G20 to unveil $1tn boost to world economy at London summit | Politics | guardian.co.uk
from this morning's guardian. it looks from this like the american plan for transforming the imf back into something like the institution is was in the bretton woods context and away from being a crisis generator operating in the interest of american-style "globalizing capitalism" throughout the southern hemisphere could be under way. the proposal is just outlined, and is not without complications. i wonder what the implications for governance of the imf will be if the "vast majority" of the funding for this change in role/organization is coming from china. up to this point, governance has been done by an assembly of member states and the number of votes has been proportional to the level of membership payments---so governance is not determined by the origin of the money that flows through the imf, but by the levels of what amount to dues or admittance fees each state pays. from its inception through now, this arrangement has kept the imf a de facto extension of american power.
part of the proposal to revamp/remake the imf that geithner floated a couple weeks ago was a change in governance: an expansion of the assembly and changes to the proportions that had obtained, moving it away from the g8 (more or less) to include china, india, etc..
without a change in governance, this plan is effectively a way to hoover cash surpluses away from china and redistribute it.
with a change in governance, the price of doing this could well be a radical diminuition of american power.
but that's not all that's in this article...
at the same time, notice that the positions of france and germany have not changed--they're asking for much more extensive regulation over the entire financial system that presently exists. the interesting bit comes near the bottom of the article---
Quote:
The normal G20 membership has been expanded so that the leaders of 24 countries are attending the summit, as well as other key international figures such as Ban Ki-moon, the UN secretary-general.
Taro Aso, the Japanese prime minister, plans to use this morning's discussions to urge his fellow leaders to learn from his country's painful experience in the "lost decade" of deflation and recession during the 1990s, and implement coordinated "fiscal mobilisation", together with aggressive plans to clean up toxic assets from banks' balance sheets.
Kazuo Kodama, Aso's spokesman, said that, "based on Japan's experience in the 1990s of addressing the issue of non-performing loans, or toxic assets, there was a situation where both the corporations and household sectors were mired in insolvency". He warned that dealing with today's banking crisis could take a very long time. "I'm not saying it will take 10 years, but that's the risk." Japan is suffering a deep recession.
Dominique Strauss-Kahn, the managing director of the International Monetary Fund, will echo Aso's concerns. The IMF, which is likely to see a substantial boost to its resources as a result of today's summit, believes more must be done to tackle the banking sector crises in many European countries before an economic recovery can be assured.
Yesterday, in a day of breathless diplomacy in London, ranging across arms control and financial capitalism, Brown and Obama emphasised a developing convergence, only for Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, to lay down "non-negotiable red lines" on issues such as hedge funds and tax havens, which they insisted had to be met today, and not deferred until future gatherings.
The belligerent tone jarred as it came hours after Brown, standing side by side with Obama in the gilded splendour of the Foreign Office, had declared that the leading countries were hours away from securing a deal to reform the global economy.
Far from rowing back from the aggressive posturing Sarkozy had adopted before flying to London, the French leader resumed the theme, saying this was no time for making "fancy speeches" and dismissing the idea of another summit later in the year. Speaking at a Knightsbridge hotel, he said he trusted Obama, but blamed America. "The crisis didn't actually spontaneously erupt in Europe, did it?" he said.
The German leader joined in. "This is a historic opportunity afforded us to give capitalism a conscience, because capitalism has lost its conscience and we have to seize this opportunity," Merkel said.
"This is nothing to do with ego or temper tantrums, this has to do with whether we are up to the challenges ahead or not.
"The day after tomorrow will be too late. The decisions need to be taken now – today and tomorrow."
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so first off, this g20 meeting is not fucking around--this is a serious one. the problems are no joke. pollyanna "just another downturn" time is over (paraphrasing elvis costello)....
but the french and german position seems geared toward two main things: increasing regulation of the financial system AND preventing banks from joining the pattern of fragmentation typical of american-style "globalization"--you know: locate-where-costs-are-cheapest and/or run to the tax havens which also have most repressive labor conditions---the walmart pattern basically....AND both governments seem to imagine that this sort of thing can be done within the context of particular nation-states.
i think they're dreaming. this is a call for a different type of transnational regulation of the economy. this is one of the developments that i've been pointing to and trying to think about---this kind of regulation requires new legal spaces and a new institutional infrastructure. whomever lands on a plan first will have a very significant role in shaping what follows--as you know people don't like uncertainty so they'll tend to rush into whatever form is offered them in times of uncertainty so long it there's some hope that it will make that Bad Bad Vertigo (paraphrasing buddy guy & junior wells) go away.
so i wonder if the french and german dance is in part about this, and not at all about what they're saying. it'd certainly fit with sarkozy's political m.o.----but it also conflicts wholesale with his neoliberal economic views. so it's a quandry.
what do you make of this?