Declaration on the International Financial Crisis
SI Committee for Latin America and the Caribbean meets in Buenos Aires, 9-10 April 2010
The international financial crisis originating from the Northern economies, largely resulting from the impact of a process of deregulation that multiplied the risks related to a speculative housing bubble, has severely affected the global economy, including the countries of the region.
The world faced the largest economic slowdown and the steepest decline in trade since the Grand Depression of the 1930s. The period between July 2008 and September 2009 saw a contraction in the value of trade of 30.4% and the emerging economies showed the most marked reduction in exports, which in Latin America reached 24.4% according to United Nations statistics (World Economic Outlook 2009).
The “cleansing” of toxic assets on bank balance sheets, combined with their restructuring and capitalisation has required the political will of the international community, expressed within the G-20 and in other global and regional institutions, with serious consequences for countries’ public debt, whose relation to GDP is reaching unsustainable limits as currently experienced by some developed countries.
It is indisputable that there is a need for:
- A more active role from those who supervise the viability of financial institutions and decision on the corrective regulatory mechanisms to identify the capital necessary in accordance with short and medium term forecasts;
- Transparency in balance sheets and banking information, with regulatory inspection, based on consistent criteria;
- New mechanisms of financial regulation, including the abolition of “tax havens” and speculative practices which have been a destabilising factor in the economies of developing countries.
Obviously, the conditions for the injection of public capital must be subject to strict criteria.
In other words, a revival of the role of the State in the generation of policies and incentives that lead to a new global financial and economic framework, encouraging productive development and a consensus between the principles of democracy and of the market, which have shown considerable imbalance.
Unemployment was one of the most immediate consequences of the crisis and the global rate climbed to 8.4% (ILO), signifying that millions more people joined the ranks of those who are out of work. The SI advises a more active role for governments in the search for resources and investments which create work, going beyond compensatory measures to those who are suffering from this situation.
We urge the Presidents of the G-20, in particular the presidents of Argentina, Brazil and Mexico, to pay particularly attention to the principles they have assumed in search of growth that is equitable, inclusive and characterised by solidarity, as well as avoiding the recourse of protectionism and other measures which distort international trade.
Social inclusion, equality of opportunity, the need to change economic policies, and giving priority to the creation of jobs and the elimination of poverty are fundamental objectives in people’s lives which the social democratic vision has always supported, but which today require an urgent and comprehensive response.