the imf's new prognosis for the economic situation - Tilted Forum Project Discussion Community

roachboy · 03-10-2009, 05:50 AM

Quote:

IMF: World economy to shrink for first time in 60 years in 'Great Recession'

• IMF expects global growth to turn negative this year
• In January, IMF predicted 0.5% growth
• Earlier forecast was for 2.2% expansion

* Graeme Wearden
* guardian.co.uk, Tuesday 10 March 2009 10.10 GMT

The global economy will shrink this year for the first time since the second world war as the "Great Recession" ravages businesses, consumers and financial institutions around the world, the International Monetary Fund warned today.

Speaking in Tanzania, IMF managing director Dominique Strauss-Kahn said the economic downturn would be more severe than previously thought.

"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," Strauss-Kahn told African political and financial leaders in Dar Es Salaam.

"Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence, is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled."

Strauss-Kahn dubbed the downturn the "Great Recession". The world economy has not suffered an annual contraction since 1945. There appears to be broad consensus that the economic downturn will be much deeper and more protracted than most experts thought just a few months ago.

In January, the IMF predicted that the world economy would grow by 0.5%, which was already a sharp revision of its earlier prediction of 2.2% growth. That was based on 3.3% expansion in developing countries and 2% contraction in advanced economies.

The IMF is expected to announce fresh official projections later this month.

Strauss-Kahn's warning, made at a conference to examine the impact of the world financial crisis on Africa, comes just two days after the World Bank predicted that the world economy would shrink by at least 1% this year.

The World Bank also forecast on Sunday that world trade would suffer the biggest decline in 80 years, and said that by this summer industrial output could be 15% lower than in 2008.

And veteran investor Warren Buffett warned yesterday that the world faced "an economic Pearl Harbor".

Most major economies are now officially in recession. The UK economy shrank by 1.6% in the last three months of 2008, following a 0.7% contraction between July and September, and is expected to keep shrinking through 2009. Japan's economy is shrinking at its fastest rate for 35 years, with GDP falling by 3.3% in the fourth quarter of 2008. And in America GDP declined by 3.3% in the last quarter on an annualised basis.

Darling: 'Moral imperative' to help poorer neighbours

The downturn has already sent unemployment rising sharply on both sides of the Atlantic, with analysts fearing that the UK jobless total will exceed 3 million before the crisis is finished. There are concerns, though, that developing nations will be hit even harder. Writing in the Guardian today, Alistair Darling says that Europe's leaders have a "moral imperative" to step in to help poorer nations.

"The International Monetary Fund has identified 26 countries, half in sub-Saharan Africa, that are particularly vulnerable to the crisis. Central and eastern European economies are estimated to face a financing gap of $100bn in 2009. And the World Bank estimates that 129 developing countries are facing a financing shortfall of between $270 and $700bn," writes the chancellor.

"Many decades of economic union have brought greater prosperity, but closer economic integration also brings challenges. We are all affected by what happens to our neighbours," he adds.

this is a new assessment of the general outline of the economic situation by those fine neoliberals at the imf.
it is interesting to monitor what this organization is saying, even as it's history demonstrates a wholesale defunctionalization--by this i mean that the imf is now lurching back toward the role that it was set up to play, but which it has not played since the end of the bretton woods period in the early 1970s.
since then, it has been a rigid instrument of neoliberal ideology applied as a weapon of neocolonial domination of the southern hemisphere by way of the instruments of debt.
so there's a grain of salt to be added to this.
nonetheless, the lurching pathway it charts is interesting.
to wit:

IMF Survey: IMF Urges G-20 States To Take More Decisive Action to Combat Crisis

the basic argument here is obvious---the economic situation escapes the control of any particular nation-state; it cannot be addressed by way of the institutional infrastructure that was constructed out of bretton woods because the system has shifted around these institutions and their basic functions have changed---so the option is concerted, co-ordinated action at the level of the G-20.

the problem--well, one of them---is a lack of institutional infrastructure capable of carrying out co-ordinated actions decided upon transnationally.

the questions are probably obvious:

how much at variance is the imf diagnosis with what you understand to be happening?

what do you make of the picture the imf draws of the economic crisis as a whole--that it is effectively a massive economic contraction the likes of which have not been seen since world war 2.
what this means, really, is that the current situation has outstripped all the institutional checks that were put into place in the middle 1940s to prevent structural wobble-to-collapse.

this should be a concern.
don't you think?

what kinds of action do you think this assessment would require.
keep in mind that actions on the part of states is a function of assessments of the situation being addressed--and that as assessments change, the rationale for actions will change along with it.

in other areas, the imf is trying to call for swift implementation of stimulus packages and a wholesale cleaning out of transnational financial sectors.

at the same time, the imf itself remains institutionally neoliberal. so there is a problem of institutional ideology that cuts across what they are recommending. it's hard to say exactly what this entails--it's more a deep and obvious Problem....

roachboy · 03-12-2009, 06:26 AM

the imf's particular position and viewpoint on the economic crisis is getting more interesting as what the obama administration is arguing for as a response to financial meltdown becomes more obvious. this in the run=up to the g-20 summit in london...

