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Wednesday, October 3, 2012

IMF Chief Economist Says Recovery Will Take Another Six Years

Olivier Blanchard, the chief economist of the International Monetary Fund (IMF), has stated in an interview published by Hungarian website Portfolio that the world will not recover from the financial crisis that struck it until 2018 at the earliest. “It’s not yet a lost decade. But it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape”, said Blanchard. He also said that part of the problem was that not enough attention was paid to the shortcomings of the financial sector before the crisis hit. “We had assumed that we could ignore much of the details of the financial sector, that we could ignore the plumbing”, said the IMF’s chief economist. He also called for more solidarity between countries in the Eurozone. “When a country is doing poorly the others have to be willing to help in various ways, not only out of solidarity, but because trouble in one country may well spillover to theirs”, concluded Blanchard.

European Commission Recommends Splitting Big Banks

A group of experts assembled by the European Commission has called for the forcible breakup of European banks that are considered to be “dangerous”. That was the main message in a report delivered on Tuesday by the group, headed by Bank of Finland Governor Erkki Liikanen. “We must get away from a system in which profits are private and losses are public and burden the taxpayer”, said Liikanen while presenting the findings. The group wants the high-risk activities of banks separated from the rest of the business. This would make it easier for those parts to go bankrupt without taking the retail banking operation with them. “The smallest banks would be considered to be fully excluded from the separation requirement”, said the report. In a statement published on the Bank of Finland website, Liikanen added that such reforms could “reduce the social costs of bank failures and the need for implicit guarantees”.

Foreign Currency Dealers Clash with Police in Tehran Over Currency Plunge

Demonstrators clashed with riot police in Tehran during a protest over the collapse of the Iranian currency, the rial, which in a week has lost 40 percent of its value against the U.S. dollar. The demonstrators, which were thought to have included many foreign currency dealers, shouted slogans against Iranian President Mahmoud Ahmadinejad, saying his economic policies had fuelled the economic crisis. “Everyone wants to buy dollars and it’s clear there’s a bit of a bank run”, said a Western diplomat interviewed by Reuters. “Ahmadinejad’s announcement of using police against exchangers and speculators didn’t help at all. Now people are even more worried.” The government blames the currency speculators for the rials’s collapse and ordered the security services to take action against them.

Syrians Approach the Golan Heights, Israel Evacuates Tourists

Israeli Defense Forces (IDF) have evacuated tourists from the Golan Heights, bordering with Syria, after sighting dozens of possibly armed Syrians approaching the border, according to a report published in the Jerusalem Post on Wednesday. The IDF said that the suspects did not manage to enter Israel and that it was not clear whether they were armed. Israel has already prepared contingency plans in case the Syrian civil war spills over its border. Mortar shells hit farmlands inside Israel last week, landing harmlessly in open fields. It was the second time in two months that Syrian shells had strayed inside Israel. According to the Jerusalem Post, Israel filed a complaint with the United Nations Disengagement Observer Force, responsible for patrolling the border zone.

Hundreds of Child Soldiers Recruited by Islamist Militias in Mali

Islamist guerrillas in northern Mali have begun recruiting children from towns and villages devastated by the country’s civil war. Mali had been a stable democracy until a coup last March and an Islamist Tuareg insurgency took control of northern Mali in April. One 16-year-old boy told the Associated Press that he could earn 15,000 francs ($30) a day for himself and another 200,000 francs ($400) a month for his family, a considerable sum in the country. Recruiters will often approach them asking them if they want to become holy warriors. If the offer is accepted, they are taken to a training camp where they are taught how to fire weapons. “Once you’ve taken the money and eaten, it’s a done deal”, said another recruit interviewed by the AP. “You’re there until you die or the war is over.” The U.N.s’s agency for children, UNICEF, said that it has been able to confirm at least 175 cases of child soldiers in northern Mali this year, with families receiving between 500,000 francs ($1,000) and 600,000 francs ($1,200) per child.

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