Thursday, August 23, 2012

Killed by the Financial Crisis

Recently, Max Keiser had Paul Moore, former Head of Risk at HBOS, on his show.

Moore claimed that 100 million people were driven back into extreme poverty by the financial crisis.

He stated that he would not be surprised if the banking crisis caused more deaths than any conflict since world war II

Keiser Report: Semaphore of Fraud (E325) 
around 18:00 minutes in

Majia here: below an excerpt From my book Governing Childhood published in 2010 and an update:

The World Bank reported in February of 2009 that up to 53 million more people would become mired in poverty due to soaring food and fuel prices catalyzed by the financial crisis (“Economic Crisis Set to Drive”). This increase would bring the total number of people living on less than $2 a day to over 1.5 billion. Children will be disproportionately impacted by this crisis, as the United Nations news center reports:
The global financial crisis sweeping through Wall Street and the European banking sector will touch the lives of the world’s most vulnerable, pushing millions into deeper poverty and leading to the deaths of thousands of children, according to a new United Nations study.
Reduced growth in 2009 will cost the 390 million people in sub-Saharan Africa living in extreme poverty around $18 billion, or $46 per person, warned the report by the UN Educational, Scientific and Cultural Organization. . . New estimates for 2009 suggest that lower economic growth rates will trap 46 million more people on less than $1.25 a day than was expected prior to the crisis, for a total of an extra 53 million trapped on less than $2 a day, on top of the 1.37 billion before the current crises. (“Financial Crisis to Deepen”)
The World Bank observed that approximately 40 percent of the 107 developing nations were highly exposed to the effects of the crisis (“Financial Crisis to Deepen”).
The outflow of currency from developing nation to affluent ones coupled with the decline in global consumption of exports together threaten to imperil developing economies that focus on export oriented production (Goodman A1, A15). A World Bank report issued in June 2009 notes further deterioration of the global economy and expresses concern for the “damage” done to low-income countries by the decline in export and the outflow of capital, which are together rendering it difficult, if not impossible, for many developing countries to finance needed imports such as basic commodities (World Bank “Global Development” 6-9). Increased global risk aversion has made it difficult for companies and governments in developing economies to raise capital (10). Worse, depreciation of currencies in the developing world has increased the “local currency cost of servicing dollar-denominated debt” (World Bank “Global Development” 18). This means that developing nations will have to pay more of their own currency to service foreign debt denominated in dollars unless debt forgiveness and/or refinancing occurs. 
The World Bank projected that by 2010 the poverty rate would increase to 89 million: "Given the current growth projections for 2010, there will be a further increase in poverty in that year, with a cumulative increase of 89 million people living under $1.25 a day and 120 million more under $2 a day by 2010." (Ravallion 

Find the World Banks's response to the crisis here

Majia here: Conclusion? The financial crisis drove millions of people into severe poverty, a situation that typically precludes adequate nutrition and health care. We don't know how many people the financial crisis actually "killed," but the toll is sure to have been large and is probably ongoing. Helping banks, as opposed to helping people, was prioritized globally, as one can see from the prioritization of responses in the World Bank's self-study of its handling of the crisis (see chapters 2 and 6).

“E         Economic Crisis Set to Drive 53 Million More People Into Poverty in 2009 – World Bank.” United Nations News Center 13 February 2009. 10 May 2009
“          World Bank Finds More People Live in Steep Poverty.” The New York Times 27 August 2008: A9.

W         World Bank. “Global Development Finance 2009: Charting a Global Recovery. World Bank Global Development Finance June 2009. 22 June 2009,,contentMDK:22218327~menuPK:5924239~pagePK:64168445~piPK:64168309~theSitePK:5924232,00.html.

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