Posts Tagged ‘g20’
by stuartbramhall in Attacks on the Working Class, The Global Economic Crisis
Guest post by Steven Miller
(This is the last of three guest posts laying out the real story about the role of Wall Street banksters in the recent bankruptcy of Stockton California. In this post Miller lays out the extra-legal, criminal nature of government austerity measures.)
If the Oakland Tribune or any other newspaper were really representing the public interest they would spread the word that the people of this country are paying the Banksters twice. The government Bail Out to the banks was at least $16 trillion. This was free money at a dollar-for-dollar rate, unheard of in the history of finance. This money could have and should have been used to pay off all outstanding debts from personal debts to student debts, mortgage debts and city debts. After all, if you owe someone money, and then pay him off, you don’t have to keep on paying. Isn’t that how things work?
So why should we pay them a second time? This open collusion by the government to guarantee bank profits at the expense of everything else in America is the 21st Century expression of how Mussolini famously defined fascism – the merger of the corporations and the state.
The economist Michael Hudson describes it this way:
“Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings.” (10)
The Politics of Austerity
Austerity is implemented across the world in various forms, but mostly this is accomplished through extra-legal measures. Leaders of the G20 countries, the biggest national economies, met in Toronto to decide how to address the economic Melt Down. Surrounded by the army to hold off the protestors, these leaders “agreed” to implement Austerity across the board. There was no treaty. No legislation was proposed. No plebiscite was held to find out the will of the people. Austerity was simply imposed.
The same extra-legal process occurred earlier this year with the so-called $90 billion Sequester that permanently cuts social programs for millions of people in the US. A bi-partisan Congress that is supposedly broken and not capable of functioning passed the Sequester more rapidly than any legislation since the Bail Out. While the process was disguised with a few hearings, and did end with legislation, the process occurred completely outside of the legally established fact finding process. No one was legally sworn in to hold them accountable for their testimony and bogus inflammatory statements.
Two years ago Michigan passed Public Act 4 – the Emergency Manager bill. This law empowered the governor, at his own personal discretion, to seize any city or municipal government and appoint a financial manager – either a person or a corporation! – with total power to break contracts and sell off public land, parks, buildings, etc to private corporations. In the 2012 election, the people of Michigan voted for a constitutional amendment to void the act.
Two weeks later, the law was simply re-established in a slightly different form by the governor. (11) Then the governor seized the city of Detroit, depriving them of the civil right to vote. These maneuvers completely void the democratic process and confirm the old saying that law is simply the will of the 1%, written down. It is possible that California will see similar propositions proposed in the 2014 election.
This combination of legal and extra-legal maneuvers, the merging of corporations and the state, demonstrate what political power really is. The Banksters work at it 24/7 and impose it upon the rest of us. We are not going to reverse this class political power by voting every 4 years, or by trying to convince bought-off legislators to see things our way for once. It is time to learn from the masters. The 99%’s struggle for political power must consider how to impose the will of the people, every day and every way, and force government officials to be truly accountable or pay the price.
10) Michael Hudson. “The Finance Industry Has Pried into Every Sector of the Economy, and Has Ended Up Running the Whole Show”. December 31, 2012
11) Rally, Comrades, March-April, 2013. www.rallycomrades.org
Originally posted at Daily Censored
Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He has been actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at email@example.com
by stuartbramhall in The Global Economic Crisis
(This is the second of three posts about the new female head of the IMF, which the business press is promoting as a “rock star of the economic world,” and how we are being deceived about the real cause of the debt crisis in Europe)
LaGarde isn’t without her critics. Former IMF chief economist Simon Johnson refers to her appointment as “the fox guarding the henhouse.” Johnson, like former World Bank economist Joseph Stiglitz, has been highly critical of the extreme concentration of financial power and it threat it poses to the global economy. This is the subject of Johnson’s recent book, Thirteen Bankers.
His criticism of Lagarde centers mainly around her proposal to solve the Eurozone crisis by issuing additional loans to the debt-ridden “peripheral” countries (Greece, Spain, Italy, Portugal and Belgium). He maintains all these countries are looking at a default scenario, no matter how much money she throws at them. He accuses her of allowing EU leaders to use the IMF to conceal from their voters major flaws in the Eurozone structure. As senior fellow at a Washington DC think tank (Peterson Institute for International Economics), he also complains about the unfairness of expecting US taxpayers to bail out the IMF for the sake of European politicians (and Greeks “who don’t like to pay taxes”). In Johnson’s view instead of spending other peoples’ money on struggling Eurozone economies, the EU leadership needs to make some a hard choice – either to integrate their fiscal systems in a way that allows fiscal transfers to poorer, less competitive countries or to create two tiers of Eurozone participation, in which only tier 1 members can borrow from the European Central Bank (see Fox in the Hen House and The Problem with Christine Lagarde).
