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Posts Tagged ‘ASEAN’

G8 is dead, long live G14 – Europe – World – NEWS – The Times of India

July 12, 2009 1 comment

The intimation of G8’s impending demise came from the host of the summit, Italian President Silvio Berlusconi. “We saw that G8 is no longer a suitable format to show a global economic way of doing. Instead, a consolidated G14 representing 80% of the world economy could help create a real dialogue. We want to see if the G14 is the best solution for debates which will bring to us unique results.”

Berlusconi was merely echoing the creeping realisation among the G8 countries that the steady decline of the developed nations, coupled with the rapid rise of developing countries like India and China, had rendered the rich club irrelevant. (via G8 is dead, long live G14 – Europe – World – NEWS – The Times of India).

Western Clubs

On 5th November 2008, Raghuram Raman was appointed as by the GOI as advisor to the Indian PM – to advise the Indian PM about the forth coming G-20 meetings. As ex-IMF man, if he is the ‘expert’ that he is touted as, by this time Raghuram Rajan should know that the IMF and World Bank are international only in name. They are Western Clubs – meant for the benefit of the West.

Sinking .. or saving ...

Sinking .. or saving ...

All G20 members were ‘invited’ to join another Western Club – the FSF. The Financial Stability Forum, another club, with the same G7 members. Just why does India join these rubber stamp bodies – and lend sanctity to the exploitative agenda of the sponsors. Does the world need another body, with the same Central Bank members, addressing the same monetary issues problems, with the same agenda?

G7 and OECD countries have created a club for themselves, by giving each other unlimited line of credit – while the developing world gets credit based on fast-depreciating dollar/euro foreign exchange reserves. Maybe this needs an inversion. The OECD and G7 should be asked to pay their purchases. In a new global reserve currency. And the BRICS need to start working on that.

Many of the regulatory bodies are actually a US-Euro Clubs – to fool the world, with token actions and steps to demonstrate inclusion and fairness of the developing world.

My feeling …

The BRIC leaders know well enough that the West will not let go of the IMF and the UN. The charade of UN /IMF /World Bank Reform is possibly required – and they are going through it.

Could you be loved ...?

Could you be loved ...?

Between ASEAN and IBSA, India needs to take Third World groupings from talk-fests to action-teams. Western clubs like UN, IMF, World Bank, G-7, P-5, etc are all heavily weighted against ‘outsiders’ like developing nations.

Join the gang

Thanks for the offer, but no thanks. And I will tell you why!

Trying to clean these Augean sales is a waste. India should engage with the BRICS countries – and focus on creating another institution without the West to start with.

Safe, Steady and Sure

We can keep banging our head against these Western altars, for another 60 years. It won’t work. We need to move – not necessarily fast, but surely and steadily. The Developing World (and India) can continue to knock at the doors of these Western clubs – and yet why would the West dilute their power and influence? And allow the Rest to take advantage of structures that the West has created for its own benefit?

Just why?

What is on the table

Bankrupt welfare state

Bankrupt welfare state

2 out of the G-7 countries are bankrupt – US and Britain. Their industrial base was supported by raw materials and captive markets – acquired by genocide, and the loot of centuries.

France, Germany Canada and Australia (not in G7) and Italy are tethering on the brink – under the weight of their social security system, and most of their business in the public sector. A geriatric Japan is dependent almost entirely on these declining seven. Japan’s investment in India and China has been negligible.

What Do We Bring To The Table

India, China and South Africa on the other hand, bring growing economies, young populations, lower welfare state burdens, expanding industrial base – and above all, a record of non-aggressive history.

These dubious clubs depend on victims to approve and finance their own slaughter – and these memberships don’t appeal to India.

G7, you are welcome to join us at our terms. We dont want to be a part of your ‘blood soaked history.’

US taxpayer moans … while the Asian worker groans under the weight of US consumer debt!

Free Trade - anyone?

'Free' Trade - anyone?

There is another aspect of the deep dive that most Asian economies took in the last quarter of 2008 that is interesting. Over the years there has evolved an arrangement: Japan exports machinery and high-tech stuff to China; S-E Asia ships intermediates to China. All of this is then used to make goods for sale in the US. At each stage there is some value added and the final product on sale in a US department store is the sum of all of the value added.