Quote:

Geithner urges G20 to fund IMF-led stimulus

By Alan Rappeport in New York

Published: March 12 2009 02:00 | Last updated: March 12 2009 02:00

Tim Geithner, US Treasury secretary, yesterday urged the world's biggest industrialised countries to commit 2 per cent of their total gross domestic product during the next two years in a coordinated effort to stimulate the global economy.

Mr Geithner said the International Monetary Fund should oversee the stimulus programme and increase its own capacity by $500bn to help restore growth in emerging markets.

"Forceful financial sector actions are critical to rebuild confidence, restore market functioning, get credit flowing and bring stability to the global financial system," Mr Geithner said.

He argued that G20 nations must act together to ensure that markets such as derivatives have better oversight and called for a "framework of capital requirements" to provide a better buffer in bad times. He said that global co-operation was needed to create tools to combat economic crises amid a fast evolving international financial system.

"There has been a lot of talk about reform," Mr Geithner said. "Now is the time for action."

The IMF estimates that the global economy will contract by 0.5 per cent in 2009 and that world trade is likely to shrink by 3 per cent or more this year.

The expanded IMF capacity should be achieved through the existing New Arrangements to Borrow scheme, Mr Geithner said, suggesting that membership be broadened to include more G20 countries. He also said the Obama administration would soon submit legislation to Congress to mobilise IMF gold to help cover additional expenses.

Mr Geithner also urged reform of the Financial Stability Forum so it includes all G20 countries, giving it a stronger mandate.

FT.com / UK - Geithner urges G20 to fund IMF-led stimulus

interesting too are the changes in the voting patterns within the imf recently implemented:

Quote:

Washington economists press Geithner on IMF reforms
by Lesley Wroughton

WASHINGTON, Jan 27 (Reuters) - More than a dozen high-profile economists on Tuesday called on the Obama administration to delay congressional approval of a proposal on changing voting power at the International Monetary Fund and negotiate more ambitious reforms.

In a letter to new U.S. Treasury Secretary Timothy Geithner, the Washington-based economists said the changes to IMF voting power approved in March were "inadequate in the light of the ongoing global economic and financial crisis."

The changes gave some large emerging economic powers like China and India a greater say in the IMF, despite misgivings among developing countries the move did not go far enough to significantly reform the IMF.

In some countries, including the United States, such changes require legislative approval.

The economists urged the Obama administration to take up the issue again at a meeting of Group of 20 leaders in early April, when IMF reforms will be discussed, and to push for a renegotiation of the package.

"We urge you to reopen the package starting in your discussions with other governments in advance of the meeting of G-20 heads of government in London on April 2," they wrote.

Among the economists is Ted Truman, a former senior U.S. Treasury official now at the Peterson Institute for International Economics; Nancy Birdsall, president of the Center for Global Development; Eswar Prasad, Joannes Linn, Homi Kharas, Colin Bradford and Ralph Bryant of The Brookings Institution; Jo Marie Griesgraber of New Rules for Global Finance Coalition, and John Sewell of the Woodrow Wilson International Center for Scholars.

The IMF's legitimacy and relevance must be strengthened through bold measures that will make it more representative of its 185 member countries, the economists said.

SEEKING GREATER RESOURCES AND MANDATE

Measures to increase the IMF's resources and to implement its mandate for exchange-rate surveillance are needed, and it must ensure its chief is selected on the basis of qualifications, not nationality, they added.

The letter to Geithner came days after he told U.S. lawmakers that President Barack Obama wants to reform the IMF to give developing nations a greater stake in the institution.

IMF spokesman William Murray said early approval of the reform legislation was important and includes proposals to put the Fund's finances on a sounder footing, including through the sale of a portion of IMF gold.

He said the changes were a first step to rebalancing members' voting power and included a commitment to additional vote adjustments.

"The IMF has been consulting closely with governments and non-governmental stakeholders on these and other issues central to the Fund's future role, and will continue to do so in the lead-up to the Group of 20 summit in April," he said.

