN Top Ten debate

Click here for Inner City Press' December 24 debate on UN budget, Niger

Click here from Inner City Press' December 12 debate on UN double standards

Click here for Inner City Press' November 25 debate on Somalia, politics

and this October 17 debate, on Security Council and Obama and the UN.

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These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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