However, the total of the transactions — the imports from S-E Asia and Japan into China and its exports — is much more. So when demand sank in the US, the impact on the supply chain was much larger. The freezing of the inter-bank market and the disappearance of trade credit following Lehman’s demise put each of these elements into jeopardy. The sum total of the damage was much larger than the slippage in the final aggregate demand emanating from the US consumer. (via Poisonous fallout of Q3 dislocation- Opinion-The Economic Times).

Suggestive statistics is like a bikini …

This is interesting. It makes a mockery of ASEAN claims that,

“East Asia already trades 55% of its output within the region. India’s trade with China, Japan and ASEAN (Association of Southeast Asian Nations) is increasing. That is the structural shift which will have to happen.”

What we have now is a funny situation

Sub-prime dollar is more apt!

The customer is a nation (USA) with outstanding debts, equaling 300% of its GNP. It’s banking systems is in shambles. It insurance industry needs protection. Its mortgage institutions are bankrupt. Its manufacturing is uncompetitive. It also happens to be the world’s largest economy.

On the supplier side are China and the ‘Asian Tigers.’ Till recently, home to some of the poorest people on earth – and colonial subjects, battered by continuous propaganda. Collectively, the US owes them, US$2.5 trillion.

US pay its debt … Smell the coffee …

The only way that the US will repay this debt is by devaluing the dollar – either openly and transparently, or by covert means.

One way or the other, this is a debt that will not get paid. While the US tax payer moans on about how Wall Street has ripped the US taxpayer, fact is, it is the poor Asian who is footing the bill of the US consumer spending.

The US tax payer is NOT paying this bill

The US tax payer is NOT paying this bill

The way out …

China, ASEAN, Japan must wean themselves away from dollar denominated trade, reserves, and transactions. Replacing it with the Euro will obviously, not make a difference. That will benefit the effete Europeans – instead of the US. A new global reserve currency, a third currency option is the way out. The London summit is an eye wash.

Or is it a brains wash!!

China says G20 summit success a priority – CNBC.com

March 13, 2009 3 comments
This will not be their last supper

This will not be their last supper

The overarching goal of Chinese foreign policy was to “spare no effort to ensure the stable and relatively fast growth of the domestic economy”, he told a news conference held to coincide with the country’s annual session of parliament. “The pressing task now is that all countries must work together to make the upcoming financial summit in London a success,” Yang said. “We believe the summit should play a role in boosting confidence, strengthening coordination on macroeconomic policies, stabilising financial markets, undertaking necessary reforms in the global financial system and regulatory regime.” Yang’s news conference highlighted the extent to which the world’s third-biggest economy now views its diplomacy through an economic lens. He brushed aside a question about whether his government blamed economic laxity in Washington for the world’s woes. He said the two had to work together and that Beijing was off to a good start with U.S. President Barack Obama’s administration. “In the current international environment, China and the U.S. share broad common interests. We hope that each side can accommodate the other’s core interests and enhance exchanges and cooperation,” he said. Obama and Chinese President Hu Jintao will meet for the first time in London. (via UPDATE 2-China says G20 summit success a priority – News – CNBC.com).

China believes in US leadership

China believes in US leadership

Outraged China

Sometime back a Chinese newspaper said, U.S. has plundered world wealth with dollar.

China was right. The US is looking after its own – and not bothered about the problems the US has created for other countries.

“The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar’s hegemony to plunder the world’s wealth,” said the commentator, Shi Jianxun, a professor at Shanghai’s Tongji University.

Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington’s sole concern had been protecting its own interests.

“The U.S. dollar is losing people’s confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance,” he wrote.

Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.

Late In the day, Mr.Hu … This is something that the world has been talking about for a long time. China has been a major supporter (and victim) of this scam – by allowing US companies unlimited access and support. Chinese citizens have been duped with low paying jobs at these enterprises.

Is China forgetting history … Mr.Hu – Today it is the US – but yesterday, it was Europe, Mr.Hu. Europe was blockaded by the US for the last 100 years – and hence, European loot is possibly forgotten in China. European loot was accompanied by a lot of bloodshed and killing also, Mr.Hu.

