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TechnoratiThe G-20 and Biological Warfare
Imagine that the United States was researching biological weapons and it inadvertently allowed a deadly bacteria to get into the atmosphere. The bacteria quickly spread around the world, leading to sickness and death everywhere.
Fortunately, US scientists have developed a drug to treat the disease, which the United States generously shares with the other wealthy countries and a select group of developing countries. Unfortunately, there are a number of developing countries with whom the United States does not choose to share the drug.
This picture would pretty well describes the world financial crisis as the G-20 prepares to meet in Washington this week. The Wall Street geniuses managed to tie up the whole world's financial system with the housing bubble in the United States. They crafted exotic financial instruments which they sold to investors in Europe, Asia, and elsewhere.
The collapse of the housing bubble led to the disappearance of trillions of dollars of financial wealth in a hugely over-leveraged system. This has led to the rash of bank collapses in the United States, Europe, and in other countries where banks bought Wall Street's junk.
However, the financial panic has also infected regions of the world where the banks did not play the Wall Street housing bubble game. The widely touted flight to safety has meant massive withdrawals of capital from countries like Argentina and Pakistan, where banks and investors had been little involved in the speculation driven by the housing bubble. The fear generated by the financial panic has caused investors to flee developing countries for the safety of US treasury bonds or the bonds of other wealthy countries.
The cure that the wealthy countries have for their financial crisis actually makes the situation even worse for the developing world. The United States government and European Union countries have given hundreds of billions of dollars to their banks to keep them afloat. These governments have also guaranteed a wide range of deposits, which means that deposits in these banks are now as secure as the governments themselves.
This massive infusion of money, coupled with the government guarantees, gives the banks in the wealthy countries an enormous competitive edge over their counterparts in the developing world. Banks in Argentina or Pakistan would have to pay an enormous interest rate premium to compete with government-subsidized banks in the United States and Europe, which now operate with government guarantees.
This protectionism (yes, it is protectionism, even though the media do not use that term to describe government subsidies to banks) is inflicting an enormous cost on the developing world. Just as would be the case when the developing world is left to confront the deadly bacteria on its own, most of the developing world will have to cope with this US-generated financial crisis on its own.
The G-20 will no doubt decide to make some aid, presumably through the International Monetary Fund, available to the countries being hit by the fallout from Wall Street's financial meltdown. But this aid will come with strings and likely not be sufficient to make these countries whole.
There is no easy remedy to this situation. But it should be obvious to the developing world that the only way that they can protect themselves from the episodic crises created by the rich countries is to have alternative poles of financial support. Specifically, if they can establish regional funds, as the South American countries have begun to do with the Bank of the South, then they can hope to insulate themselves from the financial dealings and misdealing of the wealthy countries.
Building up regional funds will not be easy. Countries will have to make compromises and surrender some control to allow a regional fund to operate effectively. In addition, the wealthy countries will go to considerable lengths to prevent the creation of effective regional funds. The most obvious route will be to invite a few important actors in the developing world to sit among the wealthy countries as junior partners.
These tactics may prove successful. However, until the developing countries can turn to alternative sources of capital, they will be susceptible to every crisis resulting from the regulatory failures of the wealthy countries, even if they had been completely responsible in managing their own financial affairs. It's not fair, but that is the way the world works.
8 Comments so far
Show AllWhy are we even bothering to fund the IMF and G-20 with our taxpayer money? Get rid of those two shenanigans. Government that governs the least governs the best !
Siouxrose
Glad you see the beauty and wisdom of these proposals, which did not originate in my brain, I hasten to add.
I believe these were developed by Richard Cook. His articles can be found at globalresearch.ca. He advocates from a school of populist economics called "social credit" which is based on the work of CH Douglass, notably his book titled "Economic Democracy".
Cook is sponsoring a petition to be sent to the upcoming global economic meeting. This petition is available to sign at globalresearch.ca. I took the proposals from that petition.
Maybe you'd like to sign and lend your voice to the call for the development of a populist monetary system.
We've had enough of this privatized bugger the poor pyramid scheme, haven't we?
This seems like the final goal of disaster capitalism. To survive, the developing world will now have to sell their land and resources to wealthy country's merging banks and corporate monopolies at bargain basement prices.
This isn't just Milton Friedman's revenge on the world for being short, it has been carefully planned by the world's oligarchy.
It is strange that during this moment of financial crisis that threatens to bring the entire world to its knees, no economist questions the financial system itself, not even Nouriel Roubini, who was among the first of the voices to sound the alarm.
Why? Does Dean Baker assume there is no alternative to the privatized central bank? It's hard to know what these knuckle heads think because they never raise the question so that it can be considered. And that question is: Has the Federal Reserve System established in 1913 failed to fulfill its mandate of financial stabilization?
The answer is YES! Repeatedly. Therefore, Dean Baker, let's consider an alternative to the private banking system. Let's stop with the dodges, the evasions, and the rationalizations. The Fed is not federal, not accountable, and the root cause of the current crisis. The Fed is the servant of private capital and it cares little for the general welfare. It is essentially parasitic and destructive of the general welfare.