But Domenico Lombardi, president of the Oxford Institute for Economic Policy and a former IMF board member, said the changes fell short of what was needed to make it an effective overseer of the global financial system.

"The kind of agreement that was reached a few months ago didn't deliver on the expectations in terms of a more drastic shake-up of the IMF governance framework," said Lombardi, who also signed the letter to Geithner.

"Given the current momentum for moving forward more aggressively, the idea would be to have a more courageous view in terms of reforming the Bretton Woods institutions," he added.

Lombardi said the new U.S. administration was widely expected to be more willing to pursue broader change at the IMF. And since Geithner had worked at the IMF, there was also a general recognition that he would be more understanding of the workings of the institution.

"While it was difficult to talk about IMF reform with the previous administration getting so close to the end of its mandate, there is a general sense of hope that the new administration will be more pro-active in terms of engaging more aggressively on the multilateral institutions," Lombardi said. (Reporting by Lesley Wroughton; Editing by Jan Paschal)

Washington economists press Geithner on IMF reforms | IFIwatchnet

so the plan appears to be to use the bretton woods structures--update them both in terms of governance (voting power was based on degree of financial support based on a political arrangement worked out in the 1940s that gave the united states de facto control over the imf, which obviously made it not so much a regulatory institution that hovered over currency exchange in particular as a way of controlling the modulations in capitalist markets as an instrument of american policy, and so an expression of american geopolitical domination) and function.

there are problems with this move, most of which have to do with what it actually might mean or require to jerk the imf away from the ad hoc role it's assumed under neoliberalism as a kind of short-term emergency loan source and ideological wedge for neoliberal "reforms" in the southern hemisphere--which made of it a generator of crisis--and back to some version of what it was set up to do.

what do you make of this movement on the part of the obama adminstration?

roachboy · 03-13-2009, 07:09 AM

3.

from this morning's financial times, more information about the american proposal for revamping the imf and the horse trading to come with the european union over it:

Quote:

Geithner looks for a trade-off over IMF

By Alan Beattie in Washington

Published: March 12 2009 19:49 | Last updated: March 12 2009 22:57

Not even an understaffed US Treasury is afraid of doubling up its bets. This week, in the face of European scepticism of its demands for global fiscal stimulus, Tim Geithner, US Treasury secretary, upped the stakes by proposing a massive expansion of the International Monetary Fund and sweeping reforms to the global financial architecture.

But at the heart of Washington’s strategy, experts say, lurks an attempted trade-off. The emerging world gets more say over the running of the world economy, and Europe gets more IMF cash to bail out the crisis-hit countries on its eastern periphery. In return, the US is trying to recruit the IMF to its campaign to press the rest of the world – and particularly recalcitrant European finance ministers – to increase fiscal stimulus.

Arvind Subramanian at the Peterson Institute in Washington says: “The US is hoping that the need to help out eastern Europe will overcome the stand-off over fiscal policy.”

The fund has led large loan packages for Ukraine, Hungary and Latvia and has been negotiating with Romania and Turkey. While the EU seems likely to find its own funds to rescue any eurozone country that requires them, it has looked to the IMF to lead the response to crises in states further east. In return the US wants the IMF to act as a global fiscal cop, monitoring whether countries keep to a benchmark of spending 2 per cent of gross domestic product to boost demand.

But whether this will loosen European public purse strings seems doubtful. On Wednesday Mr Geithner sidestepped questions of whether the European countries were currently meeting that target, saying it was a matter for the IMF. Yet fund officials say that the 2 per cent figure was intended to be a global benchmark for discretionary fiscal action – new tax cuts and spending, as opposed to the “automatic stabilisers” that kick in when economies slow. It was not intended as a country-by-country target.

In a paper released last week, the IMF said: “Countries in which the automatic stabilisers are larger will need smaller discretionary stimulus.”

When automatic stabilisers are included, the US is still one of the most stimulative of the big economies, but the differences are much less stark between it and the welfare state economies of western Europe. Measured by discretionary stimulus, for example, UK fiscal policy will actually subtract from growth next year, with a contraction equivalent to 0.1 per cent of GDP, potentially earning it a reprimand from the IMF under the US plans. But its overall fiscal balance in 2010 is highly stimulative, projected to loosen by a massive 5.4 per cent of GDP relative to the pre-crisis situation, not much below the equivalent figure of 6.1 per cent for the US.

