The prospects for resolving the ongoing debt crisis in Europe and the United States does not look positive, warns Prime Minister Vladimir Putin.
Putin told an economic forum in the Russian resort town of Sochi that he does not see clear signals for the recovery prospects in the major global economies.
“The debt crisis in Europe and the United States is being aggravated by their economies being on the brink of recession,” he said. “There has been no…clarity concerning their recovery prospects, unfortunately for all of us, including for Russia.”
Meanwhile, “the prospect (for an economic rebound) is probably even farther out of reach now than we thought three years ago,” he added.
Putin gave his comments during a speech at the Sochi-2011 International Investment Forum, which included an exhibition of Russian innovation projects.
The prime minister said that the crisis involving the sovereign debt of the industrialized states demands that politicians, economists and investors reassess their traditional approaches.
“The summer-time tremor in the global economy demonstrated once again that the development models, based on debt growth, are not working,” Putin noted.
In an effort to keep the global economy above water following the devastating financial crisis of 2008, the US Federal Reserve turned on the printing presses.
In the first-ever audit of the US Federal Reserve, it was revealed that $16 trillion dollars in secret bank bailouts occurred since 2008. The audit raised more questions about the quasi-private agency’s opaque operations.
“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else,” US Senator Bernie Sanders, an Independent from Vermont, said in a statement.
The majority of loans were issues by the Federal Reserve Bank of New York (FRBNY).
“From late 2007 through mid-2010, Reserve Banks provided more than a trillion dollars… in emergency loans to the financial sector to address strains in credit markets and to avert failures of individual institutions believed to be a threat to the stability of the financial system,” the audit report states.
“The scale and nature of this assistance amounted to an unprecedented expansion of the Federal Reserve System’s traditional role as lender-of-last-resort to depository institutions,” according to the report.
Given the Federal Reserve’s predilection for propping up “too-big-to-fail” financial and corporate institutions, Putin seems justified when he says the leaders of developed economies are surrendering their positions and “can no longer be an example of carefully-weighed macroeconomic policy for the rest of the world.”
Both Russia and China, which keep large amount of reserve funds in US dollars, have scrutinized the dollar’s position as a reserve currency and its primary role in international trade and investment.
Last month, Putin, saying that the United States was behaving like a “parasite” in the global economy, advised Russia and other countries to consider creating new reserve currencies to hedge against “a systemic malfunction” in the United States, which has – unconstitutionally, some say – turned over the authority to print money to the Federal Reserve System.
“The country is living in debt,” Putin warned. “It is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite.”
According to Putin, the centers of global economic strength have been shifting, and the developing nations will show the best economic results in the next decade, up to 2.5 times faster than that of developed economies.
On Thursday, the Financial Times reported that five European central banks (including the European Central Bank, the Bank of England and Switzerland’s central bank) said they would “provide three-month dollar loans to banks from October, which will cover the year-end period.”
The reputable British business daily said the “display of firepower was designed to prevent an escalation of financial market tensions.”
Several European nations, including Greece, Spain and Portugal, are struggling to balance their budgets, while introducing austerity measures that have been met with fierce public opposition.
Athens, for example, just introduced a two-year property tax, in an effort to shore up revenue shortfalls that amount to $3 billion this year alone.
Last week, tens of thousands of Italians took to the streets for a day-long strike against austerity measures, which include a rise in sales taxes and a watered down wealth tax.
Meanwhile, Putin praised the actions taken by Italian Prime Minister Silvio Berlusconi, saying he is brave making unpopular, but necessary decisions in order to bring the Italian economy out of the crisis.
“No matter how they may criticize Mr. Berlusconi for his attitude toward the fair sex – by the way, they mainly criticize him because they are jealous – he is acting as a responsible statesman in this difficult situation,” Putin said at the Sochi forum, as quoted by Interfax.
Despite the deepening economic crisis plaguing Italy, the country remains transfixed by revelations of alleged sexual misbehavior by the eccentric Italian leader.
Prosecutors say an Italian businessman recruited dozens of girls to attend parties at Berlusconi’s homes, choosing them for their looks and allegedly paying some to have sex with the Italian leader.
They allege that between Sept. 2008 and May 2009, Gianpaolo Tarantini recruited females of “young age, slender frame,” telling them what to wear and how to behave at the parties, according to a newly filed court document, the Associated Press reported.
Putin reminded his audience, however, that Italy has been faced with serious debt and its state debt currently reaches 124% of the GDP.
The prime minister reiterated that the Italian premier “has made difficult, but necessary decisions.”
“I have been watching him and I am happy for him,” Putin said. “Of course, many people don’t like him, but there is no other way out. Everyone understands what has to be done in this situation, but not all people have the courage to make these decisions.”