IranDaily
Number 3238 - Tue, Oct 07, 2008 - Mehr 16 1387- Shavval 07 1429

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Banking System Needs Overhaul
Free EconomicTheories Doomed
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President Mahmoud Ahmadinejad (c) and Vice-President Parviz Davoudi (r) are seen during the induction ceremony for Mahmoud Bahmani the new governor of the Central Bank on Monday.
President Mahmoud Ahmadinejad on Monday said that an indigenous and Islamic model should soon be devised for the national economy.
“The belief that economies are regulated through the free market in the capitalist world is a big lie. It only ensures the interests of thieves and charlatans,“ added the president, who was addressing the induction ceremony for Mahmoud Bahmani, the new governor of Central Bank of Iran (CBI).
“We should have a banking model that is compatible with the conditions of our country. It is not appropriate, for example, that we translate a series of issues and equations (from the western world) and use it in the country without paying heed to domestic economic paradigms.
If we want to implement capitalist formulas, the end result will be what we are currently seeing (the meltdown in western markets). Now we witness how America, which boasts of having the ultimate word in global economic affairs is grappling with intricate problems.Other countries that followed the market economy are suffering. Do we want to reach that stage? Of course not.“

Demand for Repayments
The chief executive emphasized that the banking system should be repaid all the money that some “fat cats“ have borrowed for a long time and are not fulfilling their commitments.
“When this money is returned, production will rise and we can even increase government revenues. É When banking resources of the country are not managed properlyÉ the government’s revenues decrease and economic growth is hindered. É
I also believe that bank resources (loans, credits) should be utilized in the best possible manner and be managed efficiently.
The worst thing for a banking system is that it get entangled into politics and partisanships.
We should all be careful.“
He referred to the deep crises in the global economy and the laissez -faire economy and said, “Over the past two to three years I warned that the path this (global) economy has taken is problematic and on the verge of collapse. Needless to say, the capitalist system cannot have a happy ending because its very foundations lack justice.“
He noted, “Our banking system is currently monopolized. We established 10 private banks so that the banking system would be rid of monopolies. But that did not happen and the monopoly still lingers.“
The CBI should perform in accordance with the rule of law and get back the money it has borrowed, the president declared.
“Those who abuse the banking system should be brought under control. I suggest that the banking system start with government employees and if they do not have money they should return their shares and stocks,“ he told the meeting.

Jalili Tells Solana: Logic More Helpful
Secretary of the Supreme National Security Council (SNSC) Saeed Jalili in a letter to European Union Foreign Policy Chief Javier Solana underlined that in the nuclear negotiations between Iran and Group 5+1 resorting to pressure instead of pursuit of logic will not be helpful.
According to a telefax sent to Iran Daily by the SNSC Public Relations Office, in the letter delivered to Solana by Iran’s ambassador to Brussels, Khaji on Monday, Jalili noted that the very absence of the culture of negotiations has encouraged
some states to resort to pressure tactics instead of going the way of rationale and logic.
In the missive, the top nuclear negotiator referred to Iran’s constructive approach in interacting with the International Atomic Energy Agency (IAEA) and the six powers and noted, “It is interesting for the international community that when a logical question comes up during the negotiations, the other side, instead of responding, resorts to pressure. In the eyes of the comity of nations, such illogical attitude shows that no transparent response was made to the principled questions raised by Iran.“
Jalili also referred to the package of proposals prepared by Iran and emphasized that those powers that have for years produced and stockpiled nuclear weapons simply cannot assimilate Iran’s proposal for disarmament and non-proliferation.
Jalili’s letter will also be delivered to the foreign ministers of Russia, China, France, Germany and Britain through Iran’s ambassadors and to the US via the Swiss Embassy in Tehran.

Wall Street Turmoil Continues
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Wall Street tumbled Monday, joining a selloff around the world as fears grew that the financial crisis will cascade through economies globally despite bailout efforts by the U.S. and other governments. The Dow Jones industrials skidded more than 500 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.
The Dow is down more than 570 points at the 9,747 level.
The markets have come to the sobering realization that the Bush administration’s $700 billion rescue plan won’t work quickly to unfreeze the credit markets, and that many banks are still having difficulty gaining access to cash. That’s caused investors to exit stocks and move money into the relative safety of government debt.
Over the weekend, governments across Europe rushed to prop up failing banks. The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France’s BNP Paribas agreed to acquire a 75 percent stake in Fortis’s Belgium bank after a government rescue failed.
The governments of Germany, Ireland and Greece also said they would guarantee bank deposits.
Broader indexes also tumbled. The Standard & Poor’s 500 index shed 51.71, or 4.70 percent, to 1,047.52; and the Nasdaq composite index fell 95.83, or 4.92 percent, to 1,851.56. The Russell 2000 index of smaller companies dropped 28.78, or 4.65 percent, to 590.62.
The anxiety was again obvious in the credit markets. The yield on the three-month Treasury bill slipped to 0.38 percent from 0.50 percent late Friday. Demand for bills remains high because of their safety; investors are willing to take extremely low returns just to have their money in a secure place.
Investors also moved into longer-term treasury bonds. The yield on the 10-year note fell to 3.52 percent from 3.60 percent late Friday.
Banks’ hesitation to lend to one another and to many businesses and individuals is the result of the bad mortgage debt that the financial rescue is supposed to sweep up. But it’s still unclear how quickly financial institutions will be able to hand that debt to the US government and convince the markets they are healthy again.
Oil prices fell to an eight-month low below $90 a barrel on speculation that the spreading financial crisis will exacerbate a global economic slowdown and further cut demand for crude oil. Light, sweet crude tumbled $3.82 to $90.06 a barrel on the New York Mercantile Exchange.
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