Early warning system

As G20 policymakers struggle to combat the immediate effects of the crisis with fiscal stimulus packages and financial bail-outs, their forthcoming summit will also look at designing early warning systems to spot new disasters

A French official said on Thursday that the real bargain was for more IMF resources, including from countries like China, in return for increased surveillance of financial markets, and that France had nothing to fear from scrutiny of its fiscal policy. The EU is already planning to lend about $100bn extra to the fund.

Kaoru Yosano, Japan’s finance minister, said that while fiscal stimulus was helpful, “I don’t want to force other people to follow this argument; every country has the freedom to choose their own way”.

The US has frequently been accused of using the IMF to further its own agenda. When George W. Bush was in the White House, his Treasury persuaded the fund to focus its economic surveillance on member countries’ exchange rates – widely seen as part of its campaign to make China let the renminbi float freely.

Raghuram Rajan, a former IMF chief economist, describes the exchange rate surveillance policy as “an unmitigated disaster” which made the fund look biased. He says that there are similar problems with it as the White House’s fiscal enforcer – not least because it has spent most of its previous six decades trying to get countries to tighten public finances, not loosen them. “I don’t think they seriously think the fund can censure countries on their fiscal policy being too tight,” he says. “This certainly would be a dramatic turnaround.”

Although emerging markets are pleased by US support for accelerating the review of “quotas” – countries’ contributions to the IMF, which determine their voting power – they are also suspicious of being corralled into a global campaign of fiscal stimulus. “The problem for many developing countries is not the intention or willingness to spend more,” says Sri Mulyani Indrawati, the Indonesian finance minister. “The problem is on the lack of reasonable deficit financing.”

“Clearly, the US does not want to be the demander of last resort,” Mr Rajan says. “But not all countries have the same fiscal room.

FT.com / US & Canada - Geithner looks for a trade-off over IMF

Cynthetiq · 03-13-2009, 07:27 AM

whew.. this is all really difficult for me to digest. I'm getting lost in most of it, but I'm trying hard to understand it because it obviously didn't just appear overnight.

First question I have is IMF how does it get funds to bail out countries? What gives it such authority as opposed to just letting the country economy sink and just peter out and rebuild on it's own without intervention? These seem to be the first parts of the understanding for me as a foundation.

roachboy · 03-13-2009, 07:59 AM

well, the imf was set up after bretton woods in 1944 as an institution that would prevent currencies from imploding. it operates in the same general context as the world bank and, regionally, other transnational banks on the other of the interamerican bank.

the reason for it had much to do with the prevailing american understanding of fascism in germany as arising out of the period of hyper-inflation in weimar germany, so with currency collapse.
it was part of the reconfiguration in the infrastructure that supported/stabilized capitalism that was put into place after world war 2--alongside institutions like nato (which was set up both as a cold war alliance and as a guarantor of nation-state stability) seato, etc---and the institutions that administered/benchmarked the marshall plan (oecd)...

when the nixon administration dismantled the bretton woods system, it not only took the dollar off the gold standard but it also provided impetus for the creation of international currency markets which allowed speculation (in general, not necessarily in a pegorative sense) to fix exchange rates. this left the imf without the latitude to operate as it was set up to do---by the early 1980s, it had been transformed into an instrument of american domination in the southern hemisphere primarily, moving into the chaos generated by the way in which colonialism was ended (around 1960--but it's a complicated story which maybe you know about...it's interesting too, but not so relevant here). the idea was apparently still the same--the imf would operate as a lender of last resort with the goal of enabling stabilization of basic parameters and support for transition into the neoliberal world order. i'll pass over that.

since then, it's been a primary generator of crisis in the name of staving off crisis in the south.

of course, that's not what the imf says it does. here's the overview from their website:

What the IMF Does

it's set up with a governing body the composition and voting power of which is determined by the proportions of nation-state funding that gets diverted into it. so it works with monies allocated to it by the consortium of nation-states that are represented on it's board. most of it's income derives from membership quotas:

Factsheet - Where the IMF Gets its Money

the idea behind the imf at its inception was basically that the consequences of allowing national economies to implode far outweighed any conceivable advantage to be had from it---again the american understanding of world war 2, particularly with reference to germany, centered on fascism as a result of economic (and political) instability during the weimar period--which isn't wrong exactly, but it leaves out a whole lot of stuff as well (like the radical nationalism central to fascist ideology)...so it was with that experience in mind (this was put into motion in 1944) the decision was taken collectively that stabilization mechanisms had to be in place.

there's more, but i'll leave it at that for the moment.

roachboy · 03-16-2009, 07:41 AM

FT.com / Video & Audio / Interactive graphics - G20 Wishlist

this link goes to a useful graphic that enables you to see the basic positions outlined by each of the players at the G20 going in to the meeting over the weekend.

the outcome was not exactly unanimous: it appears that the germans in particular balked at the american proposal to expand/rework the imf, preferring to maintain a nation-state orientation at the level of policy initiatives and a lower level of committment of resources that geithner (for example) had been asking for.

at the same time, there were statements about the need for co-ordinated action and indications that there might in fact be co-ordinated action.

but in the main, it seems to me that the G-20 was a missed opportunity for the main capitalist powers to do something that'd enable them to get ahead of the situation and shape it, rather than staying in a more reactive posture.

which means that the central problems were punted.