Has the Leopard Changed its spots Possibly, you dont know, Mr.Hu, because China has very little wildlife left. Leopards don’t change their spots. Europe behaves today, because it has no options.

The answers A new currency floated by the five major economies who are most affected today – China, Russia, India, Brazil, South Africa. Maybe Japan will also join in. But, the answer, Mr.Hu is with these 5 – and not Europe.

The DragoBear Dance

The DragoBear Dance

Russia and China as significant military powers as well as a part of P5, will want their pound of flesh. They will, of course, be afraid of being left out! The US will not have them and the EU does not want them!

China and Russia

The big issue is of course, China and Russia. China has 2 trillion of US dollars – and what does China do with this? Russia has come out from a default about a decade ago – with a nearly US$400 billion reserves – flexing its muscles in Georgia and dependent on a high oil prices. What happens to Russia if a new Pacific Republic (Cuba, Haiti, West Indies, etc) were to start drilling for oil? In 5 years, the world would be awash with oil – and Russia’s mineral earnings could evaporate. This crisis seems to have made the Chinese Premier shaky. So, the world may not trust China and Russia too much.

Hardliners in bid to oust China PM-China-World-The Times of India

China’s most popular politician Wen Jiabao, the prime minister, has become a target for Communist party hardliners and could be forced from office, according to a magazine in Hong Kong.

Inner Party Democracy

Actually, if the Chinese were to open up the Communist Party also to a transparent democracy, it would be OK. Then such reports would have little meaning.As long as peaceful change in Governments and officials happen, a country /nation is ‘stable’.

Propping up the dollar?

Propping up the dollar?

While Europe and USA tussle … No clash … more like fighting over spoils …

In the last 10 years, the Euro has managed to make a niche for itself – and make space for itself. With the dollar under pressure, now the Euro wants to twist the knife into the dollar side. The Euro-zone knows that the G-5 (Russia, China, India, Brazil, South Africa) are not prepared with an alternate plan.

Without such ‘special’ mechanisms, the Euro and dollar zones have to compete, without significant weight advantage on their side. The institutional mechanisms in the G-5 have large gaps – and the Euro Bloc knows that. Hence, the Euro Bloc is trying to gain advantage over the dollar – and they can succeed only if China and Russia ‘co-operate’ with the Euro zone.

For all this time, the UK, was undecided and non-commital. But Gordon Brown’s visit to the Saudi Arabia is interesting.

Breaking News

BRITISH Prime Minister Gordon Brown said on Sunday he expected Saudi Arabia to give more money to boost the International Monetary Fund’s ability to bail out nations hardest hit by worldwide economic chaos.

The IMF has 250 billion pounds (S$596 billion) available to help countries struggling to stay afloat – but Mr Brown wants to increase this by hundreds of billions of dollars.

Opening doors

Middle East is possibly the only place where a British passport still opens doors. Most of the Gulf’s despots were put on the throne by a British dispensation after WW1. Hence, they look back at the British with gratitude and fondness – and bless themselves at their stroke of luck. Of course, the initial oil finds in the Middle East were also done by British monopolies.

Sending Gordon Brown to the Middle East was a smart move – by the US establishment, with George Bush suffering from a lame duck presidency. And the Saudi’s would have been it was payback time, as

“earlier this year oil prices soared to US$150 a barrel, allowing Gulf Arab energy producers to enjoy increased wealth.”

Now, there has been big controversy about ‘peak oil’. This should give some ideas as to what happened. This will also give an idea to everyone which way UK has jumped – not that it was ever in doubt.

Before the London Summit  was global financial crisis summit on   November 15- International Business-News-The Economic Times

WASHINGTON: President George W Bush will host a summit on November 15 in Washington, DC, area to discuss the global financial crisis and ways to prevent it from happening again, the White House announced on Wednesday.

“This will be the first in a series of summits that bring together leaders from countries that participate in the G-20 finance process to discuss current economic challenges.

The so-called G-20 includes the Group of Seven advanced industrial countries and the European Union as well as China, Brazil, India, Russia, South Korea and other major economies.

