03-24-2015, 08:04 PM
TECTONIC PLATES SHIFTING IN WORLD POWER STRUCTURE ARE SIGNS OF A NEW WORLD ORDER
http://www.michaelmeacher.info/weblog/20...rld-order/
Something has just happened which got hardly any attention in the media, but which is very important. The recent setting up by China of the Asian Infrastructure Investment Bank may not seem likely to excite the passions, but it should. For this is clearly an intention by the big Asian powers to challenge the World Bank and the IMF which have been the cornerstone of Western (for which read US) domination of the global economy since Bretton Woods in 1944 and the main deliverers of the so-called ‘Washington consensus’. It is equally significant that several of Washington’s European allies, led by Britain, have signed up to become founding members of the new bank, despite vigorous US lobbying to stop them joining. France, Germany and Italy have also now joined up, and Australia and South Korea are also now thought likely to join. This unprecedented desertion of the US approach by its key allies has left Washington scrambling to recover from a major setback. But the immediate signs are that it’s not succeeding.
Jack Lew, the US Treasury secretary, has been forced to go to Congress to plead with the Republican majority to drop their opposition to IMF reforms which would give China and other emerging powers a greater voice in the Fund. He stated that if the reforms were not accepted when “our international credibility and influence are being threatened”, there will be “a loss of US influence and our ability to shape international norms and practices”. Republican intransigence may well block the Obama team’s initiative.
So why did the UK, which usually kowtows to all US demands and was recently described by a Beijing thinktank as “America’s thug for hire”, step out of line? Following Lew’s line that the US is concerned that the new bank will not live up to the ‘highest global standards’, Osborne said the UK was joining up to ensure that the bank was ethical, transparent and efficient (!). How he has the gall to utter such platitudes in the light of a decade of monstrous corruption by Britain’s Big 4 banks is beyond satire. But of course such weasel declarations have nothing to do with the truth. The most obvious reason is that Osborne wanted to make the City of London a prime offshore financial centre for China and the renminbi. Whether Osborne succeeds in the light of still raw Chinese memories of the opium wars, the history of gunboat diplomacy and the legacy of Britain’s ‘unequal treaties’ and colonial subjugation in China, is another matter.
There are good reasons for the proposed World Bank reforms. Presently China has just 3.8% of voting rights though it control 16% of global output. The rules and norms that have governed international relations since the 1940s were made in Washington’s image , and unsurprisingly China objects to norms made then which still allow the US to police Asian waters vital to China’s interests. Even if reform is blocked in the US Congress for the present, in the medium term it is inevitable. A recognition of the real reasons for that by the West, as opposed to empty platitudes, would be helpful and the best way to ensure that this major transition in world affairs is carried through with least disadvantage to the old US-UK powers.
WHEN NEO-LIBERALISM IS PHASED OUT SO SHOULD THE IMF AND WORLD BANK
http://www.michaelmeacher.info/weblog/20...d-bank-be/
We are constantly being told that 2014 is the centenary of the start of the First World War, but rather less – or indeed nothing at all – is being made of the fact that this year is also the 70th anniversary of the establishment of the IMF and World Bank. That is more than a pity because both these institutions are redolent of the Washington Consensus, the darker side of US foreign policy, and the domination of the Western countries over the former colonies and the emergent economies, all of which are now under profound challenge and being forced to give way to new structures of power. And as neo-liberalism has become increasingly volatile and toxic under the impact of financialised capitalism over the last three decades, it has become more and more clear that a new model of global governance is needed that fits these new constellations of power. It would also be helpful if Labour, which has so far concentrated exclusively on domestic issues, could extend its reach by highlighting how its domestic vision of the realignment of corporate power should apply also within the world community.