Quote:

G20 twin-track strategy seeks to avoid splits

By Chris Giles in Horsham

Published: March 15 2009 15:48 | Last updated: March 16 2009 08:54

The Group of 20 advanced and emerging countries ceased hostilities at the weekend over fiscal stimulus and regulatory policies in an attempt to appear united at a summit next month.

The move followed a week of US pressure on Europe to introduce bigger discretionary tax cuts and public spending increases and irritation at perceived bullying.

Ministers and officials stressed areas of co-operation before the summit in London on April 2. The G20 process is now on a twin-track of immediate economic stimulus and financial system repair, alongside medium-term ideas for tougher financial regulation, officials argued.

Seeking common ground, the G20 finance ministers and central bank governors, meeting in Horsham, southern England, pledged to “take whatever action is necessary until growth is restored”.

Their communiqué said they would ensure that “all systemically important financial institutions, markets and instruments are subject to an appropriate degree of regulation and oversight”.

But the meeting was short on substantive agreements and the ministers continued to acknowledge different priorities as the most important next steps in the reaction to the financial and economic crisis.

Tim Geithner, US Treasury secretary, dropped a US call for countries to implement a fiscal stimulus equivalent to 2 per cent of national income in 2009 and 2010. But he stressed that with “all the major economies . . . putting in place substantial fiscal packages”, the “stronger the response, the quicker recovery will come”.

The communiqué contained a commitment “to deliver the scale of sustained [fiscal stimulus] effort necessary to restore growth” and called on the International Monetary Fund “to assess the actions taken and the actions required”.

But Alistair Darling, the UK chancellor, conceded that the IMF already plays that role on the global stage. He was unable to say, however, whether the G20 communiqué would alter his thinking over Britain’s planned fiscal tightening in 2010.

In a further sign that few concrete decisions had been taken, Christine Lagarde, French finance minister, said: “I don’t think we should ever consider that April 2 is the end of the road. It is the step on the road for which we are delivering the platform”. France wants to host a G20 summit, European diplomats said yesterday.

French officials on Sunday said communiqué language on requiring hedge funds to “disclose appropriate information to assess the risks they pose” was en-couraging, as was a commitment to make financial regulation damp rather than amplify economy cycles in future.

Peer Steinbrück, Germany’s finance minister, said “remarkable progress” had been made in the fight against tax evasion in tax havens and the regulation of hedge funds. But he sounded a defiant note on fiscal stimulus, saying: “We are convinced it makes no sense to pump more and more money in our economy when we haven’t restored the confidence on the financial markets”.

Finance ministers from emerging economies were pleased with the commitment substantially to increase the resources of the International Monetary Fund and to allow citizens from outside the US and Europe to head the fund and the World Bank in future.

http://www.ft.com/cms/s/0/9038bb32-1...0779fd2ac.html

Cynthetiq · 03-16-2009, 07:43 AM

silly question I'm sure... but G20, G7, G8, do the attendees change like people change socks?

roachboy · 03-16-2009, 07:49 AM

i think they're just different organizations.
the G8 is older:

G8 - Wikipedia, the free encyclopedia

the G20 was formed in the late 1990s and seems more suited to dealing with the present situation because it's more open and includes china, india etc.

What is the G-20

flstf · 03-17-2009, 02:46 PM

One thing I didn't realized untill recently is that Credit Default Swaps (like those sold by AIG) are not limited to those who own and are insuring their mortgage backed holdings but are sold to anyone. There may be more money tied up in these than all the money in the world. I don't think even the most committed capitalist would be against their regulation knowing what we know now.

What is happening now with the AIG bailouts in which the government gives them money to pay off CDS claims still seems like the unwinding of a Ponzi scheme. Eventually the American people will refuse any more bailouts and those left holding the swaps will be out of luck when AIG goes belly up. Just like any other Ponzi scheme you have to get your money early or lose it all.