At the first meeting, working groups will be set up to develop recommendations to be considered by leaders in subsequent summits.

Earlier Quicktake Tripolar Currency System – Connecting the dots – Part II recorded what is the likely outcome – which has happened till now.

The New 5

The real action will be 5 countries – Russia and China on one hand – and India, South Africa and Brazil on the other.

Safe, Steady and Sure

Between ASEAN and IBSA, India needs to take such groupings from talk-fests to action-teams. Western clubs like UN, IMF, World Bank, G-7, P-5, etc are all heavily weighted against ‘outsiders’ like developing nations. We can keep banging our head against these altars, for another 60 years. It wont work.

We need to move – not necessarily fast, but surely and steadily.

Three Horsemen Of Apocalypse

The G3 (i.e. India, South Africa and Brazil) have functioning democracies, decent regulatory systems (which can be ramped up), the technology platforms, the trading systems, a vibrant entrepreneurial class – all of which is powering their economies forward. What they don’t have is P5 status – which is useful, though not essential.

This Washington meeting

During the con-fab, ‘committees will be set up’ which create mechanisms for this management.

The big issue for the developing world will be obtaining assurances against predatory raids by the dollar bloc and the Euro-zone to dismantle any new system – like the alleged plot of 1997 Asian crisis.

The lesser issues will also be inter-bank settlements, anchoring currencies (the role of gold or bullion).

Contours Of The Deal

The EU-USA-Asia may agree on a broad a global regulatory and oversight body to monitor and maintain oversight over a multiple currency regime. The new currency may an Asian-Developing world currency. Some of Asia may want to cling to the dollar skirt.

The new 3rd currency may take some time to figure out.

Complacent also .. not just clueless ...

Complacent also .. not just clueless ...

Clueless Indians

Like the Chinese and Russians, the Indian outline of steps to deal with global financial crisis too was superficial and patchy.

India … outlined the steps it wants taken to lift the global economy out of the current financial morass. Addressing leaders of 45 Asian and European countries at the ASEM summit here, PM Manmohan Singh said the first step would be to “de-clog” the global credit markets which had choked up as a result of the crisis.

Second, multilateral financial institutions (MFI) like World Bank and IMF should step in with larger resources to invest in large infrastructure projects in developing countries, which can act as a stabilizer in the global economy. …

It is now clear that India would certainly be present at the November 15 G-20 summit in Washington. … US President George Bush has called up Singh to personally ask him to be present. In what was clearly a global reversal of roles, European countries repeatedly asked Asia to lead the way out of the crisis. N Ravi, secretary (east) in the MEA, told reporters that all EU leaders asked Asian countries to refrain from withdrawing into “economic nationalism”.

Either … or …

India seems to completely lack direction on how to move independently in times like these. After, all why should India even look at IMF and World Bank – which are fig leaf organizations of the West, as transfer mechanisms of wealth from the Third World to the rich.

Or India is working on a different plan, of which we know nothing. After all, India does believe in moving steadily (even, if slowly).

Russia and China

US and EU have their own reserve currencies – leaving Russia and China out in the open. Russia and China (as full P5 powers) will want a ‘lion’s share’ of influence in any new architecture. Which any Third World grouping will not give.

Stalemate.

Japan + ASEAN

China-leaning Lee Kuan Yew with an Islamic Malaysia may not be very hot about ‘giving so much influence’ to a ‘new member’ like India for an ASEAN initiative.

Any action which hurts the US, their largest market and patron, will be something that will make Japan and ASEAN hesitate. The very economic model of ASEAN + Japan is undervalued currency + exports to the USA. Hence, they will be wary of any initiative that affects the USA – and the West.

Status Quo …

Interestingly …

Manmohan Singh is the only educationally qualified leader in the leadership line up of major world economies.

Democratic Monarchy

Lee Kuan Yew’s diatribe against ‘Western democracy’ fails on this point. What happens after the Lee family dilutes its holding in Singapore – due to family size and age. Singapore has become a ‘democratic’ monarchy’. Which would be fine – if it were to declare itself so, and define succession laws.

India, engage

It is this lack of political transparency, which stops many awaited changes from taking place. And that is one thing that differentiates India.