Lagarde Gets the Cold Shoulder
Thus far Johnson’s arguments have resonated with most non-European IMF member countries. Despite Lagarde’s aggressive lobbying to add $500 billion to the IMF rescue fund at the recent G20 meeting in Mexico City, she came away empty handed. Most finance ministers agreed with the response U.S. Treasury Secretary Timothy Geithner gave her: the European Central Bank must make a much larger financial commitment before asking other G20 countries for money.
Fairy Tale Economics
The problem with mainstream media coverage, which continues to center around Lagarde and her “rock star” persona is that it’s a fairy tale – complete with a fairy princess – that never addresses the fundamental structural problems that caused the world economic collapse. The corporate media never tells the back story – that fossil fuel scarcity has effectively ended global economic growth, rendering our debt-based monetary system totally inoperable. Richard Heinberg convincingly makes the case that Peak Oil is responsible for the global economic collapse in his 2011 The End of Growth, as do Richard Douthwaite David Korowicz, Chris Vernon and Tom Konrad in Fleeing Vesuvius (see Will Peak Oil Spell the End of Capitalism?).
Instead the mainstream media promotes cruel myths about lazy Greek workers and a Greek middle class that refuses to pay taxes, obscuring the reality that much of the Greek debt is likely “odious; and fraudulently incurred.
To be continued.
by stuartbramhall in Attacks on Civil Liberties, Attacks on the Working Class, New Zealand
My fifth and final post about the antiglobalization movement – and why it’s more important than ever in 2011.
Activists mustn’t be lured into a false sense of security by the collapse of Doha round of WTO negotiations. Globalization is very much alive and well. WTO tribunals continue to meet secretly in Geneva enforcing trade provisions that have already been agreed. Moreover after a two year hiatus, an informal meeting at the May G20 Summit in Paris has resulted in the scheduling of a WTO ministerial in Geneva in December 2011. The goal of the December meeting is to try to reach a “partial” agreement on the Doha round.
Even more ominous are efforts by corporately-controlled governments in the industrial north to coerce concessions out of smaller countries with bilateral “free trade” (see * definition below) deals that strip citizens of their democratic rights and force subsistence farmers off their lands in Africa and Southeast Asia (to enable their sale to multinational agrobusinesses).
The TPPA: Say Goodbye to Generics
At present, both the US and New Zealand are at highest risk from the Trans-Pacific Partnership Agreement (TPPA), a nine country (US, Australia, New Zealand, Brunei, Chile, Malaysia, Peru and Vietnam) free trade treaty currently being negotiated with the US. Up till now, the US has been unwilling to negotiate a “free trade” agreement with New Zealand, owing to this country’s antinuclear policy, which denies US naval vessels access to our harbors. I find it frankly embarrassing to see our new National (conservative) government tart themselves up like a cheap hooker in order to trade away New Zealand’s sovereignty, economic sustainability and public health.
Dr Jane Kelsey, New Zealand’s foremost anti-globalization lawyer and activist, was among the protestors at the Chicago anti-TPPA kick-off rally over Labor Day. Other high profile TPPA opponents include Public Citizen, Knowledge Ecology, and Health Gap (international HIV-AIDS campaigners). The last two groups are extremely concerned about TPPA provisions increasing the monopoly rights of pharmaceutical companies, which will make it virtually impossible for low income patients (especially in developing countries) to access low cost life-saving generic drugs.
Kelsey has written and spoken extensively about the TPPA, which first came to public attention in New Zealand thanks to a December 2010 Wikileaks cable. Although New Zealand’s National-led government still refuses to release the full text of TPPA, enough has been leaked by various sources to reveal that its bad news for New Zealand’s democratic system of government. Like the Multilateral Agreement on Investment (MAI), it guarantees special rights to investors and forces the repeal of laws that interfere with the ability of multinational corporations to do business in this country. This includes scrapping PHARMAC, our world-famous bulk drug purchasing agency (pharmaceutical companies hate PHARMAC because it forces them to discount their brand name drugs), as well as restricting New Zealand’s ability to put warning labels on cigarette packs and content labels on genetically modified foods. It would curtail their ability to regulate dodgy finance companies, as well as forcing us to allow mining in our forest reserves, fishing in our marine reserves and high rise hotels on our pristine beaches.