Certainly the record of the IMF and World Bank has been abysmal. They have consistently supported corrupt and dictatorial regimes so long as they served Western interests – in the Congo, Rwanda, Indonesia, Philippines, Tunisia and Egypt. They used their resources and power to undermine and destroy outbreaks of democracy – Mossadegh in Iran, Arbenz in Guatemala, Goulart in Brazil, the Sandinistas in Nicaragua, Allende in Chile, and many others. When countries, despite the efforts of the IMF and World, nevertheless gained their independence in the 1950-60s, they forced these fledgeling independent states to repay the odious debts contracted by the previous authoritarian and corrupt regimes.
They continued to provide financial back-up to countries like apartheid South Africa and Portugal in their suppression of the countries and races they controlled whether in Africa or the Pacific. In terms of the environment and climate change, they overwhelmingly backed the fossil fuel industries and multinational exploitation of indigenous resources in the newly independent developing countries. The World Bank financed projects that flagrantly violated human rights such as the enforced displacement of populations in Indonesia. And their signature policy, the liberalisation of capital flows, has paved the way for the current industrial-level tax avoidance, extensive corruption, and abrupt flight of capital that is so badly damaging emerging markets.
So what should be done? What is needed is an alternative to the World Bank that allows regionalised banks in different continents, particularly in the South, to supply very low interest loans or grants to emerging economies on condition that they observe strict social, employment and environmental standards and respect fundamental human rights. Equally the IMF should be transformed to its real mandate to ensure currency stability, replace its neoliberal dogma with a genuine developmental model, and coordinate international action to crack down on tax havens and tax avoidance in all its forms.
DEBT MOUNTAINS EVERYWHERE ARE RAPIDLY PRECIPATING NEXT FINANCIAL CRASH
http://www.michaelmeacher.info/weblog/20...ial-crash/
The big problem, the very big problem indeed, for capitalism at its present stage is that demand is flat or falling. That underlying pattern has existed for the last 40 years since the demand for continent-wide reconstruction after the Second World War gradually petered out in the 1970s. Thereafter the flatness of demand was to some extent hidden by the acceleration of global arms expenditure in the Cold War as well as by the world-scale development in technology applying to cars, planes and computers. The unipolar power of the US as the world’s hegemon plus the paucity of technological breakthroughs with worldwide industrial application have left a growing vacuum of demand sufficient to power a global capitalism that depends on it. That comparative vacuum which was met by the enormous explosion of debt in the 1990-2000s, and which led directly to the global financial crash of 2008-9, is once again being met by the huge expansion of debt which cannot conceivably be sustained long-term.
The one relatively bright spot last time round was China. Its growth rate fell, but was still strong by Western economy standards. Now however China is joining other nations propelled by debt-fuelled growth. Total bank and other-financial lending in China hit almost 200% of GDP in 2012, well on the way to doubling since the 125% level in 2008. Moreover the debt is growing twice as fast as the economy. That kind of debt-laden growth can survive for some time, but sooner rather than later will hit the buffers because the level of debt cannot be paid down.
Next, Europe. Lombard Research has found that EU banks are more or less insolvent and only survive because of Draghi’s famous commitment to do ‘whateve it takes’ to preserve the euro. That has meant providing unlimited liquidity to the EU banks. This again is not a long-term tenable position because the EU banks’ liabilities exposure is 350% of EU GDP (compared, say, to only 80% for US banks in relation to US GDP). Moreover the eurozone banks are not only highly leveraged, but are still expanding their balance sheets and making little effort to recapitalise.
Then there is what the Director of Financial Stability at the Bank of England has termed “the biggest bond bubble in history”. This is the flip-side of the government pumping £375bn of electronic money (QE) into the UK economy over the last 4 years. If that colossal bubble were to deflate in a rapid or disorderly fashion – signs of which were apparent when Bernanke at the US Federal Reserve indicated he might begin to reduce the QE stimulus – the consequences would be catastrophic. What makes these risks even worse is the further bubble created by Osborne’s insane help-to-buy mortgage guarantee scheme.
