In A Historical Victory for Humanity; The G20 are Going Left…slowly
Anti-G20 protesters march in Europe
JOINING FORCES:: Protest rallies were also held in Paris, Madrid, Berlin, Rome and other European cities, drawing anywhere from a few hundred people to several thousand
Monday, Mar 30, 2009,
Tens of thousands of people took to the streets of London on Saturday to express their anger at the human cost of the financial crisis.
Demonstrators also marched in other European capitals as politicians appealed for calm during Thursday’s G20 gathering in London.
Police estimated the London crowd at up to 35,000 but there were no reports of any violence as the placard-waving crowd snaked along the 6km route to Hyde Park.
An alliance of more than 150 organizations including unions, charities and environment groups joined the march to demand action to save jobs, create a low-carbon economy and impose stricter controls on the finance sector.
US Vice President Joe Biden, meanwhile, called for protesters to give governments a chance to tackle the economic crisis at a conference in Chile.
“I would hope that the protesters give us a chance, listen to what we have to say and hopefully we can make it clear to them that we’re going to walk away from this G20 meeting with some concrete proposals,” he said.
Also in Chile, British Prime Minister Gordon Brown, who will host the G20 summit, said: “The action that is happening in London today I understand, and we will respond to it at the G20.”
Organizers of the Put People First march for “jobs, justice and climate” in London had rejected as “smears” claims in police briefings that marches could be hijacked by anarchists bent on violence.
Brendan Barber, general secretary of the Trades Union Congress, said the demonstration had a clear message for the presidents and prime ministers heading to London.
“Never before has such a wide coalition come together with such a clear message for world leaders,” he said.
“The old ideas of unregulated free markets do not work, and have brought the world’s economy to near-collapse, failed to fight poverty and have done far too little to move to a low-carbon economy,” Barber said.
One protester, Chris Pounds, 45, a health worker from Northampton, said the groups in the march were united in their belief that global leaders had “made a real mess” of the economy.
“We have got to start again to find a new way of living because over the last year we’ve seen that our so-called leaders don’t know what they are doing,” he said. “I don’t care what happens at the G20 summit — we don’t need their help.”
The protesters waved banners with slogans such as “We won’t pay for the crisis,” “Plan it with the planet in mind” and “Capitalism always leads to death.”
More protests are planned in London in the days leading up to the summit.
In Rome, protesters threw red paint, egg and smoke bombs at banks, insurance companies and estate agencies in their protest.
Students and left-wing activists were among those who took part in the march, which organizers said had drawn around 6,000 people.
Thousands of people also marched through Berlin and Frankfurt on Saturday. In Vienna, police said at least 6,500 people marched to protest about the effects of globalization.
Several hundred demonstrators turned out in Paris, where they erected and demolished a model of an island symbolizing a tax haven.
China calls for financial reform
IDEAS:: After suggesting the IMF’s Special Drawing Rights could serve as a reserve currency, Beijing is calling for regulatory reform for financial institutions
AGENCIES, MEDELLIN, COLOMBIA AND BEIJING Chinese central bank Governor Zhou Xiaochuan (周小川) on Saturday again urged for international financial reform in the face of the global economic crisis.
Speaking at an Inter-American Development Bank (IADB) meeting in the northwestern Colombian city of Medellin, Zhou said that current fiscal and monetary measures were useless if the international financial system is not overhauled.
He said financial reform and measures for international development banks like the IMF and the World Bank would likely be discussed at the upcoming G20 summit of developing and industrialized nations on Thursday in London.
“Up to now we have participated in some working groups which focus on coordinating effort to overcome the negative impact of the financial crisis,” Zhou said.
“The second [effort] is maybe financial sector reform, including regulatory reform and I think we also expect there may be some reform agenda for international financial institutions, including the Fund, the Bank and other development banks,” he said.
He also called for tougher regulation of international financial institutions. The issue of the world currency reserve is expected to be raised at the G20 summit.
The banking chief this week called for a replacement of the dollar, installed as the reserve currency after World War II, with a different standard run by the IMF.
Zhou suggested the IMF’s Special Drawing Rights (SDR), a currency basket comprising dollars, euros, sterling and yen, could serve as a super-sovereign reserve currency, saying it would not be easily influenced by the policies of individual countries.
IMF managing director Dominique Strauss-Kahn welcomed Zhou’s comments and said that talks on a new world reserve currency to replace the US dollar were “legitimate” and could take place “in the coming months.”
But US Treasury Secretary Timothy Geithner defended the dollar as a key global reserve currency in Washington. Geithner was scheduled to attend the IADB summit yesterday.
“I hope I can see Geithner. He’s coming? Tomorrow, yeah?” Zhou said with a note of surprise in his voice.
Zhou said China would be prepared to participate if the IMF sought to increase its reserves to better tackle the crisis.
“Certainly, we have quite an active preparation to participate if IMF wants to raise their reserves,” he said.
Asked if one possibility would be a private placement of SDR-¬denominated bonds, he said: “I think the approach is not that important. But anyway China is going to do some things. And I think probably [a] technical issue [is] still in discussion.”
Zhou also said it was uncertain whether China’s economic slowdown had ended and he urged more financial reforms in the face of the worldwide slump.
China is facing a challenge to its economy as demand slows in the US and Europe amid the global crisis. Exports have dropped from last year’s levels in the last four consecutive months, including a 25.7 percent drop last month.
“You know it still very much depends if this global financial crisis reached bottom,” Zhou told reporters when asked if China’s slowdown had halted. “This kind of dependence is the most important. Up to now it is still uncertain. We don’t know yet.”
China is targeting GDP growth of 8 percent this year and is spending 4 trillion yuan (US$585 billion) on a two-year stimulus package to maintain high economic growth.
The World Bank on March 18 lowered its forecast for China’s economic growth this year to 6.5 percent from the November estimate of 7.5 percent, warning Beijing it would actually be thwarting its own medium-term goals if it tried to offset the slowdown by further boosting investment.
Meanwhile, Europe is comfortable with China’s growing world role but believes the G20 summit will be too early to decide on Beijing’s calls for more say in global financial bodies, the EU Commissioner for External Relations said yesterday.
EU Commissioner Benita ¬Ferrero-Waldner said in Beijing that the London gathering of 20 major wealthy and developing powers this week would focus on “concrete results” to revive the global economy, not more distant issues.
China caused a stir ahead of the Thursday summit when it suggested the world move to greater use of the IMF SDF as an international reserve currency.
“I don’t think that this will be the question that really will be discussed thoroughly in London,” Ferrero-Waldner said after talks with Chinese Foreign Minister Yang Jiechi (楊潔箎) and Vice Premier Li Keqiang (李克強).
Likewise, she said, China’s call for a bigger role in the IMF and other international financial bodies would not be a focus of the summit.
“I think it’s too early for us to give a really concrete answer,” she said of these calls. “I think it is within the IMF, it is within the international financial institutions, that these questions have to be discussed.”
The idea of a new reserve currency system based on the SDF has not been entirely knocked down, but many G20 leaders have made clear that for now the US dollar’s status as the dominant reserve unit remains.
Ferrero-Waldner is seeking to smooth differences between Brussels and Beijing before the G20 meeting and a planned summit between China and the EU in May.
She said China’s growing economic clout naturally meant more of an international role for Beijing.
On eve of G-20 summit in London
European powers rebuff US, British proposals for economic stimulus
By Patrick Martin
30 March 2009
In what appears to be a calculated leak by the German government to demonstrate its opposition to increased deficit spending, Der Spiegel magazine published excerpts this weekend of a draft final communiqué proposed by Britain for the G-20 summit of leading economies to be held in London April 2.
Der Spiegel confirmed that the draft document came from the German government, with other press accounts identifying the conservative Christian Social Union, the ruling party in Bavaria and a coalition partner of German Chancellor Angela Merkel, as the source.
The document called for the G-20 countries to spend a combined $2 trillion to stimulate the world economy, now sinking into the deepest crisis since the Great Depression of the 1930s. Its publication provided an occasion for many continental European leaders to make additional denunciations of new spending that would increase fiscal deficits.
Merkel attacked calls for a "global new deal," adding, according to a Times of London report, "I will not let anyone tell me that we must spend more money." Spanish Finance Minister Pedro Solbes said, "In these conditions, I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans."
These remarks follow previous negative comments by French President Nicolas Sarkozy, who said international bank regulation, not more spending, was required, and a scathing denunciation of the Obama administration's policies by the current president of the European Commission, Czech Premier Mirko Topolanek, who described US calls for big deficits to stimulate the economy as "the road to hell."
A spokesman for British Prime Minister Gordon Brown claimed that the document was an old draft that merely estimated what spending had already been approved, including the $787 billion stimulus package enacted by the Obama administration.
No additional stimulus was to be expected at the summit, British Foreign Secretary David Miliband told the BBC, saying the G-20 meeting "isn't about rabbits out of hats." He added, "This is about trying to tackle an exceptional economic crisis--far beyond the financial system--and set in place measures... that really do make a difference over the short term and the long term."
