Former UNCTAD Economist Flassbeck Argues for Market Holiday, Instant Kreditanstalt Business Loans

March 23 (EIRNS)—In an exclusive interview with Milena Preradovic’s blog, Punkt.Preradovic, former chief economist of UNCTAD in Geneva Heiner Flassbeck calls for a shutdown of stock markets for one month, or better for two, because continued ups and downs make people nervous and aggravate the panic. He also urges throwing the EU Maastricht criteria, and dogmas on debt and debt brake (zero budget increases), overboard. Flassbeck’s recommendations indicate fertile ground in some circles for the proposals in the direction of Glass-Steagall and LaRouche’s Four Laws, made by Schiller Institute President Helga Zepp-LaRouche two weeks ago.

Flassbeck says the most important thing, next to the necessary medical measures, is to grant loans at an enormous range to companies, to prevent them from going under, and, where necessary, to enable them to continue production. The present crisis is not a recession, but a deep shock that will likely cause a reduction in economic output by up to 30%, Flassbeck says, and which requires a serious emergency mobilization, because one cannot simply shut down all of the economy and wait for something to happen. The debt ratio in Germany and elsewhere will grow to 90-100% of GDP, but this is a very specific situation in which one cannot conduct business as usual. And, it would be completely irresponsible, he continues, once the disease crisis is over, to try to return to budget austerity as a means to drive the debt ratio back to the 60% rule of the Maastricht system.

Companies need emergency loans in the next few days, not in five months, when the bureaucrats have finally looked at all the figures, at which point the companies may no longer exist. Move the bureaucrats out; new people who know what to do and do it quickly must take over. The instant loans to the companies should be handed out by the German state bank Kreditanstalt für Wiederaufbau.