World Economic News
Experts: Avian flu Pandemic Is a Certainty
Representatives from dozens of national and international organizations packed an auditorium at the Woodrow Wilson International Center for Scholars in Washington Sept. 19, to hear the dire warnings of two experts, that an avian flu pandemic is a certainty. Michael Osterholm, director of the Center for Infectious Disease Research and Policy, and Helen Branswell, medical writer for the Canadian Press Agency, pulled no punches as they presented the alarming statistics about the confluence of circumstances which will lead to, not just a global pandemic, but a global economic meltdown as well.
According to Osterholm, the nature of the flu virus and its hosts, like the nature of Hurricane Katrina, means a natural disaster is inevitable. But, unlike Katrina, it need not be massively catastrophic. He was convinced, however, that even with a focussed and concerted international effort, there wasn't time to make enough changes and develop the infrastructure and technology to avert this particular pandemic.
The major blame, said Osterholm, is the global, "just-in-time" economic system, which has rendered nations unable to amass even the bare necessities to avert catastrophevaccines, surgical masks, food, clean water, etc. When the flu strikes, countries will close borders and horde medical resources, but almost no countries have all the necessary resources within their borders, due to the multinational nature of manufacturing. People, panicked about catching the flu, will hunker down, refusing to go to work, leaving national economies in a shambles.
Osterholm emphasized, it's not about money any morebuilding infrastructure takes time. The global economy will collapse, "the levees will break if we don't act now."
The audience of high-level bureaucrats, while concerned, showed little understanding of how dire circumstances really were. The idea of preemptively changing the economic system to avert this catastrophic meltdown, was not even imaginable by most.
Prominent Banker Warns of New LTCM
Another LTCM disaster is just around the corner, stated the head of the German financial supervision agency (BaFin) Jochen Sanio at a New York bankers conference on Sept. 22, organized by Goldman Sachs. The theme of the conference was identifying the ten top risks to the global economy. In front-page coverage on Sept. 23, London's Financial Times noted that Sanio warned "that it was only a matter of time before there was another Long Term Capital Management, the hedge fund that was bailed out in 1998." Sanio is quoted saying: "It will happen. And nobody at the moment is prepared for it. That is why I am scared as hell."
A World Awash in Liquidity Keeps Brazil Afloat
The principal reason that Brazil's markets, exchange rate, and country-risk rating have remained (relatively) calm, despite the political crisis paralyzing the country, is that international markets are awash with liquidity, and therefore "investors" continue to be willing to take risks, the Brazilian daily Valor commented on Sept. 13. In speaking with reporters in Basel, Switzerland the day before, Brazilian Central Bank chief Henrique Meirelles admitted this was the case, baldly asserting that "structural changes" in the world markets ensured such liquidity would continue.
Meirelles was in Basel for a Sept. 12 meeting of top central bankers at the Bank for International Settlements (BIS). Various Brazilian dailies reported that the central bankers insisted to Meirelles (himself, the former president of FleetBoston's global operations) that if Brazil expected to survive the political crisis and international "turbulence," it must finally adopt the Central Bank autonomy which Congress has refused to approveand no excuses would be accepted. One outcome of the political crisis, in fact, should be Central Bank autonomy, a group of bankers was reported to have told Meirelles.