Quote:

ONE REASON THE MARKET TOOK OFF is that you don't have to own a bond to buy a CDS on it - anyone can place a bet on whether a bond will fail. Indeed the majority of CDS now consists of bets on other people's debt. That's why it's possible for the market to be so big: The $54.6 trillion in CDS contracts completely dwarfs total corporate debt, which the Securities Industry and Financial Markets Association puts at $6.2 trillion, and the $10 trillion it counts in all forms of asset-backed debt.

"It's sort of like I think you're a bad driver and you're going to crash your car," says Greenberger, formerly of the CFTC. "So I go to an insurance company and get collision insurance on your car because I think it'll crash and I'll collect on it." That's precisely what the biggest winners in the subprime debacle did. Hedge fund star John Paulson of Paulson & Co., for example, made $15 billion in 2007, largely by using CDS to bet that other investors' subprime mortgage bonds would default.

So what started out as a vehicle for hedging ended up giving investors a cheap, easy way to wager on almost any event in the credit markets. In effect, credit default swaps became the world's largest casino. As Christopher Whalen, a managing director of Institutional Risk Analytics, observes, "To be generous, you could call it an unregulated, uncapitalized insurance market. But really, you would call it a gaming contract."

There is at least one key difference between casino gambling and CDS trading: Gambling has strict government regulation. The federal government has long shied away from any oversight of CDS. The CFTC floated the idea of taking an oversight role in the late '90s, only to find itself opposed by Federal Reserve chairman Alan Greenspan and others. Then, in 2000, Congress, with the support of Greenspan and Treasury Secretary Lawrence Summers, passed a bill prohibiting all federal and most state regulation of CDS and other derivatives. In a press release at the time, co-sponsor Senator Phil Gramm - most recently in the news when he stepped down as John McCain's campaign co-chair this summer after calling people who talk about a recession "whiners" - crowed that the new law "protects financial institutions from over-regulation ... and it guarantees that the United States will maintain its global dominance of financial markets." (The authors of the legislation were so bent on warding off regulation that they had the bill specify that it would "supersede and preempt the application of any state or local law that prohibits gaming ...") Not everyone was as sanguine as Gramm. In 2003 Warren Buffett famously called derivatives "financial weapons of mass destruction."
Will credit default swaps cause the next financial crisis? - Sep. 30, 2008

nickelclad · 03-18-2009, 01:15 AM

I think institutional bias might be a problem that will plague the IMF. Bias in terms of who controls its decisionmaking bodies (and thus whose interests it might privilege), and bias in terms of the kind of thinking and philosophy that it adopts in its approach to global economic problems. It doesn't have a very good track record in this respect, and it'll be interesting to see how the G20 plans to rehabilitate it.

Tully Mars · 03-18-2009, 02:56 AM

This is interesting but I really don't understand it very well. I'm not sure if that's a good or bad thing.

roachboy · 03-18-2009, 03:37 AM

the basic problem that, as it turns out, it not yet being addressed is whether nation-states are in a position to maintain stability in the context of transnational capital flows, particularly given the speed with which they move (the net) and the opacity of the most explosive types of financial devices....

the split within the g20 at the last meeting happened over this question, with the germans acting like us republicans in assuming that it is possible for nation-states to remain the central while the us proposed a reworking of the imf that'd enable it to operate at a meta-national level to effect the spaces of flows directly.

the thread has gone in two directions: the first was about the assessment of the overall economic situation issued by the imf itself, which was kinda interesting both in itself and also because it came as the proposal to change the composition of the governing council and the role of the institution---so you can look at the report as an indication of the scenario that the imf drew that'd define the situation into which it was going to enter. the second part of the thread was about geithner's proposal to revamp the imf itself and what happened to it at the g20 meeting last weekend in london.

personally, i think the past few months are demonstrating that capital and it's movements have outstripped the control of individual nation-states, but also that political and economic stability requires that they be controlled. there have been a series of explosions in the southern hemisphere driven by this situation which are directly political--guadeloupe, madagascar have both experienced general strikes--there have been quite massive protest movements in france---iceland has already experienced the consequences of a collapse of the financial sector. it's a little surprising to me that there has been so little in the way of oppositional activity in the united states, but i attribute that to the centrality of the ideology of spectatorship coupled with the timing of the transition of power to the obama administration.

the problem is that if it turns out that the political classes realize that there have to be supra-national institutions (and by extension legal frameworks) to stabilize things, what'll be required is something on the order of a new bretton woods--but which goes beyond that---but this is a complicated project and the political class has apparently decided that it's too much to take on so they've chosen to run away from the problem for the time being. i think this will turn out to be a really stupid move and that the problem will resurface soon and that they'll be in a postion of having to be more reactive than they already would have been because they've pissed away more time.