These recapitalization efforts do nothing more than reward the perpetrators of financial crimes. The stimulus efforts will fail.
Let's make a REAL CHANGE. The following principles should become the basis for a populist monetary system that will provide stability and economic justice.
● Monetary systems should be controlled by sovereign national governments, not the central banks which mainly serve private finance. The main economic function of the monetary system should be to assure adequate purchasing power to consume an environmentally sustainable and optimal level of production whereby the basic needs of every person in the world community are satisfactorily met.
● Income security, including a basic income guarantee and a national dividend, should be a primary responsibility of national governments in the economic sphere. A right to adequate purchasing power should be part of every national constitution.
● The primary function of international finance should be to assure fair transferability of
value among national economic systems, utilizing, to the extent possible, fixed and transparent exchange rates. Speculative attacks on sovereign currencies should be outlawed.
● Private creation of credit for speculative purposes should be abolished, and capital markets should be regulated to assure fairness, openness, and freedom from predatory practices.
● Every national government should have the right to spend lowcost credit directly into
existence for public purposes—including infrastructure, environmental protection, education, and health care—without incurring new debt.
● The physical backing for every currency in existence should be the actual production of national economies.
● National governments should treat credit as a public utility — like clean air, water, or
electricity — and should assure its availability to all citizens as their social heritage and as a basic human right.
● National credit policies should favor the development of sustainable local and regional
economies, of small business, and of family farming.
● Credit should be regulated in order to encourage maximum ownership of property by
individuals without artificially inflating its price.
● The private banking system should be utilized to provide liquidity for business operations but should not be needed in a properly constituted system to finance consumption or capital formation.
● There should be an immediate worldwide moratorium on home foreclosures and
recognition of the right of each person to a secure home.
● An International Debt Settlement Commission should be formed and charged with producing a clean financial slate by reviewing all existing public and private debt and determining through due process what can reasonably be repaid, restructured, or forgiven.
It is time to assure that the world financial system is no longer operated for the benefit of the few over the many and that it reflects the spiritual principle that the natural resources of the Earth belong to all of humanity and must be rationally distributed to every individual, such that no one is left behind on the path of human progress.
your last paragraph, sealed your concept into the same faulty "container" of "logic" that has led to the current problems.
The "world financial system" was developed with the single intent that the few benefit at the cost of the many------from "hunter gatherer"----mostly tribal/familial origins---with a relatively small population until the advent of "mass agriculture"; and the only way to change that is to reduce the populations currently putting pressure on the faulty system.
"the spiritual principal that the natural resources of the Earth belong to all of humanity and must be rationally distributed to every individual such that no one is left behind on the path of human progress"..........
Please give at least one "citation" excepting any of religious origins---that mention the "spiritual principal" that applies to a "creature" that is a relative late arrival---slow to evolve and improve- (3 mill years) v 10K years of "development" i.e. "civilization"-----a creature coming from "hunter gatherer" origins---where the archaeological evidence overwhelmingly points to the fact that "humanity" has always fed off each other-----
Religion especially, then racial then social then population control and finally "personal" differences will need to be overcome---for the majority to enjoy the "proposal" you postulate------and with the current weapons systems available----humanity does not have much time left.
I'm sure that your heart is pure and your intentions are honorable-----and your proposal will appeal to many---most of which are waiting for their Messiah to return----any day now I hear----and either take them to this place you describe----or establish it here on a polluted planet-------
Either way, I personally will not be a participant----because I am capable of returning at a moments notice to the "hunter gatherer" mode------are you?
Civilization is an experiment that has never been closer to failure than now----and saving it for future generations will be difficult with the world populations in their present numbers. The pressures on a finite planet have already been observed--even though largely ignored/denied by the controlling groups-----and the "clock is ticking"----tick tic--tick toc---so hone your hunting and gathering skills----and remember----if YOU survive---- that "milk fed puppy" is some very good eating.
You do have a "sweet thought though"--------good luck with it ---you'll need luck.
I agree with much of what you write.
"World population" and its continual increase is a threat to civilization and to life itself. We are struggling with pollution, environmental degradation, water and food supply with our current population.
At some stage the population of the world will have to be stabilized and preferably reduced. The question is whether we are going to let nature do the job with the inevitable consequence of major suffering or whether it possible to have the world unite to bring about a benign reduction. One child per family for two or three generations would return us to a condition where our impact would be sustainable. Doing nothing in this field will nullify all our efforts in all other fields.
An interesting series of proposals. Unfortunately, it comports to the continuation of Consumeristic Capitalism which is unsustainable on a finite planet. The current economic paradigm is in failure mode and rapidly unwinding. Some of the above suggestions will work within a new global economic paradigm, mostly those related to international trade and currency flows. The remainder of the 21st Century will be wracked by the transition to the next economic paradigm that must be ecologically based (because the planet demands this) and no longer reliant on the growth mantra because that is impossible on a finite planet.
Sioux Rose
CRUX PUPPY: Stellar reasoning! It should be considered by all holding fiscal-decision making positions!