Alan Greenspan Says the Federal Reserve Didn’t Cause the Housing Bubble – WSJ.com

March 12, 2009 1 comment
Terrified Al ... might miss out on his Nobel for Economics

Terrified Al ... might miss out on his Nobel for Economics

As I noted on this page in December 2007, the presumptive cause of the world-wide decline in long-term rates was the tectonic shift in the early 1990s by much of the developing world from heavy emphasis on central planning to increasingly dynamic, export-led market competition. The result was a surge in growth in China and a large number of other emerging market economies that led to an excess of global intended savings relative to intended capital investment. That ex ante excess of savings propelled global long-term interest rates progressively lower between early 2000 and 2005. (via Alan Greenspan Says the Federal Reserve Didn’t Cause the Housing Bubble – WSJ.com).

Poor Al!

Poor Al!

I can see the Nobel prize slipping away …

Poor Al! He can see it slipping away from him. What cane he do? Blaming the Asians is good start point. He is not below using Ben Bernanke’s rubbish to save his sagging hide.

What does this mean

An Indian economist explained this rather well. Suman Bery, writing for a direction towards Toward a robust globalisation, explained,

In a famous speech exactly four years ago, Fed Chairman Bernanke represented the US as responding passively and benignly to the global “savings glut” which had developed following the East Asian crisis of 1997-98.

Even though most closely associated with Chairman Bernanke, this formulation is widely shared by respectable economists and commentators, such as Martin Wolf of the Financial Times, Professor Richard Portes of the London Business School and the Centre for Economic Policy Research, and Professor Max Corden of the University of Melbourne. The task of recycling these imbalances fell on the sophisticated financial systems of the advanced countries. In the event, for a variety of reasons, even they proved unequal to the burden placed upon them.

The trigger ...

The trigger ...

Thus Spake Ben Bernanke

Remarks by Governor Ben S. Bernanke, Before the National Economists Club, Washington, D.C. November 21, 2002 (ellipsis mine)

U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press … that allows it to produce as many U.S. dollars as it wishes at essentially no cost. … …the Fed could find other ways of injecting money into the system–for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities … If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.

A terse anouncement by the Federal Reserve Board said,

“On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Al ... going from from respect ... to infamy

Al ... going from from respect ... to infamy

On November 10, 2006 Ben Bernanke justified,

“As I have already suggested, the rapid pace of financial innovation in the United States has been an important reason for the instability of the relationships between monetary aggregates and other macroeconomic variables.”

Ben Bernanke has given ample (and more) indications about what he will do. In fact, more than indications, he was brazen enough to say, what exactly he would do! How can the world blame him now?

Does it matter ... what pricked the balloon ...

Does it matter ... what pricked the balloon ...

The Asian savings glut was the problem …

Ben Bernanke joins a long list of Western propagandists, who find specious’ ways to blame others for Western problems. His most recent propaganda gem was to blame Asia for a savings glut.’

a satisfying explanation of the recent upward climb of the U.S. current account deficit requires a global perspective that more fully takes into account events outside the United States. To be more specific, I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving–a global saving glut–which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world today.

After Ben Bernanke opened the flood gates of such logic with ‘helicopter drop of dollars’ and ‘printing press technology’, and now the savings glut’ – others such ‘economists’ have rushed in to do another tom-tom dance around this logic.

What’s the word for a red neck economist?

A so called economist, weighed in with two bits, Dani Rodrik: Who killed Wall Street?

…the true culprits lie halfway around the world. High-saving Asian households and dollar-hoarding foreign central banks produced a global savings “glut,” which pushed real interest rates into negative territory, in turn stoking the US housing bubble while sending financiers on ever-riskier ventures with borrowed money. Macroeconomic policymakers could have gotten their act together and acted in time to unwind those large and unsustainable current-account imbalances. Then there would not have been so much liquidity sloshing around waiting for an accident to happen.

Americans are saints because they are shopping ...

Americans are saints because they are shopping ...

The Real Culprits …

Dani Rodrik does not mentioned Ben Bernanke even once. Bernanke’s printing press and helicopter’s are not mentioned even once. The evasion of Federal Reserve on M3 figures are not mentioned even once.