What is needed, but no political leader will talk about, is not the further magnification of already gigantic financial bubbles, but rather the release of the suppressed demand caused by decades of squeezing wages and the ideological taboo at the centre of neoliberal capitalism against any use of Keynesian demand stimulus.
http://www.michaelmeacher.info/weblog/20...rld-order/
Something has just happened which got hardly any attention in the media, but which is very important. The recent setting up by China of the Asian Infrastructure Investment Bank may not seem likely to excite the passions, but it should. For this is clearly an intention by the big Asian powers to challenge the World Bank and the IMF which have been the cornerstone of Western (for which read US) domination of the global economy since Bretton Woods in 1944 and the main deliverers of the so-called ‘Washington consensus’. It is equally significant that several of Washington’s European allies, led by Britain, have signed up to become founding members of the new bank, despite vigorous US lobbying to stop them joining. France, Germany and Italy have also now joined up, and Australia and South Korea are also now thought likely to join. This unprecedented desertion of the US approach by its key allies has left Washington scrambling to recover from a major setback. But the immediate signs are that it’s not succeeding.
Jack Lew, the US Treasury secretary, has been forced to go to Congress to plead with the Republican majority to drop their opposition to IMF reforms which would give China and other emerging powers a greater voice in the Fund. He stated that if the reforms were not accepted when “our international credibility and influence are being threatened”, there will be “a loss of US influence and our ability to shape international norms and practices”. Republican intransigence may well block the Obama team’s initiative.
So why did the UK, which usually kowtows to all US demands and was recently described by a Beijing thinktank as “America’s thug for hire”, step out of line? Following Lew’s line that the US is concerned that the new bank will not live up to the ‘highest global standards’, Osborne said the UK was joining up to ensure that the bank was ethical, transparent and efficient (!). How he has the gall to utter such platitudes in the light of a decade of monstrous corruption by Britain’s Big 4 banks is beyond satire. But of course such weasel declarations have nothing to do with the truth. The most obvious reason is that Osborne wanted to make the City of London a prime offshore financial centre for China and the renminbi. Whether Osborne succeeds in the light of still raw Chinese memories of the opium wars, the history of gunboat diplomacy and the legacy of Britain’s ‘unequal treaties’ and colonial subjugation in China, is another matter.
There are good reasons for the proposed World Bank reforms. Presently China has just 3.8% of voting rights though it control 16% of global output. The rules and norms that have governed international relations since the 1940s were made in Washington’s image , and unsurprisingly China objects to norms made then which still allow the US to police Asian waters vital to China’s interests. Even if reform is blocked in the US Congress for the present, in the medium term it is inevitable. A recognition of the real reasons for that by the West, as opposed to empty platitudes, would be helpful and the best way to ensure that this major transition in world affairs is carried through with least disadvantage to the old US-UK powers.
WHEN NEO-LIBERALISM IS PHASED OUT SO SHOULD THE IMF AND WORLD BANK
http://www.michaelmeacher.info/weblog/20...d-bank-be/
We are constantly being told that 2014 is the centenary of the start of the First World War, but rather less – or indeed nothing at all – is being made of the fact that this year is also the 70th anniversary of the establishment of the IMF and World Bank. That is more than a pity because both these institutions are redolent of the Washington Consensus, the darker side of US foreign policy, and the domination of the Western countries over the former colonies and the emergent economies, all of which are now under profound challenge and being forced to give way to new structures of power. And as neo-liberalism has become increasingly volatile and toxic under the impact of financialised capitalism over the last three decades, it has become more and more clear that a new model of global governance is needed that fits these new constellations of power. It would also be helpful if Labour, which has so far concentrated exclusively on domestic issues, could extend its reach by highlighting how its domestic vision of the realignment of corporate power should apply also within the world community.
Certainly the record of the IMF and World Bank has been abysmal. They have consistently supported corrupt and dictatorial regimes so long as they served Western interests – in the Congo, Rwanda, Indonesia, Philippines, Tunisia and Egypt. They used their resources and power to undermine and destroy outbreaks of democracy – Mossadegh in Iran, Arbenz in Guatemala, Goulart in Brazil, the Sandinistas in Nicaragua, Allende in Chile, and many others. When countries, despite the efforts of the IMF and World, nevertheless gained their independence in the 1950-60s, they forced these fledgeling independent states to repay the odious debts contracted by the previous authoritarian and corrupt regimes.
