Western economy on verge of collapse

The head of the International Monetary Fund (IMF) Christine Lagarde has said that world's economy is in a dangerous situation.

She urged Europeans to speak with one voice on the region's debt crisis that has rattled the global financial system.

Lagarde also criticized the latest EU summit that drafted a new treaty for deeper economic integration in the eurozone.

She said the summit was not detailed on financial terms, being too complicated on fundamental principles.

Press TV has conducted an interview with Rodney Shakespeare, professor of binary economics, to share his opinion on this issue.

Following is a transcript of the interview:

Press TV: Now professor Shakespeare, what Christine Lagarde is saying that this is a dangerous situation, has things changed so much from just a few months ago that now she is speaking, it seems with a little bit more urgency than before?

Shakespeare: The good news is that she is waking up showing some realism about how dangerous the situation has become and she is recognizing that Europe is failing to take effective action but, and this is the bad news that she does not specify exactly what should be done and the problem there is that she herself in effect, is at the acme of a collapsing system and therefore she is not going to propose anything that fundamentally change it.

So in effect, she is a talking puppet for a corrupt system and she is not going to propose the one thing which needs to be done which is for the national banks that issued interest-free loans in a large way for the benefit of jobs and ordinary people.

Press TV: Okay so let's say that she knows exactly what needs to be done to salvage the system but because that she is basically a part of the system, so what is the point in even pointing this out and talking about the severity of it? Why is she doing that? What can she accomplish from this?

Shakespeare: She is a talking puppet who can accomplish nothing except to depress people and to ensure that nothing happens. That is exactly what the problem is. If she cannot proposes something which is going to actually change the situation and improve it, which means getting the money out into the hands of jobs, for the people don't lose their homes etc. etc., then she should get out. The IMF is part of the system and it does not have any means of fundamentally correcting what is wrong.

Press TV: So professor, where is the European economy, and should I say the global economy, headed in your perspective in 2012?

Shakespeare: Christine Lagarde has rightly said that Europe is failing to take action, that putting up things which are much too complicated but the action that Europe proposes will also not be effective, it is in effect just kicking the can down the road and Christine Lagarde sees and understands that.

But at the moment, the attention is on Europe, because when the European economies go down, that would mean the banks would go down, that will immediately instigate probably this huge pyramid of derivatives which are based upon things like an insurance for whether or not a national government pays for its bonds. In other words default against, forms of default, insurance against faults or default.

So she is quite right to see that Europe is at the center amount of the trouble but then the USA as well is a Western system which is totally now inundated with irreparable debt.