China which has funded the US to the extenet of US$2 trillion is not even mentioned once. Japan which has funded the US to the extent of US$1 trillion is ignored.

Alan Greenspan is mentioned once.

But Asians countries whose reserves are getting wiped due to dollar depreciation – are instead mentioned as culprits.

Wow. This is a new level in brazen-ness. Keep it up Ben, Al – and not forget you, Dani boy.

Helicopter Ben just wont stop ...

Helicopter Ben just wont stop ...

Let us see .. what this means …

Lawrence Summers (correctly) described the current global financial system as a “balance of financial terror”. Lawrence Summers could not have been more clear than this. In a speech on March 23, 2004, at the Institute for International Economics, Lawrence Summers described the US strategy. Again on March 24, 2006, at the Reserve Bank of India lecture, he repeated his message.

In the last 5 years, more than US$10 trillion were printed and the world is awash with dollars. Where did this money go? How was this used?

Lendings by US commercial banks in the period 2000 to 2004 soared by altogether USD 1,500bn to USD 6,750bn. In the European Monetary Union lending to the private sector by monetary financial institutions (MFI) climbed from roughly EUR 6,200bn end-1999 to not quite EUR 8,700bn at the end of last year.” Allianz Report, Dresdner Bank.(Links mine)

The recipients of this largesse, mainly Western banks made (it was whispered) bad loans worth 300-400 billion dollars. Actual figures coming out now are about 20 times as much – much higher.

The loans story does not end there.

These loans were in turn sold and re-sold, then packaged and mortgaged, derived and contrived – finally ballooning into the sub-prime’ crisis. Are these welfare payouts by another name? Who will pay for this “lending”? US Consumers are not repaying their housing loans.

Some one has to!

And that is the root of the problem. The West is trying to make Asians pay!! And people like Ben Bernanke, Alan Greenspan et al are paid hacks to create a logic by which the West will try and make the poor pay.

Nothing less!

Toward a robust globalisation

March 11, 2009 3 comments
Manu and Chiddu are wasting time

Manu and Chiddu are wasting time

In a famous speech exactly four years ago, Fed Chairman Bernanke represented the US as responding passively and benignly to the global “savings glut” which had developed following the East Asian crisis of 1997-98.

Even though most closely associated with Chairman Bernanke, this formulation is widely shared by respectable economists and commentators, such as Martin Wolf of the Financial Times, Professor Richard Portes of the London Business School and the Centre for Economic Policy Research, and Professor Max Corden of the University of Melbourne. The task of recycling these imbalances fell on the sophisticated financial systems of the advanced countries. In the event, for a variety of reasons, even they proved unequal to the burden placed upon them.

Not surprisingly, quite a different view is taken by the major current account surplus countries, notably China, but including Germany, Japan and, for a while, the major oil-exporting countries. Here, the finger is pointed squarely at the monetary policies followed by the US Federal Reserve

The G-20 is not the perfect vehicle for India to show leadership, but it is a start. India should grasp the opportunity being given to it and run with it. (via Suman Bery: Toward a robust globalisation).

Dollar prop!

Dollar prop!

Promising start.

The post laid out the position of the world economic structures and developments in the last few years, rather well – and the way Bretton Woods unravelled. And then, in the last paragraph, Suman Bery suddenly, from nowhere comes out that India is being ‘given an opportunity’! And makes out as though India(ns) should be grateful – kow-tow and bless the benefactors. And, before they change their mind.

RUN with the bone that they have thrown at India!

Note the language …

Similar is the story with Manu and Chiddu. They use the language of recipients, of pleading and impotence. Chidambaram says that ‘they’ will now “give greater representation and voice to developing countries” Manmohan Singh mirrors the sentiment when he says,”consultations were merely for the sake of form”.

The Developing World FTA

Instead of breaking heads with the WTO, the Developing World should declare a 100 country FTA. As Rajat Nag, of the ADB points out,

“East Asia already trades 55% of its output within the region. India’s trade with China, Japan and ASEAN (Association of Southeast Asian Nations) is increasing. That is the structural shift which will have to happen. Our forecasts are not based on any dramatic shift”

Put the Doha round in deep freeze, and turbo charge work on a FTA within the developing world. That can add another 2%-4% to economic growth – especially to the poorest countries.