They continued to provide financial back-up to countries like apartheid South Africa and Portugal in their suppression of the countries and races they controlled whether in Africa or the Pacific. In terms of the environment and climate change, they overwhelmingly backed the fossil fuel industries and multinational exploitation of indigenous resources in the newly independent developing countries. The World Bank financed projects that flagrantly violated human rights such as the enforced displacement of populations in Indonesia. And their signature policy, the liberalisation of capital flows, has paved the way for the current industrial-level tax avoidance, extensive corruption, and abrupt flight of capital that is so badly damaging emerging markets.
So what should be done? What is needed is an alternative to the World Bank that allows regionalised banks in different continents, particularly in the South, to supply very low interest loans or grants to emerging economies on condition that they observe strict social, employment and environmental standards and respect fundamental human rights. Equally the IMF should be transformed to its real mandate to ensure currency stability, replace its neoliberal dogma with a genuine developmental model, and coordinate international action to crack down on tax havens and tax avoidance in all its forms.
DEBT MOUNTAINS EVERYWHERE ARE RAPIDLY PRECIPATING NEXT FINANCIAL CRASH
http://www.michaelmeacher.info/weblog/20...ial-crash/
The big problem, the very big problem indeed, for capitalism at its present stage is that demand is flat or falling. That underlying pattern has existed for the last 40 years since the demand for continent-wide reconstruction after the Second World War gradually petered out in the 1970s. Thereafter the flatness of demand was to some extent hidden by the acceleration of global arms expenditure in the Cold War as well as by the world-scale development in technology applying to cars, planes and computers. The unipolar power of the US as the world’s hegemon plus the paucity of technological breakthroughs with worldwide industrial application have left a growing vacuum of demand sufficient to power a global capitalism that depends on it. That comparative vacuum which was met by the enormous explosion of debt in the 1990-2000s, and which led directly to the global financial crash of 2008-9, is once again being met by the huge expansion of debt which cannot conceivably be sustained long-term.
The one relatively bright spot last time round was China. Its growth rate fell, but was still strong by Western economy standards. Now however China is joining other nations propelled by debt-fuelled growth. Total bank and other-financial lending in China hit almost 200% of GDP in 2012, well on the way to doubling since the 125% level in 2008. Moreover the debt is growing twice as fast as the economy. That kind of debt-laden growth can survive for some time, but sooner rather than later will hit the buffers because the level of debt cannot be paid down.
Next, Europe. Lombard Research has found that EU banks are more or less insolvent and only survive because of Draghi’s famous commitment to do ‘whateve it takes’ to preserve the euro. That has meant providing unlimited liquidity to the EU banks. This again is not a long-term tenable position because the EU banks’ liabilities exposure is 350% of EU GDP (compared, say, to only 80% for US banks in relation to US GDP). Moreover the eurozone banks are not only highly leveraged, but are still expanding their balance sheets and making little effort to recapitalise.
Then there is what the Director of Financial Stability at the Bank of England has termed “the biggest bond bubble in history”. This is the flip-side of the government pumping £375bn of electronic money (QE) into the UK economy over the last 4 years. If that colossal bubble were to deflate in a rapid or disorderly fashion – signs of which were apparent when Bernanke at the US Federal Reserve indicated he might begin to reduce the QE stimulus – the consequences would be catastrophic. What makes these risks even worse is the further bubble created by Osborne’s insane help-to-buy mortgage guarantee scheme.
What is needed, but no political leader will talk about, is not the further magnification of already gigantic financial bubbles, but rather the release of the suppressed demand caused by decades of squeezing wages and the ideological taboo at the centre of neoliberal capitalism against any use of Keynesian demand stimulus.