geithner's imf proposal had the sole advantage of looking to institutions that already exist.
but i think that the internal culture of the imf will be a proble, and the adaptation to the role geithner suggests not easy, the outcomes not necessarily good--but it at least starts to address the problem.

strangely, i think the neocons tried to deal with something like this question by way of the war in iraq--their idea was to set up the united states as supra-national by way of military hegemony. this would have issued into an authoritarian global order, an explicit american empire---but the gambit didn't work--and it's a good thing it didnt because had this same crisis we're going through unfolded in that scenario, the political damage to the united states would have been total. the central motivation behind neocon politics, however, is anxiety about loss of centrality for the nation-state....the writing's on the wall you see.

Tully Mars · 03-18-2009, 11:38 AM

Interesting post.

I can't help but think it's all just numbers in a computer. No one actually has cash they have numbers on a account statement. Value and worth isn't really tied to anything. I find that scary.

roachboy · 03-18-2009, 11:50 AM

université tangente - tangential university

it's not like there aren't already transnational institutions...but the lay of the land is confusing. there's a fantastic map on the page linked above that you can zoom into and out of that tries to outline the interlocking institutions...but you figure if it's hard to visualize--by which i mean it's hard to organize even as a map--it'd be harder still to co-ordinate action.

somehow i think this is helpful.
but maybe i just really like the maps these folk make.

03-13-2009, 07:27 AM	#4 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	whew.. this is all really difficult for me to digest. I'm getting lost in most of it, but I'm trying hard to understand it because it obviously didn't just appear overnight. First question I have is IMF how does it get funds to bail out countries? What gives it such authority as opposed to just letting the country economy sink and just peter out and rebuild on it's own without intervention? These seem to be the first parts of the understanding for me as a foundation. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

03-13-2009, 07:59 AM	#5 (permalink)
roachboy Super Moderator Location: essex ma	well, the imf was set up after bretton woods in 1944 as an institution that would prevent currencies from imploding. it operates in the same general context as the world bank and, regionally, other transnational banks on the other of the interamerican bank. the reason for it had much to do with the prevailing american understanding of fascism in germany as arising out of the period of hyper-inflation in weimar germany, so with currency collapse. it was part of the reconfiguration in the infrastructure that supported/stabilized capitalism that was put into place after world war 2--alongside institutions like nato (which was set up both as a cold war alliance and as a guarantor of nation-state stability) seato, etc---and the institutions that administered/benchmarked the marshall plan (oecd)... when the nixon administration dismantled the bretton woods system, it not only took the dollar off the gold standard but it also provided impetus for the creation of international currency markets which allowed speculation (in general, not necessarily in a pegorative sense) to fix exchange rates. this left the imf without the latitude to operate as it was set up to do---by the early 1980s, it had been transformed into an instrument of american domination in the southern hemisphere primarily, moving into the chaos generated by the way in which colonialism was ended (around 1960--but it's a complicated story which maybe you know about...it's interesting too, but not so relevant here). the idea was apparently still the same--the imf would operate as a lender of last resort with the goal of enabling stabilization of basic parameters and support for transition into the neoliberal world order. i'll pass over that. since then, it's been a primary generator of crisis in the name of staving off crisis in the south. of course, that's not what the imf says it does. here's the overview from their website: What the IMF Does it's set up with a governing body the composition and voting power of which is determined by the proportions of nation-state funding that gets diverted into it. so it works with monies allocated to it by the consortium of nation-states that are represented on it's board. most of it's income derives from membership quotas: Factsheet - Where the IMF Gets its Money the idea behind the imf at its inception was basically that the consequences of allowing national economies to implode far outweighed any conceivable advantage to be had from it---again the american understanding of world war 2, particularly with reference to germany, centered on fascism as a result of economic (and political) instability during the weimar period--which isn't wrong exactly, but it leaves out a whole lot of stuff as well (like the radical nationalism central to fascist ideology)...so it was with that experience in mind (this was put into motion in 1944) the decision was taken collectively that stabilization mechanisms had to be in place. there's more, but i'll leave it at that for the moment. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-16-2009, 07:43 AM	#7 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	silly question I'm sure... but G20, G7, G8, do the attendees change like people change socks? __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