To follow TPPA negotiations and get involved in the anti-TPPA movement go to http://tppwatch.org/
*Free trade – describes an approach to international trade that allows traders to trade across national boundaries without any interference from respective governments.
*Fair trade – is closer to the original “free trade” concept (abolishing protective tariffs and quotas) promoted by Adam Smith in the Wealth of Nations. Smith advocated that wealth should flow naturally from richer to poorer nations, as a way of increasing innovation and productive capacity in both rich and poor countries. Fair trade is an organized social movement around a market-based approach that advocates for third world producers to be paid a fairer, higher price for their products, as well as higher social and environmental standards.
by stuartbramhall in China Watch, The Global Economic Crisis
The so-called “currency wars” have been headline news here in “export or die” New Zealand. Most of the US press has been focused on China and its refusal to devalue the yuan. However here there has been more concern about the breakdown of IMF talks at the beginning of October.
Apparently, not just China, but 16 countries – including Japan, Brazil and South Korea – have been devaluing their currencies to make their exports cheaper on the world market. Here in New Zealand we know only too well how this works. Our two main export industries – dairy and tourism – are deliriously happy when the New Zealand dollar drops below $US 0.66. We still charge the same for our milk solids and excursion packages. But because other currencies have suddenly increased in value (relative to ours), our products are suddenly cheaper than those of our competitors.
How to Devalue Your Country’s Currency – Fast!
The main way most countries (including the US – this is the real reason interest rates are 0.25%) devalue their currencies is by reducing their interest rates. This causes investors to sell their treasury bonds and buy bonds in the currency of countries paying higher interest rates. Some governments help this process along by dumping their own bonds.
All this can spell disaster for small business, of course – and even some large businesses. Here in New Zealand, you can wake up one morning and find the kiwi dollar has risen to $US 0.78 and your business has been wiped out – because your product is suddenly 15% more expensive on the world market and no one will buy it.
The purpose of the IMF meeting two weeks ago was to draw up an agreement for countries to act collaboratively in managing exchange rates – rather than unilaterally (and aggressively – as happened with Greece earlier this year). Unfortunately the meeting was a failure. However at the G20 yesterday, a concession was made to allow the BRIC (Brazil, Russia, India and China) economic powerhouse two of the European seats on the IMF (in 2012 and with the US retaining veto power).
Pursuing Export-Driven Recovery
It seems that most of the G20 nations have given up on a consumer-driven recovery to the global financial crisis. Because a consumer-driven recovery would only be possible if we put people back to work (which would mean taxing the wealthy more to create public sector jobs) – and if we paid workers enough to buy the products manufacturers create (which would mean paying CEOs less and increasing the minimum wage). And since no one is willing to do either, the G20 counties have seized on export-driven recovery as the only solution. Thus the mad dash for countries to increase exports by devaluing their currencies.
Joseph Stiglitz’s Proposal
Former World Bank economist Joseph Stiglitz proposed ages ago that the easiest way to solve this problem was to create a separate reserve currency – independent of the dollar and euro – which would eliminate the need for individual countries to buy and sell each others’ currencies like crazy. Stiglitz, a Nobel Prize winner in economics, has a lot of good ideas about monetary reform. However he tends to put the public good ahead of Wall Street, so nobody listens to him.
China: Propping Up the Dollar – and the Euro (?)
I’m sure it must really annoy Obama that the US dollar hasn’t dropped nearly as much as it was supposed to (it’s dropped considerably – from $NZ 2.00 to $NZ 1.30 in the eight years I have lived here). In addition to refusing to devalue the yuan, the Chinese actively prop up the dollar by buying US Treasury bonds (someone has to and Saudi Arabia seems to have lost interest in buying our debt).
The other currency doing really well, thanks to Chinese intervention, is the euro (see http://www.therealnews.com/t2/component/content/article/54-william-engdahl/450-a-surprise-boost-for-euro-from-china). Though it’s received very little attention in the US media, China has stepped in to guarantee the Greek debt, and has already begun to purchase Greek treasury bonds. The Chinese thought it was quite ungentlemanly the way George Soros, Goldman Sachs, Bank of American and the US credit rating agencies attacked the Greek bond market earlier this year.
China has also agreed to guarantee the debt of any euro country (including Spain, Italy and Ireland) coming come under similar attack from US financial institutions in the future.
The Eurozone doesn’t seem terribly unhappy about their strong currency so far. It so happens that having a strong currency goes a long way towards making austerity measures more palatable. If you have to accept lower wages, pensions and unemployment benefits, it’s great to be able to buy more cheap imports with the little money you have.