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Global Financial and Economic Crises

Global Economic Collapse in Other Nations

Project: Global Financial and Economic Crisis 2007-Present
Open-Content project managed by KJF, mtuck

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McClatchy reports that economies in Latin America are beginning to improve following the global financial crisis. The signs of the recovery include a “booming” construction industry in Peru, strong property sales in Peru, and expanding software companies in Chile. However, McClatchy says that the recovery in Mexico and other Central American countries is lagging behind, due to the slow recovery in the US. Prior to the global financial crash, Latin America had experienced its best five years of prosperity since the 1950s. [McClatchy Newspapers, 9/28/2009]

Entity Tags: Peru, Brazil, Mexico, Chile

Category Tags: Other, Other Nations

Iranian President Mahmoud Ahmadinejad orders that his country’s foreign exchange reserves be moved from the dollar to the euro, setting the stage for the Iranian Central Bank to cut its foreign currency reserve interests rates from 12 percent to 5 percent. The estimated rate cut makes it cheaper for the bank to acquire foreign currency. “They have been talking about switching their foreign currency reserve from the dollar to the euro for a while now, but it makes them more dependent on the euro and the European Union,” says Dr. Ali Ansari, director of Scotland’s St. Andrews University Iranian Studies Centre.
Followed Call Addressed to OPEC - Ahmadinejad’s decision comes shortly after he called for the Organization of Petroleum Exporting Countries (OPEC) to discard the dollar as the currency standard for oil-related deals. Despite recent declines in dollar value and the fact that most major oil producing countries are outside the US, the dollar remains the prevailing currency for pricing a barrel of oil. The dollar also remains the most frequently used international trade currency.
Possible Motivation - Some analysts believe that exchanging the dollar for the euro may be Iran’s attempt to lessen the effects of US economic sanctions in force since the 1979 Islamic revolution when the US backed the overthrown Shah of Iran, who was replaced by an Islamic republic. US sanctions include prohibiting US involvement with Iran’s petroleum development, as well as prohibiting all trade and investment activities by US citizens around the globe. Sanctions were softened somewhat in 2000, when the US Treasury amended its prohibition edict by allowing US citizens to buy and import carpets and food products like dried fruits, nuts, and caviar produced in Iran. Recent media reports suggest, however, that President Obama is considering an increase in sanctions if Iran persists in its alleged development of nuclear weapons. Iran maintains that its nuclear program is solely for power production. [Media Line, 9/22/2009]

Entity Tags: Iran, Organization of Petroleum Exporting Countries, Mahmoud Ahmadinejad, Ali Ansari

Category Tags: Oil and OPEC, Other Nations

The tasks before the forthcoming Group of 20 (G-20) summit to be hosted by President Barack Obama in Pittsburgh, Pennsylvania, are rolled out in the media. The number one agenda item for global leaders will be restraining financial institutions’ compensation and forcing them to clean their balance sheets to avert a duplicate of the near-meltdown of global financial systems. They will also attempt to find new methods for controlling over-the-counter derivatives markets, which are said to have augmented the global crash. The leaders are also scheduled to “increase oversight of hedge funds, credit rating agencies, and debt securitization.” Most leaders agree that it is essential to find a resolution for the huge financial imbalances in trade, savings, and consumption, all of which played a role in the global financial crisis, and ultimately may leave global economies vulnerable to future financial shocks. Christine Lagarde, the French Finance Minister, says that signs of economic recovery should not act as an excuse to avoid economic reforms. Officials of France and Germany are recommending stringent financial sector regulations, which incorporate limits on executive pay. The mandate of the G-20 is to “promote open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability.” The G-20 is comprised of finance ministers and central bank governors from 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union, which is represented by the rotating council presidency and the European Central Bank. [Reuters, 9/22/2009; New York Times, 9/22/2009; Voice of America, 9/22/2009; G-20.org, 9/22/2009]

Category Tags: Other, USA, Britain, Other Nations

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