UN advisor: Drug money saved banks in global crisis

This can’t be good:

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. “In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.”

Quote of the Day

“With all due respect, the UN does not move the market.”

~ Leonardo Leiderman

A Quick Thought on the UN

The U.N. is, and will likely remain, a farce. It is no accident that people trust local government more than state government, state government more than federal government, and federal government more than–and God help me for even saying it–international government. The farther the government is from you, the less it understands you. The U.N. reminds us this too often.

A Global Currency to Replace the Dollar?

According to Bloomberg:

The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.

UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.

I’m not sure that ditching a national monetary policy is the best course of action for the United States. Nor do I think the American people support forfeiting their monetary sovereignty to the “global community.”

Milton Friedman has this to say about a global currency:

I view it as a monstrosity—on a par with my reaction to world government, for that is what a common currency amounts to for one aspect of economic activity. As a citizen of the United States, I find it bad enough that we have developed monetary arrangements under which so much power has been vested in a small group of unelected individuals, subject only indirectly to political control. I find it far worse to vest so much power in individuals chosen by international negotiation, individuals who are not accountable in any meaningful way at the ballot box.

Libyan Leader Gadhafi to Urge UN to Abolish Switzerland

According to Swiss minister Christa Markwalder, when Libyan leader Moammer Gadhafi arrives in New York on September 23rd, he will ask the United Nations to abolish Switzerland and divide its land between France, Germany and Italy.

The UN charter, however, dictates that no member nation can threaten the sovereignty of another, so not much should be expected.

Swiss-Libyan tensions began last year when Gadhafi’s youngest son, Hannibal, was arrested in a Geneva hotel for beating two servants with a belt and a coat-hanger.

Fart Tax in Europe?

The Times Online reports,

Livestock contribute 18 per cent of the greenhouse gases believed to cause global warming, according to the UN Food and Agriculture Organisation. The Danish Tax Commission estimates that a cow will emit four tonnes of methane a year in burps and flatulence, compared with 2.7 tonnes of carbon dioxide for an average car.

In addition to contributing greenhouse gases, they also contribute to humans not dying of starvation. Nevertheless, in Europe the solution may be a new fart tax.

Proposals to tax the flatulence of cows and other livestock have been denounced by farming groups in the Irish Republic and Denmark.

A cow tax of €13 per animal has been mooted in Ireland, while Denmark is discussing a levy as high as €80 per cow to offset the potential penalties each country faces from European Union legislation aimed at combating global warming.

The proposed levies are opposed vigorously by farming groups. The Irish Farmers’ Association said that the cattle industry would move to South America to avoid EU taxes.

A problem in the Arab world

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