keating on lateline, page-29

Another great interview with Pk and summary of the world financial mess check out last years intervew as well here's a summary of last night:


Former Australian prime minister Paul Keating says the current economic situation calls for an overhaul of the international institutions that lead economic policy.

Mr Keating told ABC 1's Lateline program that governments should move on from inter-government institutions such as the International Monetary Fund (IMF) and G7 to combat the global financial crisis.

He says China and India deserve more of a say.

"What we need is a completely new global political and economic settlement," he said.

"Get rid of the old G7. We've got to get rid of the old IMF. We've got to bring the surplus countries into the political framework.

"The G7 is made up of debtor countries, countries like the United States, Britain, France, Italy - these are all borrowers.

""There's no surplus countries in that. If you look at the structure of the IMF the Chinese get 3.7 per cent of the vote, the Indians get 1.9."

"The Europeans and the Americans get 51 per cent and there is just now way the Chinese communist party is going to hand over control of their currency and their political fortunes to a Washington-based, US Treasury run institution."

"So unless there is going to be a totally new settlement... we are not going to get out of this."

Mr Keating says he expects the effects of the economic slowdown will be felt for a long time.

"The United States is also going to go through a very long and deep recession and a massive period of adjustment and I'll be very surprised if this is any less than six or seven years," he said.

He called on surplus countries to spend less,save more and not accumulate massive exportable financial surpluses and for deficit countries to save more and spend less.

He said Aust fiscal position is prtetty good,the deficit would be a sideshow,& sees a glimmer of light for Aust.

He slso boasted about running the first federal surplus ever - 3 in a row !

He said you've got to be a fiscal pragamatise when private exp drops off it needs to be replaced by public exp and let the budget go into deficit.

He also said that the USA would go through a very long and deap recession and it would take 6-7 yrs, with them running budget deficits 15% of gdp for at least the next 3-4 yrs and cited Japan took from 1989-2003 to bring down their bubble.

He noted that Aust big 4 banks are in the top 15 because they were locked up under the 4 pillars,regulation and what happened in the 1990's.


But the biggest problem he saw was the unavailabilty of debt for infrastructure,a turn down of the availability of credit ,a tightening of the lines of credit and that his advice to the Aust govt was was for them to package up debt for infrastructure projects.