07.11.2010

OpinionChristian Science MonitorG-20 must take radical measures to end 'mother of all crises'

Kuala Lumpur, Malaysia – The G-20 group of countries that will be meeting in Seoul, South Korea represent only themselves. How they were selected and what qualified them is a mystery. But what they will be deciding will no doubt affect the entire world. One can only hope the effect will be good for the poor economies as much as it must be for the rich economies.

As it has been for the past few meetings, the current financial super-crisis will be on the agenda. It so far has defied solutions by the G-20 and by others. Will the meeting in Seoul be any different?

Defy convention and do the unthinkableMalaysians are not in the same class as those people in the International Monetary Fund (IMF), the World Bank, the world-renowned financial institutions, and the Wall Street people. But Malaysia has had the bad taste of a currency crisis precipitated by the speculative traders. We managed to overcome the crisis by ignoring convention and doing the unthinkable.

Might it be possible that the present crisis, too, needs to be dealt with by doing the unthinkable? Of course, the causes of the present crisis are not exactly the same as the East Asian financial crisis of 1997-1998. And the scale is also different. Saddam Hussein, if he were alive, would call the present crisis ^aEURoethe mother of all crises.^aEUR

But still there is something common between the East Asian financial crisis and the present crisis. Both are man-made. Both are the result of abuses of the prevailing systems by greedy people.

For another view: Economic collapse: Don't blame the free market

Criminal abuses by certain market playersTaken from that angle, the response to the current crisis may well lie in adapting the solutions to East Asia's earlier crisis, perhaps with particular reference to the Malaysian way.

What Malaysia did was reject the belief that the crisis was due to bad financial management, contagion, and loss of confidence in our institutions. Instead, Malaysia insisted that the crisis was due to deliberate manipulation of exchange rates by currency traders.

To solve the present crisis, the first thing to do is to acknowledge that it is the result of criminal abuses by certain market players. So much has been lost and no amount of currency printing will bring back the wealth.

The rich must accept that they will become poorer. Just as they used to readily advise countries in financial trouble that when companies lose money, the best thing to do is shut them down, so must they accept that all those institutions which lost money must be shut down.

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Everyone must accept the realityThe ensuing demotion of those who had been wealthy will bring about massive social problems. Everyone, rich and poor, will feel deprived, unable to enjoy the standard of living they were used to. In Bangkok, at the height of the crisis, millionaires had to sell toys on the streets. In Indonesia, workers thrown out of jobs rioted, looting shops, killing the unfortunate shopkeepers, and burning the premises. On the advice of the IMF, subsidies for food and fuel were withdrawn, resulting in starvation and even deaths.

The suffering of the newly impoverished rich will not be nearly so dire as was seen in Bangkok and Jakarta, but there will be much suffering nevertheless. The old lifestyle of the rich must be given up.

Once they accept the reality of the situation, they should, together with the poor countries, sit down and draw up a new global monetary system, a much more open banking system, and a new financial system.

Currencies should be valued against goldThe new monetary system should be based on gold, as represented by an international currency to be used for international trade only. Domestic currencies of all countries would be valued against gold.

The banks should be allowed to create a limited amount of money. They must be closely regulated and watched by governments. The smaller amount of money that banks can lend will no doubt lead to slower growth of the ecomies of countries. But it is better to have slower growth than repeated international financial crises and the accompanying social disasters.

Financial transactions must be transparent and regulated by governments. There should be no offshore financial houses. Money must be lent only for real business; that is, for the production of goods and services and for trade. Trading in currencies must be classified as a business crime. Short-selling should be disallowed. Leveraging should be severely limited.

The IMF and World Bank should be democraticThe IMF and the World Bank should be reorganized and set to work in the interest of poor countries. They should be democratic in terms of the appointment of officers to run them.

If all these things are done, the current financial crisis is more likely to finally be stopped. Financial crises would be less likely to occur in the future. Economic growth would be real - creating jobs, spinning off new businesses, and enhancing world trade. Mergers and acquisitions must be by willing buyers and willing sellers. An internationally accepted antitrust law would prevent monopolies by the corporate giants of the rich countries.