03-16-2009, 07:49 AM	#8 (permalink)
roachboy Super Moderator Location: essex ma	i think they're just different organizations. the G8 is older: G8 - Wikipedia, the free encyclopedia the G20 was formed in the late 1990s and seems more suited to dealing with the present situation because it's more open and includes china, india etc. What is the G-20 __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-18-2009, 02:56 AM	#11 (permalink)
Tully Mars Living in a Warmer Insanity Super Moderator Location: Yucatan, Mexico	This is interesting but I really don't understand it very well. I'm not sure if that's a good or bad thing. __________________ I used to drink to drown my sorrows, but the damned things have learned how to swim- Frida Kahlo Vice President Starkizzer Fan Club

03-18-2009, 01:15 AM	#10 (permalink)
nickelclad Upright	I think institutional bias might be a problem that will plague the IMF. Bias in terms of who controls its decisionmaking bodies (and thus whose interests it might privilege), and bias in terms of the kind of thinking and philosophy that it adopts in its approach to global economic problems. It doesn't have a very good track record in this respect, and it'll be interesting to see how the G20 plans to rehabilitate it.

03-18-2009, 03:37 AM	#12 (permalink)
roachboy Super Moderator Location: essex ma	the basic problem that, as it turns out, it not yet being addressed is whether nation-states are in a position to maintain stability in the context of transnational capital flows, particularly given the speed with which they move (the net) and the opacity of the most explosive types of financial devices.... the split within the g20 at the last meeting happened over this question, with the germans acting like us republicans in assuming that it is possible for nation-states to remain the central while the us proposed a reworking of the imf that'd enable it to operate at a meta-national level to effect the spaces of flows directly. the thread has gone in two directions: the first was about the assessment of the overall economic situation issued by the imf itself, which was kinda interesting both in itself and also because it came as the proposal to change the composition of the governing council and the role of the institution---so you can look at the report as an indication of the scenario that the imf drew that'd define the situation into which it was going to enter. the second part of the thread was about geithner's proposal to revamp the imf itself and what happened to it at the g20 meeting last weekend in london. personally, i think the past few months are demonstrating that capital and it's movements have outstripped the control of individual nation-states, but also that political and economic stability requires that they be controlled. there have been a series of explosions in the southern hemisphere driven by this situation which are directly political--guadeloupe, madagascar have both experienced general strikes--there have been quite massive protest movements in france---iceland has already experienced the consequences of a collapse of the financial sector. it's a little surprising to me that there has been so little in the way of oppositional activity in the united states, but i attribute that to the centrality of the ideology of spectatorship coupled with the timing of the transition of power to the obama administration. the problem is that if it turns out that the political classes realize that there have to be supra-national institutions (and by extension legal frameworks) to stabilize things, what'll be required is something on the order of a new bretton woods--but which goes beyond that---but this is a complicated project and the political class has apparently decided that it's too much to take on so they've chosen to run away from the problem for the time being. i think this will turn out to be a really stupid move and that the problem will resurface soon and that they'll be in a postion of having to be more reactive than they already would have been because they've pissed away more time. geithner's imf proposal had the sole advantage of looking to institutions that already exist. but i think that the internal culture of the imf will be a proble, and the adaptation to the role geithner suggests not easy, the outcomes not necessarily good--but it at least starts to address the problem. strangely, i think the neocons tried to deal with something like this question by way of the war in iraq--their idea was to set up the united states as supra-national by way of military hegemony. this would have issued into an authoritarian global order, an explicit american empire---but the gambit didn't work--and it's a good thing it didnt because had this same crisis we're going through unfolded in that scenario, the political damage to the united states would have been total. the central motivation behind neocon politics, however, is anxiety about loss of centrality for the nation-state....the writing's on the wall you see. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

03-18-2009, 11:38 AM	#13 (permalink)
Tully Mars Living in a Warmer Insanity Super Moderator Location: Yucatan, Mexico	Interesting post. I can't help but think it's all just numbers in a computer. No one actually has cash they have numbers on a account statement. Value and worth isn't really tied to anything. I find that scary. __________________ I used to drink to drown my sorrows, but the damned things have learned how to swim- Frida Kahlo Vice President Starkizzer Fan Club

03-18-2009, 11:50 AM	#14 (permalink)
roachboy Super Moderator Location: essex ma	université tangente - tangential university it's not like there aren't already transnational institutions...but the lay of the land is confusing. there's a fantastic map on the page linked above that you can zoom into and out of that tries to outline the interlocking institutions...but you figure if it's hard to visualize--by which i mean it's hard to organize even as a map--it'd be harder still to co-ordinate action. somehow i think this is helpful. but maybe i just really like the maps these folk make. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite