G20 Fails to Solve Global Economic Crisis



From G4 to G7 to G20, the capitalist leaders have used the forums to protect imperialist trends and capillarity corporate exploitative profit interests. Some over greedy nations from developing world looking to gain access to manoeuvrings by US-UK terror twins have joined the club to secure some place on the "high" stable but n fact only assist the G7 rogues that control the UNSC-5 to mainly promote their interests.

The most crucial issue of climate change has remained either on the periphery of debates of G20 or just found nowhere.

Expansion of NATO led military conflict internationally has contributed to the economic crisis of western terrocracies. With more illegal wars in Islamic world to loot heir resources on card, NATO would like to keep the war momentum intact. The exhaustion of all economic means for overcoming the global crisis signifies that politics will now come increasingly to the fore. The ruling classes in every NATO terrocracy have already set out their agenda: pampering the rich classes and corporate sector and increasing repression of others making poor and working class suffer mores; all the social concessions of the twentieth century in competing with Soviet socialist schemes, are now taken back one by one, coupled with a turn to trade war, currency war and ultimately crushing the people even more.

The G20 finance ministers’ meetings held in Paris on Oct 15 to continue "talks" on solving the eurozone debt crisis was yet another flop with regards to untangling the European sovereign debt and banking crisis. There was also a suggestion that the International Monetary Fund should increase in size as part of a broader global response to the situation. However the idea has been met with some resistance by the US. A proposal to inject $350bn (£221bn) into the IMF had been backed by some emerging market policymakers. However, US Treasury Secretary Timothy Geithner said that both the IMF and EU already had sufficient funds.

USA, the leader of western terrocracies, says Europe as a whole has resources available to help with the financial problems. In his talks with German chancellor Angela Merkel, US president B. Obama has warned of the risks posed to the US economy, and also discussed preparations for a G20 summit in Cannes scheduled for early next month.

The talk of a possible increase in the resources of the International Monetary Fund to enable it to provide increased support to the European financial system remained a mere slogan mainly because it was opposed by the US, Canada and UK. France is resisting because its banks would be adversely affected under conditions where they are being downgraded by credit rating agencies.The US has pressed for a bailout in order to protect the interests of American banks, which would suffer major losses in the event of any default. The development of the crisis has intensified the inherent conflicts among them.

From across the Atlantic, Obama regime officials have been demanding that the Europeans organize a massive bailout of the banks along the lines of the US Tarp scheme. The motivation for such calls is fear that a major European default will severely impact on US banks and financial houses that hold credit default swaps on European debt. The US and European financial crises have a different form. The US Tarp was launched to bail out the banks after their losses on real estate and securities. the region’s banks and governments are now linked so closely that they should be considered to have a consolidated balance sheet. In effect, recapitalization by national governments is just a shift from the left to the right pocket. This is why a ‘euro Tarp’ will not solve the eurozone’s key problem: the loss of confidence in government debt.” The “excessive rescue funds” are more likely to create a “fire channel,” drawing them into a “morass of debt.”

French President Nicolas Sarkozy and German Chancellor Angela Merkel announced they had come to an agreement to bailout and “recapitalize” European banks but France is sceptical about financial stability because a direct intervention by the national government would lower France’s credit rating. Germany has demanded that the first port of call should be private markets, with national governments stepping in if that approach fails.

Earlier, G-20 development ministers meet on Oct 12 in Washington. One of the items on their agenda was a proposal developed in June for the G-20 agriculture ministers to allow the World Food Program to develop a pilot proposal for an emergency food reserve. Food price volatility correlates with low stocks, and that providing stocks is a proven way to curb excessive volatility. In emergencies, in most of the poorest countries, it takes an average of 90 days to bring food into food-deficit areas which is too long.

The costs of working in emergency conditions are also too high, in both resources and human life. G20 considers that there are cheaper, better ways to ensure food is available when it’s needed: a reserve in the food-vulnerable regions is one of them. The pilot is to be part of the G-20 Action Plan on Food Price Volatility. Preparation of the proposal included extensive consultation with the Economic Community of West African States (ECOWAS), which accepted an invitation to host the pilot project.

The Economic Community of West African States (ECOWAS) has agreed to host a pilot emergency food reserves project as part of the G-20 Action Plan on Food Price Volatility which will be implemented in late 2011.

The proposal covers all aspects of the creation, operation and governance of the reserve as well as a comparative analysis including other measures to respond to humanitarian needs under conditions of high and volatile food prices. They managed some outreach to NGOs with experience in humanitarian emergencies and stocks policies. It is an impressive achievement. Yet the G-20 governments placed a number of constraints on the design of the pilot, including the requirement that releases from the reserve only be distributed through safety net programs so as to not affect local food prices. Furthermore, the difficulties of targeting people made newly vulnerable by a sudden price rise will likely require additional quantities of grain to account for inclusion errors.

While the proposal was presented as a constructive strengthening of the EU, it is further evidence of its disintegration. Indeed, the fragility of the EU and the eurozone was underscored by this week’s vote in the Slovakian parliament to reject an increase in the lending capacity of the EFSF to €440 billion from its present €250 billion. It is indicative of future developments as the EU fractures along national divisions.

The problem now facing Europe is the EU is run by the corporate world, banks and corporations though selfish politicians. The intensifying European sovereign debt and banking crisis keep aggravates the divisions among the major powers internationally. No one can feel confident that the global/western financial crisis will soon be over. On the contrary, there are indications it is worsening. The views of European leaders reflect concern that bailing out weaker euro-zone members might be an excessive burden. There has been a move for establishing a “Non-Eurogroup” within the EU.

The much troubled European states now look forward to the November 3 meeting of the G20 to solve all their capitalist economic and financial ailments. The European corporate lords held out the prospect of the EU and the euro providing a way forward for the peoples of the continent, putting an end to the conflicts that erupted in the first half of the twentieth century. But the entire project has turned into a nightmare, bringing poverty and the ever-increasing danger of a Balkanised Europe and war.

There are concerns that the crisis is destabilizing the entire European Union. In May 2010, the euro-zone financial crisis burst into open, threatening a breakdown of the European financial system. Germany and many other European are eager to save the euro at any cost by offsetting the financial crisis through bailout packages. A bank rescue plan organized by France and Germany is taken as a “golden chance to redeem the fading credibility of Europe’s leaders.”

European Council President Herman Van Rompuy has pledged that when the leaders of the EU meet on October 23 they will “finalize our comprehensive strategy” in preparation for the November 3 meeting of the G20. But that promise cuts little ice. Herein lies the main barrier to any “economic” solution to the crisis. Instead of resolving the sovereign debt crisis, bailouts have the potential to extend it from the “peripheral” countries to the core.

Economic crisis has upset western economies and powers affected by the negative trend are looking to other nations for sort of bailout packages.

As the next meeting of the G20 to be held at the beginning of next month, Bank of England has insisted that in order for the global economic crisis to even begin to be tackled there must be a “grand bargain” of the world’s major powers to “act in the collective interest”. Driven into action by signs of a global economic disaster, central banks have now decided to buy up government bonds in financial markets in order to lower long-term interest rates. This phenomenon points to the rapid deepening of the global financial crisis and the consequent rise of international tensions and also as a vote of “no confidence” in euro-zone authorities, making it necessary for Britain to act on its own. USA has insisted that European leaders take action to deal with the debt crisis and end the uncertainty in financial markets—the “biggest headwind” affecting the US economy. As much as 50 percent of European sovereign bonds are insured via credit default swaps by American banks. Therefore any default in Europe would see US banks lose heavily. They fear the deepening global crisis will create a major crisis for the American banking system - and not exactly affecting US people.

Tensions between the US and Europe and the US and China are also rising. USA and EU member states have looked to China, the economic giant of Asia, for suitable bailouts. Beijing resents US interference in China's "internal" affairs with regards to Muslim regions and human rights issue. USA attacks China for its dumping policy in US market. America is critical of non-cooperation of EU member states for the illegal terror wars in oil rich Muslim nations. USA attacks China saying Beijing been “very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the USA. Attacks on China have increased over the past five years, especially since the coming to power of the Obama regime. China argues that the US contradictions arise within the structure of American capitalism itself and its declining world position rather than from Chinese “aggression.”

The constraints listed by euro nations reflect the preoccupation of many governments that nothing interferes with commerce. Commercial traders are keen to realize the profits that higher market prices offer and perhaps less willing to be drawn into supplying the reserve. The preferred “virtual reserve” options rely on drawing from either national food stocks or stocks held by local or regional grain traders. The difficulty of relying on these reserves is that during a period of high and volatile food prices, both of these types of stocks will be under intense pressure to satisfy national needs. Issues related to global market shocks and local or regional food insecurity indicators are not attended properly. The proponents acknowledge this risk but do not provide a satisfactory alternative.

Ministers from outside the eurozone have been pressing European leaders to take decisive action to solve the crisis. However, any major decisions will not be announced until the meeting of European Union (EU) leaders on 23 October.

An Observation

The corporate bourgeoisie has no answer to the crisis their extra profit system has produced which deepened poverty, austerity and illegal wars in Muslim nations, but they are not a solution.

EU leaders would produce a plan at a summit on October 23 that would be convincing for financial markets. The United States is among countries keen to keep pressure on the Europeans to act more decisively to end the debt crisis that began in Greece. Since the problems began two years ago, they have spread to Ireland and Portugal - and are also lapping at Spain and Italy.

If the G-20 really wants an emergency reserve to work, it will be important for development ministers to push for a pilot project that dares a little more than the current proposal. The commercial market has already proved itself inadequate. If the G-20 wants markets to dominate the exchange of food, safety nets are essential. Here is a chance to work with something more effective and less expensive that the existing system of humanitarian assistance. Whatever the explanation for the failings, it is clear that much of the demand for food in poorer countries has a hard time making itself heard in the international marketplace.

Whatever the final form, any bailout will not bring about an economic revival. Rather it will be accompanied by a deepening onslaught against the people, the weak, and the poor across Europe as a whole.

It is an opportunity to send a strong signal to the G-20 heads of state, who will meet next month, that reserves are a practical tool to counter market failures that jeopardize people’s lives and livelihoods. It is great to have a proposal on the table, but reserves deserve a better hearing than the G-20 agriculture ministers’ mandate allows. World leaders must take the idea to a higher level.

About the writer:


Dr. Abdul Ruff  is aSpecialist on State Terrorism; Educationalist; Chancellor-Founder of Centor for International Affairs(CIA); Independent Analyst; Chronicler of Foreign occupations & Freedom movements (Palestine, Kashmir, Iraq, Afghanistan, Pakistan, Xinjiang, Chechnya, etc); Anti-Muslimism and anti-Islamism are more dangerous than "terrorism" Anti-Islamic forces & terrorists are using criminal elements for terrorizing the world and they in disguise are harming genuine interests of ordinary Muslims. Global media today, even in Muslim nations, are controlled by CIA & other anti-Islamic agencies. Former university Teacher. Website:http://www.abdulruff.wordpress.com


Comments

There are 0 comments on this post

Leave A Comment