Wednesday, April 28, 2010
America Is Losing It's Imperial Status,and Global Institutions Such as The IMF,G20 and BIS Are Filling The Void by The Washington's Blog
IMF As Grim Reaper of Austerity?
As I wrote last June:
When the International Monetary Fund or World Bank offer to lend money to a struggling third-world country (or "emerging market"), they demand "austerity measures".
As Wikipedia describes it:
In economics, austerity is when a national government reduces its spending in order to pay back creditors. Austerity is usually required when a government's fiscal deficit spending is felt to be unsustainable.
Development projects, welfare programs and other social spending are common areas of spending for cuts. In many countries, austerity measures have been associated with short-term standard of living declines until economic conditions improved once fiscal balance was achieved (such as in the United Kingdom under Margaret Thatcher, Canada under Jean Chrétien, and Spain under González).
Private banks, or institutions like the International Monetary Fund (IMF), may require that a country pursues an 'austerity policy' if it wants to re-finance loans that are about to come due. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'.
Wikipedia goes on to point out:
Austerity programs are frequently controversial, as they impact the poorest segments of the population and often lead to a wider separation between the rich and poor. In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors.
What Does This Have to Do With the First World?
Since the IMF and World Bank lend to third world countries, you may reasonably assume that this has nothing to do with "first world" countries like the US and UK.
But England's economy is in dire straight, and rumors have abounded that the UK might have to rely on a loan from the IMF.
And as former U.S. Comptroller General David Walker said :
People seem to think the [American] government has money. The government doesn't have any money.
Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.
Al Martin - former contributor to the Presidential Council of Economic Advisors and retired naval intelligence officer - observed in an April 2005 newsletter that the ratio of total U.S. debt to gross domestic product (GDP) rose from 78 percent in 2000 to 308 percent in April 2005. The International Monetary Fund considers a nation-state with a total debt-to-GDP ratio of 200 percent or more to be a "de-constructed Third World nation-state."
What "de-constructed" actually means is that a political regime in that country, or series of political regimes, have, through a long period of fraud, abuse, graft, corruption and mismanagement, effectively collapsed the economy of that country.
The IMF is - in fact - now saying that the U.S. must live more austerely.
As the Washington Post noted Saturday:
In the lingo of the International Monetary Fund, the future of the world hinges on "rebalancing and consolidation," antiseptic words that would not seem to raise a fuss.
But the translation is a bit ruder, something on the order of: "Suck it up. The party's over."
To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive.
That's the practical meaning of a series of policy papers and statements issued in recent days by IMF officials, who have a long history of stabilizing economies and solving global financial problems, as they plot a course to keep the world economy growing and reduce the risk of another "great recession."
It means a pretty serious reworking of expectations in the developed world: changes in labor rules, product prices, currency values and even the social contract between governments and an aging citizenry.
"It is not that living standards will lower, but they will not increase as fast as they have been," said Domenico Lombardi, a former IMF executive director. The ideas being discussed by world leaders "are coded words," he said. "They don't like words like 'imposing higher taxes' and 'cutting spending.' "
The level of the correction needed is large, perhaps 10 percent of gross domestic product. In the United States, that would amount to roughly $1.4 trillion annually, to be cut from government programs or raised through new taxes.
Dean Baker notes:
Back in the 90s the IMF came to be known as the "Typhoid Mary" of emerging markets as its policy prescriptions led to sharp economic downturns in one country after another.
The "grim reaper" might be a better analogy.
IMF As World's Central Bank?
Not only is the IMF treating America like another failed state, but the IMF may - in some ways - replace the U.S.
As I pointed out last May, the IMF may be taking over world's financial regulator:
The Group of 20 countries have made the [IMF] the linchpin in their efforts to combat the worst economic downturn since the Great Depression
The Washington Post notes:
Global financial chiefs agreed yesterday to reshape the International Monetary Fund, moving to broaden its mission ...
The IMF, which in recent years had become largely an advisory body to nations in crisis, will now be charged with aggressive monitoring of the global economy. Underscoring that role, Treasury Secretary Timothy F. Geithner said yesterday that Washington had consented to a rigorous IMF review of the U.S. financial system for the first time since the fund was created at the end of World War II.
And the IMF's currency - Special Drawing Rights (SDRs) - may become the world's reserve currency. See this and this.
And some say that the IMF will become the world's central bank.
According to Jim Rickards - director of market intelligence for Omnis - the purpose of the G20 Summit in Pittsburgh on September 24 was as follows:
The IMF is being sort of anointed as a global central bank.
