Some of the so-called "Friends of the Helsinki Process" sent low-level diplomats to Dar es Salaam, or nobody at all in the case of Brazil, Canada and Britain.

The Helsinki Process on Globalization was launched five years ago by Finland and Tanzania with the aim of addressing international divisions, to achieve an inclusive globalization process based on human and environmental security.
Last week, however, at a conference held in the Tanzanian financial center of Dar es Salaam to review the second phase of the process, it was sentenced to die young.
In September 2008 its sponsors will deliver a final report to the United Nations secretary-general summarizing the work and proposals of the initiative. Without the passionate drive of Erkki Tuomioja--Finland’s minister of foreign affairs until March this year--it is likely that the Helsinki report will simply add to the seldom read and rarely implemented analyses of global problems piling up at international organizations, diplomats said.
The November 27-29 conference revealed little--if any--enthusiasm on the part of the new center-right Finnish government to follow up on what many in Finland’s political establishment considered a whimsical project of the leftish, unconventional Tuomioja.
Whimsical it may have been. Nonetheless, the Helsinki Process was a unique forum in which nothing was deemed politically incorrect, nobody too insignificant to be present, and participants did not necessarily belong to the usual collection of development speakers.
Even before the review of two years of discussions on issues such as peace and security, poverty and development, human rights, governance, informal diplomacy and the environment, Tanzanian Foreign Affairs Minister Bernard Membe announced the end of the process. This came in his inaugural speech, surprising many.
During the closing ceremony Thursday, Finnish Foreign Trade and Co-operation Minister Paavo Vayrynen said that “the Helsinki Process will continue in other fora“. Directly afterwards, however, his Tanzanian colleague said it would instead evolve into a Dar es Salaam-based “Regional Center for Policy Development“.
The center had been mentioned by Membe at the start of the conference as something “offered“ by Finland. This generated some local headlines but irritated Finnish officials, who told Ipsnews.net that shrinking an ambitious world-saving project into an East African think tank was not exactly what Helsinki had envisaged.
The contrast between the first conference of the Helsinki Process, held in December 2002 in the Finnish capital, and the latest gathering, was telling. In 2002 a parade of ministers from the centre-left coalition led by the Social Democratic Party moderated debates, while the meeting was addressed by both the president and prime minister of Finland.
For last week’s proceedings, held under the theme ’Inclusive Governance--Bridging Global Divides’, the highest-ranking Finnish official present was Deputy Foreign Affairs Minister Teija Tiilikainen, until the late arrival of Vayrynen to deliver the closing speech.
Consequently some of the so-called “Friends of the Helsinki Process“--countries which assisted in the second phase of the initiative, from 2005 to 2007--sent low-level diplomats to Dar es Salaam, or nobody at all in the case of Brazil, Canada and Britain. The sole exception was Egypt, represented by Assistant Foreign Minister Raouf Saad.
However, the lack of senior diplomats did not deter delegates from flooding the various conference events with opinions and ideas. An Indian participant suggested that instead of setting up a Regional Center for Policy Development, the process should establish a “Center for Bitter Confrontation“ between North and South, between transnational corporations and the dispossessed.
The last word on the Helsinki Process may not have been said. But, it seems clear that Finland is not keen to keep footing the bill for an exercise that is not delivering quick political returns.

In Soviet times, their own funerals were almost the only thing elder Russians were saving for.

According to a number of surveys, almost 70 percent of Russians don’t have any savings at all. And of those who do have the ability to invest, only a third have entrusted their money to banks, and about a half keep savings in cash at home.
One of the most significant reasons for the lack of confidence in Russia’s banking system, its financial market and private pensions is a collection of bad memories from the 1990s.
When the Soviet Union collapsed in 1991, millions of Russians lost their rouble savings due to rocketing inflation and the lack of opportunity to spend or invest their money because of a huge goods deficiency and the non-existence of a financial market.

Rouble Resurrection
So for a long time the American dollar--in cash, of course--was the only trusted means of saving for Russians. But in recent years the declining dollar and growing economic stability in Russia have made the rouble the most attractive currency in the country.
Half of Russians say that the rouble is the best currency for savings, with a quarter trusting in the euro and only a few in the dollar. The problem, though, is that because of the high rate of inflation--prices are set to rise more than 10 percent this year--the national currency can not preserve the value of savings as the average interest rate for rouble deposits’ is lower than the inflation rate.
All these factors explain why about half of Russians see property investment as the best way to gain significant returns. Dollar denominated flat prices in Moscow almost doubled in 2006. This year they have stagnated a little, but started to climb again recently.
Some experts say there is potential for the growth to continue, as the prices are up to three times lower than in London, for example.

Question of Trust
Irina Denisova, lead economist at the Center for Economic and Financial Research at New Economic School in Moscow, thinks people don’t invest their money in the best way, including in property, because of a lack of trust in financial institutions.
“They try to find an investing form that doesn’t depend on the government,“ she told BBC.
Some people even prefer to invest in their children’s future, hoping that they will be supported by them in retirement.
Ekaterina Pokoptseva, an analyst at the Association of Russian Banks, says the structure of Russia’s financial market is not household-oriented and attracts mostly institutional investors.
No Need to Save
Another factor preventing Russians from investing their money is a lack of financial knowledge due to no experience in the field.
For instance, surveys suggest almost 90 percent of people have not bought any shares and do not plan to. Even the consumer credit and mortgage market that has been growing rapidly recently, didn’t exist several years ago.
Official statistics show Russians had 4.6 trillion roubles in savings at the start of October and drew upon credits of 2.9 trillion roubles, with the credit sum rising faster than the savings.
Professor Liudmila Rzhanitsyna, chief researcher at the Institute of Economics at Russian Academy of Sciences, advises that in Soviet times there was no need to make savings as social guarantees were in place and everybody got a state pension.
In reality, their own funerals were almost the only thing elder people were saving for.