But press commentaries in both Britain and the United States called the leak to Der Spiegel an "embarrassing disclosure" and even "a deliberate act of sabotage" by the German government.
The most nationalistic reaction came from British Labour MPs. Denis MacShane, the former Europe minister, asked, "Who does Mrs. Merkel think is going to buy Mercedes and BMWs if she... says putting demand into the economy is a bad thing?" Another Labour MP said: "One has to ask who had something to gain from the leak of the communiqué. This feels like a dirty trick."
Right-wing domestic critics of Brown sounded warnings similar to Merkel's. In an article in the Sunday Telegraph, former foreign secretary Lord Owen warned that the British economy may be subjected to "IMF disciplines" to halt a "precipitate loss of confidence." He compared the current atmosphere in London to the crisis that erupted in the British Labour government of James Callaghan in the late 1970s, which paved the way for Margaret Thatcher.
Mervyn King, the governor of the Bank of England, urged Brown earlier in the week to drop further plans for fiscal stimulus. "Given how big these deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits," he told a parliamentary committee on Tuesday.
In a White House briefing Saturday, an Obama aide denied there was a split between the continental Europeans, particularly Merkel and Sarkozy, and the Anglo-American leaders, saying, "You know, the president had very productive video conferences this week and phone calls with Chancellor Merkel, with Prime Minister Brown and with President Sarkozy, to work on many of the issues we're talking about, and I saw no evidence of any such back-and-forth or rift or anything."
The verbal gymnastics cannot disguise the gulf between the policy proposals from Washington and London and those coming from the other European powers, as well as such G-20 attendees as China, Brazil and Argentina. Despite the attempts to present a picture of responsible world leaders gathering to consult and cooperate on reviving the world economy, the participants in the G-20 summit will arrive in London effectively crippled and deeply at odds.
Last week the head of China's central bank created an international stir by suggesting that it was time to investigate an alternative to the US dollar as the main vehicle for settling international trade accounts. He called for a greater reliance on Special Drawing Rights issued by the International Monetary Fund, provided that China and other countries in Asia, Africa and Latin America were given a greater say in the IMF's affairs.
The Obama administration has enacted not only a stimulus spending package, but a far larger federal bailout of Wall Street, which has pumped trillions into the financial system, requiring enormous borrowing and money creation by the Federal Reserve, the US central bank.
These policies are of a highly nationalist character, aimed at shifting the burden of the crisis which began with the collapse of the US financial system onto the major rivals of American capitalism in Europe and Asia. By raising the US budget deficit and national debt to unprecedented levels, Washington is drawing virtually all available private capital around the world into the US.
At the same time, US demands that the European powers expand their deficit spending to finance larger stimulus programs would, if carried out, would have a destabilizing impact on the euro and intensify centrifugal tendencies already threatening to tear the European Union apart.
The impasse, in attempts to fashion a credible international response to the crisis coincides with a deepening slide toward world depression. The US unemployment rate is expected to jump to 8.5 percent in March (the figure will be officially announced on Friday, the day after the G-20 meeting), with one projection, from IHS Global Insight, that net job loss in March will hit a record 750,000, the worst month since 1949.
Japanese industrial output is expected to show a 10 percent decline in a report due out Monday, while all the European countries are in deep recession. Recent forecasts have the German economy shrinking by 6 percent in 2009, its worst showing in the post-World War II period. As for the impoverished countries of Asia, Africa and Latin America that will not be represented at the G-20, their fate is even worse. According to the Institute of International Finance, private capital inflows into "emerging markets" will fall from $929 billion in 2007 to only $165 billion this year.
Reflecting the mood in Washington, one prominent economist predicted the outcome of the G-20 meeting: "There will be a very long communiqué, but there won't be much in it." Such a result would mean that the London conference, far from setting a course for the revival of world capitalism, could mark an important turning point in its further disintegration.
Financial Times columnist Martin Wolf noted the historical parallel to the crisis of the 1930s in a column last month, in which he warned of the danger of a repetition of the summit held in the same city in 1933, in the depths of the Great Depression.
US President Franklin Roosevelt did not even bother to attend the meeting, which broke up in failure over proposals to revive the gold standard.
Wolf wrote: "The London summit of 1933 marked the moment at which cooperative efforts to manage the Great Depression collapsed. The summit of the Group of 20 countries, in the same city, on April 2, must turn out quite differently.
That may seem a simple task. It is not. The usual platitudinous communiqué would be a catastrophe."
All indications are that precisely such a result is now to be expected. The divisions between the rival capitalist nation-states, each seeking to safeguard the profits and privileges of its own ruling class, are an insuperable obstacle to the formulation of a coherent policy for dealing with the deepening global depression.