Rickards also said that the plan is for the IMF to issue SDRs as a global reserve currency to replace the dollar, and then America will gradually depreciate the dollar to reduce the size of its enormous debt:
However, the Wall Street Journal argued in October that - while the IMF would like to be the world's central bank - the G20 is relegating it to a lesser role:
International Monetary Fund Managing Director Dominique Strauss-Kahn is using the IMF's annual meeting here to campaign for turning the fund into a kind of global central bank with at least $1 trillion for lending developing nations in a crisis.
But a very different reality is taking shape: The IMF is essentially being turned into the staff of the Group of 20, an organization of industrialized and developing nations that doesn't have a headquarters, staff or rules for membership. With the leaders of the G-20 effectively functioning as the board of directors of the global economy, they need the IMF's help to carry out their role.
Ellen Brown argues that the Bank for International Settlements (BIS) has been, and will continue to be, the real power behind the throne, even though the IMF seems to be gaining power.
I don't know who is right. But it does seem like America is losing its imperial status, and that global institutions such as the IMF, G20 and BIS are filling the void.
Thursday, April 22, 2010
Anti-Human Earth Day
by Edward Hudgins
April 22-- Today is a religious holiday that should make us all into atheists. April 22, marks the 40th anniversary of Earth Day. For many people it's simply a day to think warm and fuzzy thoughts about clean air, crystal lakes, verdant forests and soaring eagles. Until the 1990s May Day marked the worship by the communists of an abstraction called the "workers" at the expense of real flesh-and-blood workers and every other human being on the planet. The result was human carnage. Now Earth Day marks the worship by eco-extremists of the planet itself at the expense of all we humans who inhabitant it. If the cult continues to grow, the results will be the same as that wrought by the Reds.
There is nothing wrong with individuals wanting to keep woods, flowers, ponds and the like on their own private property for their own enjoyment, nor with wanting to reduce the real, measurable damage caused to humans, for example, by air and water pollution. In any case, the worst pollution problems have pretty much been dealt with in past decades.
But today the eco-extremists have converted legitimate concerns into a cult. Tell someone you don't recycle, for example, and they treat you like someone might have a century ago if you made fun of Jesus. When recycling makes economic and environmental sense, a market develops for the recycled items and there is no need for government involvement. (As a kid I collected newspapers to sell to recycling centers to earn spending money.) But often recycling imposes millions of dollars in net costs and harms the environment. What with fleets of trucks to collect your bottles, which you're first supposed to waste water washing out, and those energy-gulping facilities that grind up or melt down the glass, it is often better just to bury the stuff.
Much has been written about the inability of environmentalists to show how many alleged problems actually harm humans. Does reducing the amount of some substance in the water from two parts per billion to one part really make any difference?
Much has been written about the bad science behind many environmental programs and serious problems those programs create for humans while delivering microscopic benefits. DDT is not the danger some made it out to be, but failure to use it to eradicate disease-carrying insects has resulted in thousands of deaths.
What requires more attention is the fundamental values problem with environmental extremism. The ultimate source and standard of all values is human life. Rocks and mud, oceans and mountains, fish and fowl are of no intrinsic worth in and of themselves. They're neither good nor evil. They just are. It is in relation to we human beings that things are of value.
We must use our reasoning minds as individuals to discover the means of our survival and flourishing. An animal is of value because we can use it for food or admire its beauty. Water is of value because we can drink it or swim in it. Rocks and trees are of value because we can build houses with them for our shelter or climb them for our enjoyment. Swamps might not be of value because they are at just the spot on which we want to build a house.
And, of course, "we" does not mean some abstract collective. It means each of us as individuals. That's the point of private property. We each should be free to own and use assets for our own good as individuals.
Eco-extremists take human individuals out of the picture. They speak of the value of eco-systems, habitats and wetlands without reference to humans in general or to specific individuals who might own and make use of material assets. In effect, the eco-extremists create an Earth cult that puts humans second. Many eco-extremists now say as much openly, for example, labeling people as pollution on the planet. There's even a Voluntary Human Extinction Movement. Its creed: "Phasing out the human race by voluntarily ceasing to breed will allow Earth's biosphere to return to good health."
Most individuals who celebrate Earth Day by cleaning up trash beside the road no doubt mean well. But they and all of us must recognize that the philosophical premises on which one acts will lead inevitably to certain consequences over time whether one intends them to or not. The premises behind the eco-extremists are anti-human and, if acted on consistently, would lead to worse carnage than that wrought by communists. On Earth Day we should reflect not on the planet but on the inhabitants who can make it of value.