From Volume 5, Issue Number 19 of EIR Online, Published May 9, 2006

World Economic News

Danish Daily Warns of Derivatives-Triggered Crash

A May 1 article in the leading Danish daily Politiken warns that derivatives could set off a global financial crash, adding to the series of recent articles and statements from Denmark, issuing similar warnings. Under the title "Dannevirke has fallen," a pun on the name of a collapsed Danish derivatives-based bond, and the name of an historical Danish defense fortification line, Politiken announces that "the global trade of sophisticated financial instruments—so-called derivatives—has exploded, but the politicians are not talking about it, even if speculation in derivatives, in the worst case, can set off new financial crashes." Derivatives, lo and behold, they discover, "can harm the Danish national economy, the liberty of action of the politicians, and the private economy of Danes.... Financial institutions gear their investments as never before. In some cases, they have gambled so much, that there is even a risk for their existence, for the stability of the global financial market and for national economies....

"Never before has trade with claims on financial values of the future been so great—in comparison with what, in the old days, was called 'the real economy.' Maybe it is more important to discuss derivatives rules than to run an election campaign based on slaughterhouse jobs," the paper suggests. After all, one or more unforeseen political and economic events could trigger "a lemming effect on a global scale, which has never been seen before."

Not all Danish politicians have ignored this issue, however. The election poster of Tom Gillesberg, the Copenhagen mayoral candidate for Friends of the Schiller Institute—which won the award for the "worst" election poster, among other things, because it contained the word "derivatives"—had the slogan "When the bubble bursts ... a New Bretton Woods" with a picture of a bubble with the words "derivatives, housing prices, inflation."

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