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Global financial crisis and currency war
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As one of the founders of the Bretton Woods institutions, Harry Dexter White once commented: "Currency warfare is the most destructive form of economic warfare. Economic warfare eventually brings war".

The world is approaching its first "lost biennium", with devastating results in terms of growth and development, and a politically unpredictable ending.

Whatever the results of the actions taken – or promised by the G-20 or any other "G" Summit, it seems unlikely that any short-term measure can assuage the impacts of the crisis on the real economy.

Nor can it be expected that any political statement whatsoever can check a crisis whose evolution no one is able to fancy.

Considering the fact that mortgage-backed securities are but a segment of asset-backed securities (a category that includes personal- and consumer loan-, credit card receivable-, and car-loan-backed securities), all of which are ultimately based on demand and consumption, we are only to sit back and expect the next crisis waves, where people just stop paying back their car loans or credit card bills, limit their expenditures, refrain from accepting credit, or simply save, rather than purchase.

Considering, besides, the fact that a proportion of pension funds, private or sovereign investment funds, and even multilateral financing institutions’ investments are denominated in such asset-backed securities, and the fact that such assets and other structured financial instruments guarantee the loans of large corporations and no one can ascertain their "toxicity" levels, the real extent of the crisis is simply unknown.

The crisis has already been on the stage for two years, and its outlook is worsening steadily.

Once upon a time, as stories tell, there was a global financial crisis prompted by a dangerous combination of speculation and greediness, open and active advocacy of capital market opening to foreign banks and innovative financial instruments, combined with lack of control and regulation.

Guilty parties are easily found: bankers and private financial institutions, with the coverage of credit risk evaluators, credit multilateral agencies actively promoting capital market liberalization and structured financial instruments, as well as national governments, who decide both the assets its sovereign funds are to be invested in, and domestic regulation and controls.

The billion dollars delivered to the banking entities during consecutive rescue operations reflect the scale of the problem in the industrialized countries. The choice of the G-20 as the forum for a concerted exit prompts me to surmise the leaders of the great nations are unable to draw a response from closer fora, such as the G-5 or the G-8 – or have simply staged a cost-sharing strategy for a period where the most intense global impacts make themselves felt.

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