The Third Global Reserve Currency

To this add the Third Global Reserve Currency option – and junk the Dollar and the Euro. With this, the World economy will have two strong drivers for economic growth – without dependence on the West. The world needs to move away from the Dollar-Euro duopoly to tri-polar currency regime.

This calls for leadership – intellectual and political. Does the developing world have it? Can India provide it?

Some more crumbs and bones – World Bank will lend a few billion to microbanks – NYTimes.com

February 16, 2009 3 comments

The World Bank and the German government said Thursday that they hoped to inject as much as $600 million into microcredit banks, fledgling institutions in developing countries that are being starved of financing as the credit markets have tightened.

The effort highlights how even small banks in poor countries are getting caught in the financial crisis — and it offers them a chance to get public money to replace rapidly diminishing private capital. (via Microbanks Are Getting a Cash Infusion – NYTimes.com).

Under the plan, the World Bank would initially provide $150 million alongside an additional $130 million from the German government. Mr. Zoellick said the bank was soliciting contributions from other countries and agencies, and hoped to mobilize up to $600 million. That would be enough to help 150 to 200 microfinance banks in 40 developing countries.

Crumbs coming your way …

The US is throwing a few bones, our way, to keep us quiet. While they continue the flooding the world with these depreciating pieces of paper. India is losing 10% of its foreign currency reserves every year due to dollar devaluation. What we are getting from the IMF/WB duo is just 1% of this as debt.

And we have a few preening bureaucrats who think this calls for some self-congratulations!

Europe wants to stay relevant

Europe which has a major say in the IMF and World Bank, after the USA, obviously wants to increase its role – and decrease US importance. To gets its way, it has gone on a major diplomatic offensive – to the extent of restoring diplomatic ties with Cuba.

To placate the Third World, the duopoly and Europe may show some token resistance – and finally give the Third World some minuscule voting rights. The Third World must not waste time on reforming the IMF and World Bank – but instead focus on setting up a system to manage the Third reserve currency.

As an interim measure, to deal with the current liquidity problem, the US Fed, the IMF and World Bank should be pressured to part with some liquidity.

Why flog the IMF and World Bank dead horses.

Interview after G-20 Washington Summit

P.Chidambaram – They will give greater representation and voice to developing countries … Now whether they will be ready through that I can’t say, they have set the ball rolling now and it would be difficult now to resist any governance reforms on the IMF.(via Moneycontrol >> News >> Economy >> G20 meet sees agreement on common accounting standards: FM)

Describing the G20 summit as “very successful”, Prime Minister Manmohan Singh … said that … There was one important significance which is clear that the balance of power is shifting increasingly in favour of emerging economies,

“We were previously also invited for the past couple of years for the G8 meetings. But consultations were merely for the sake of form. For the first time there was a genuine dialogue between many of the developed countries and the emerging economies,” he said. (via PM terms G20 meet as ‘very successful’)

Note the language …

This is the language of recipients, of pleading and impotence. Chidambaram says that ‘they’ will now “give greater representation and voice to developing countries” Manmohan Singh mirrors the sentiment when he says,”consultations were merely for the sake of form”.

The Developing World FTA

Instead of breaking heads with the WTO, the Developing World should declare a 100 country FTA. As Rajat Nag, of the ADB points out,

“East Asia already trades 55% of its output within the region. India’s trade with China, Japan and ASEAN (Association of Southeast Asian Nations) is increasing. That is the structural shift which will have to happen. Our forecasts are not based on any dramatic shift”

Put the Doha round in deep freeze, and turbo charge work on a FTA within the developing world. That can add another 2%-4% to economic growth – especially to the poorest countries.

The Third Global Reserve Currency

To this add the Third Global Reserve Currency option – and junk the Dollar and the Euro. With this, the World economy will have two strong drivers for economic growth – without dependence on the West. The world needs to move away from the Dollar-Euro duopoly to tri-polar currency regime.

This calls for leadership – intellectual and political. Does the developing world have it? Can India provide it?

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