UN's poverty chief turns on greedy 'super-bankers'

from the Times Online

Rhys Blakely in Bombay

The United Nations representative in charge of eradicating poverty has said that the rapacious pursuit of profits by a new generation of “super-bankers” has triggered an economic crisis that risks delaying anti-poverty targets in the poorest countries.

Kemal Dervis, the head of the UN Development Programme, said that the blame for the three economic ructions of the past decade — the Asian crisis of 1997, the dot-com collapse of 2001 and the present American sub-prime troubles — fell at the feet of an overinfluential and underregulated financial sector.

“It is the super-bankers, hedge fund managers and owners of private equity firms that have become the new barons of 21st-century capitalism,” the former Turkish finance minister and vice-president of the World Bank said in India. “It is almost unbelievable: 40 per cent of total corporate profits in the US in recent years went to the financial sector that in itself does not ‘produce' ... but intermediates and organises' the resources that do produce.”

Mr Dervis said that a steep decline in global economic growth was in danger of pushing back the UN's Millennium Development Goals, which call for extreme poverty to be halved and for the spread of HIV/Aids to be halted by 2015.

He said: “A world economy growing at 4 to 5 per cent in purchasing-parity terms is a wonderful thing for development. A major slowdown would be a tremendous setback.”

He added that herd-minded financiers profit hugely from the inflation of asset bubbles, “but pay very little personal penalty when the bubble bursts”. Instead, ordinary people bear the costs through government bailouts and higher inflation stoked by aggressive cuts to interest rates.