Many lenders have tightened their lending criteria as a result of the problems in the US subprime mortgage sector.

Housing market in the UK has been slowing dramatically in recent months, and it appears that worse is yet to come.
The latest data from the British Bankers’ Association (BBA) show that the number of home loans plummeted by 22.4 percent month on month to a record low of 44,105 in October--and this marks the third successive month of decline. In year-on-year terms, loans secured on housing fell by 37.4 percent. In the BBA’s press release, its statistics director, David Dooks, warned that the latest data provided “evidence of a rapidly slowing mortgage market“.
As reported by Economist.com, backing up BBA figures, Halifax reported that its house price index fell by 0.5 percent month on month in October, following a 0.6 percent decline in September. According to the latest housing market survey from the Royal Institution of Chartered Surveyors, 22.2 percent more chartered land surveyors had reported a drop in house prices in October, compared with 14.9 percent in September.
Why the turnaround from what has been a heady market? Higher interest rates have begun to limit the extent to which demand for housing can be financed. Rates have risen five times, by a total of 125 basis points, over the past 15 months.
Although it is widely accepted that the Bank of England (BOE, the central bank) is about to embark upon a period of monetary loosening base interest rates are not expected to fall below 5 percent for the foreseeable future.
UK house prices have become unaffordable to an increasing number of the population, given that household debt now exceeds 150 percent of disposable income (a historical high), and that the mortgage interest burden stands at 20 percent of gross income (up from 11 percent in 2003).
Even if demand were strong enough to continue to push up house prices, the recent credit crunch has reduced the funds available to potential house buyers as lenders have reined in borrowing. There is also the additional expense from the extension of the controversial Home Information Packs (HIPs), which cost on average between £300 and £350, to all properties from December 14th (HIPs are currently a mandatory requirement for properties with three bedrooms or more).
Increased mortgage repayments are set to deal current homeowners a further blow. According to the Council of Mortgage Lenders (CML), 1.4 million people will reach the end of cheap fixed-rate loans over the next 12 months, and will then have to make higher monthly repayments.
Given the current credit squeeze, there will be few attractive offers from banks to refinance for a better deal. Indeed, many lenders have tightened their lending criteria as a result of the problems in the US subprime mortgage sector. According to a report from Moneyfacts (an independent financial research group) as of October, lenders had withdrawn 40 percent of buy-to-let and residential mortgage products over the past three months.
In the case of “bad credit“ mortgages, there was a 72 percent drop after rapid growth prior to the problems in the sub-prime mortgage market.

The weather may be cold and wet, but in the rich world’s financial markets it is beginning to feel like August all over again. Credit spreads have widened and shares are pitching from gloom to elation as investors look to the Federal Reserve for solace. The anxiety is unmistakable.
But this time the scare is about more than bad mortgage loans and their baleful effect on the credit markets. America may be falling into recession. And a new fear now stalks the markets: that the dollar’s slide could spin out of control, reported AP.
A full-blown dollar crisis on top of a credit crunch and a weakening economy would be frightening. It would send financial markets reeling and tie the hands of the Fed, perhaps forcing it to raise interest rates even as recession looms. The sky-high euro would soar further, choking off Europe’s growth. Political tensions would also rise. Already Airbus has called the dollar’s decline “life-threatening“ and France’s president, Nicolas Sarkozy, has given warning of “economic war“.
At worst, the shadows could darken further. For half a century the dollar has been the hegemonic currency. A large slice of global trade is counted in dollars. Central banks hold most of their foreign-exchange reserves in dollars, a boon for America that has allowed it to issue debt more cheaply.
That dominance has survived dollar slides before, as in the late 1970s and mid-1980s. But now, with the euro as an alternative, the fear is of a sudden shift in the global monetary system, with investors switching quickly from one currency to the other.
So far, this remains only a fear. Although the dollar has been falling at quite a lick--down 6 percent against a trade-weighted basket of currencies since August--it has seen no chaotic slump, but a slide interspersed with brief rallies. Americans’ expectations of future inflation have not yet risen much. Yields on government bonds have fallen: clearly, investors do not yet expect higher premiums for safe American assets. Whether disaster strikes depends on what exactly is driving the dollar down and on how policymakers react.
Much of the dollar’s weakness is driven by economic fundamentals. Since peaking in 2002, it has fallen by 24 percent against a trade-weighted basket of currencies. Given America’s need to borrow from abroad to finance its consumption, that is neither surprising nor sinister. By inducing Americans to import less and export more, a weaker dollar helps cut the current-account deficit. For America, the medicine has been working--the deficit is down to 5.5 percent of GDP from a peak of almost 7 percent.
But economic fundamentals are not all that is hurting the dollar. The currency is also suffering because the credit mess is concentrated in dollar assets. Investors’ conviction that transparent markets and vigilant regulators make America a safe place to store money has taken a battering from the revelations of recent weeks. Net private capital inflows into America seem to have evaporated since the credit turmoil began. The subprime crisis has tarred the dollar as a subprime currency.
If the slide becomes chaotic, it could demand currency-market intervention and a willingness to hold back interest-rate cuts for the sake of the dollar.
The other part of the solution lies elsewhere, particularly with those countries with dollar-pegging currencies. These economies need to allow their currencies to rise, both to curb inflation and encourage the rebalancing of the global economy. Appreciation would mean that these countries accumulated new dollar reserves at a slower pace.