Free trade should be regulatedFree trade should be regulated. Yes, made less free. Countries should be allowed to protect their infant industries against the world giants.

These are radical measures. But they would repeal the greed and lack of transparency that have infected the global economy.

To be sure, such measures will require far greater political will on the part of the G-20 than has so far been mobilized. But the roiling instability that remains in the international system ought to make it evident that half measures will not do. Sooner or later, it will be evident, even to the G-20 leaders, that, when it comes to the mother of all crises, only the mother of all solutions will bring the crisis to an end.

Mahathir Mohamad is the former prime minister of Malaysia and the author, with Shintaro Ishihara, of "An Asia That Can Say No."

ї 2010 Global Viewpoint Network/Tribune Media Services. Hosted online by The Christian Science Monitor.

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Apple to Triple iTunes Song Previews to 90 Seconds

Apple is preparing to roll out longer song samples in the iTunes Store, up to 90 seconds, according to . The move would triple the current length of 30-second preview clips, a decision Apple probably hopes will boost sales. While this could be a great move for consumers, some labels might pull their content off the iTunes Store, as Apple's decision to increase song samples is opt-out, not opt-in.

iTunes Store users in the United States will be able to preview 90-second clips of songs over 2 minutes 30 seconds long, while any song shorter than that will continue to have 30-second preview clips. Apple is pressing labels to conform to the move, or pull their music from the iTunes Store, the largest of its kind in the world.

"We believe that giving potential customers more time to listen to your music will lead to more purchases," reads a letter obtained bythat Apple sent to music labels, alerting them of the change. "All you have to do is continue making your content available on the iTunes Store, which will confirm your acceptance of the terms," the letter continued.

In February 2010, Apple announced it sold more than 10 billion songs from the iTunes Store since its inception, over a quarter of all music sold in the United States, according to . In the digital downloads market alone, the iTunes Store controls 70 percent of digital music sales, giving Apple some leverage when it comes to negotiating with music labels.

Longer song previews from the iTunes Store could also mean that Apple is closer to putting iTunes in the cloud, suggests . The move, widely , has never come to fruition. However, if Apple can stream 90 seconds of a song before you buy it, it pretty much has the technical solution to stream the entire song to you on demand.

Will 90-second iTunes Store previews help you better pick which songs to buy? Sound off in the comments.

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112th Congress: Steve Stivers, R-Ohio (15th District)

Election: Defeated Rep. Mary Jo Kilroy, D

Residence: Columbus

Born: March 24, 1965; Cincinnati, Ohio

Religion: United Methodist

Family: Wife, Karen Stivers; one child

Education: Ohio State U., B.A. 1989 (international studies), M.B.A. 1996

Military: Ohio Army National Guard 1988-present

Career: Lobbyist; securities company executive; county party official; campaign aide

Political highlights: Ohio Senate, 2003-08; Republican nominee for U.S. House, 2008

Stivers, who promotes himself as a budget hawk, wants to cut discretionary spending and supports giving line-item veto authority to the president.

But even if it would save tax-payer dollars, don't expect him to support legislation that would privatize Social Security or raise the program's retirement age. "The promises made to our seniors must be promises kept," he pledged during the campaign. Instead, he says he wants to reduce costs by promoting efficiency and eliminating waste and fraud.

Energy independence also is on Stivers' list of congressional priorities. He supports green energy technology, nuclear power and clean coal. But he turned his back this year on the cap-and-trade approach to regulating greenhouse gas emissions, the Columbus Dispatch reported, even though he supported the policy two years ago.

The new health care law runs counter to Stivers' spending philosophy, and he will look for ways to control costs and promote price transparency.

He also isn't a fan of this year's financial regulatory overhaul because it "spends too much money and it costs jobs," he told the Dispatch.

But while he says he will try to "fix" those two laws, he will not work to repeal them.

Stivers also speaks in support of abortion rights, but he established an anti-abortion record as a state Senator and was named a "preferred" candidate by Ohio Right to Life.

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