A Quote From Our Latest Issue

A Busted Clock Isn't Always Wrong:

Even the most "dysfunctional" creations of the human mind do rest on a kernel of truth. Although a busted clock is not much use for telling the time, it is indeed right twice every day. Like the other international organisations which emerged from WWII, the World Bank was right in claiming that the path from "low income" to "high income" was the accumulation of capital. But it was dead wrong in the methods it advocated and pursued to bring that about. The way to attract capital, then as now, is to entice those who have it to voluntarily invest it with you. The way to do that is to guarantee investors that they will retain ownership in what they have invested.

The way it was actually done was the exact opposite. The best example of that is the one given by the first Prime Minister of India after its independence from Britain in 1947. Mr Nehru's idea of attracting investment to India was to publicly guarantee that it would not be nationalised - FOR TEN YEARS. Needless to say, with "guarantees" like that, India became one of the earliest and biggest recipients of World Bank "largesse". No private owner of capital would even consider such a proposition.

As The Privateer has pointed out throughout the GFC - and long before - the global financial system is long overdue for a "purging" - a sweeping out of the huge pile of debt-induced malinvestments which have now all but brought the entire world to a standstill. When even the World Bank has come to the point where they can see no other way out, one may know that the purging is not far away.