Sean Fleming T.D., Fianna Fáil Spokesperson on Public Expenditure has said a new approach is urgently required to deal with the international difficulties in the financial and bond markets and the levels of sovereign debt held by various Governments.
“There is a clear limit to what international politicians can achieve. A fundamental issue that must be accepted is that financial crises can only primarily be resolved by financial measurers. Political compromises, no matter how well intentioned, can never fully resolve these issues.
“The time has come for an international summit of leaders of the three most important financial institutions in the world: The European Central Bank represented by Jean-Claude Trichet, The US Federal Reserve represented by Ben S. Bernanke and the Head of the Central Bank of China.
“Essentially the global economic crisis is substantially as a result of many western democracies spending more money than they earn, thereby running up debts and borrowing more money internationally each year. The same applies to many African countries.
“The build up of this debt is causing a global financial imbalance. China is the biggest lender of funds to western democracies and there can never be a real solution unless they are part of the process.
“We have seen in recent times efforts by President Obama in Washington to achieve a political compromise in relation to problems in the US. Likewise we have seen Germany and France attempting to broker a deal for Europe and the euro zone area.
“These efforts are only temporary measures as they involve countries continuing to borrow more each year on the international markets. The financial markets know that many of these debts will not be paid back for generations, possibly centuries, if ever at all.
“Logically they do not believe or accept the credibility of political compromises involving ever increasing borrowing without any real repayment plans.
“The interest payments of several countries and their level of debts is a severe burden on citizens of these countries. People who provide the loans are understandably nervous regarding the long term repayment of the interest and the loans.
Finally, Deputy Fleming said that “western democracies and other indebted countries will continue to have problems until there is stability in their own exchequer finances and in the international financial, exchange rate and monetary systems and economic growth returns to these economies.
“When these three Central Banks meet then they can call on the IMF to implement a programme to bring the levels of debt for these countries to a sustainable level.”