It certainly beats any dreary Group of 20 (G-20) communique. Everything one
needs to know about the US Federal Reserve's quantitative easing (QE), currency
wars and the mudslinging tsunami that passes for the current global financial
system can be found at this animated rap video by Taiwan-based Next Media
Animation (see the video
here)
If only the G-20 summit in Seoul this week had released a ''making of''. The
summit was billed as a lofty last rampart of antiprotectionism, supporting the
global economic recovery while alleviating widespread deficit and debt
problems. As the meeting
was taking place on Thursday and Friday, the final declaration had been
hammered out on Wednesday. And what a mud-wrestling match that was.
After much sweating, a draft communique was arrived at, stating that nations
should let markets determine currency rates and ''refrain from competitive
devaluation'' (a veiled reference to the US). But until the last minute the
sherpas, the officials whose keen sense of hazards and secure routes help to
guide their leaders to a safe if banal conclusion at any summit) also kept in
brackets crucial alternative wording - ''competitive undervaluation'' (a veiled
reference to China).
As a consolation prize to global public opinion, at least it was heartening to
see the BRIC countries - Brazil, Russia, India and China - and the European
Union (EU) finally getting their act together to produce a declaration
stressing the - almost general - political will that nations should not adopt
policies (such as the Fed's latest round of quantitative easing, or QE2) that
seriously mess with other nations' economies.
Every central bank in the world had been asking the Fed for days to come clean
on QE2. To believe that the G-20 would gladly accept US President Barack
Obama's offer to embrace yet another tsunami of US paper dollars that the US
cannot pay for is to live in Oz. No wonder many a diplomat would confirm,
tersely or not, that this was indeed the G-19 to 1 summit.
Yet to exhibit as a G-20 success only a promise that the much-scorned
International Monetary Fund (IMF) should monitor what the G-20 is doing is
slightly less than appalling (although the IMF now dreams that a coordinated
G-20 action to "save" the world economy could generate 52 million jobs in the
medium term). Not to mention that Washington refuses to undergo the "structural
adjustment" that its baby, the IMF, has always imposed on any other budget
deficit patient.
The new model army
How could it be otherwise? Take the letter Obama sent to the G-20 leaders ahead
of the summit. He tried to convince the other 19 that the US is keeping its
"commitment to refrain from undervaluing currencies for competitive purposes" -
when all of them were practically screaming that QE1 and QE2 are nothing less
than US dollar devaluation. Obama's letter practically laid the blame for the
2008 financial crisis on China and the emerging markets. And as he defended the
Fed's action in India on Monday, he in fact was stating that what is good for
the US is good for the world.
Brazilian President Luiz Inacio Lula da Silva’s response was certainly more
measured than many an angry European central banker, who were accusing the US
of "treason"; Lula suggested that the BRIC countries should start using fewer
US dollars while trading among themselves (and that's already the case).
Even the mineral kingdom is aware that since the US under Richard Nixon in 1971
unilaterally declared the end of a link between gold and the US dollar, the
Bretton Woods system introduced at the end of World War II has been dead. What
has been going on to this day is the unending coma of the global monetary
system. Washington/Wall Street has embraced a take-no-prisoners law of the
jungle - endless manipulating of the US dollar as the global reserve currency.
For emerging nations, the only possible counterpunch is to coordinate an array
of public investment works, to guarantee jobs and incomes in their internal
markets, and to protect their local industries.
It's enlightening to compare the current situation with what happened under
Franklin Delano Roosevelt. To reverse the Great Depression, the US government
took over the economy. President Roosevelt did not resort to "the markets"; he
unleashed a state-conceived developmentalist package - public works mixed with
social action.
As much as the impasse at the G-20 is real, the current Washington rhetoric of
striving for global coordination to beat the crisis is nonsense: what matters
to Washington/Wall Street today is to smash any political alternative to its
unilateral adjustment. The University of Missouri's Michael Hudson has
explained it in a nutshell: "Essentially, you'll have America's financial
system and the banks acting as an army to raid foreign currencies."
It's still full spectrum, stupid
So what will happen in the US after QE2 and this G-20? Business as usual - that
is, the return, in full force, under the auspices of a Republican-dominated US
Congress, of the full primacy of the Pentagon's Full Spectrum Dominance
doctrine. Republicans will hysterically try to cut every budget in sight - but
definitely not the Endless War budget.
Thus the ''honeymoon'' with China is over. China more than ever will now see
its position solidified at the top of the Pentagon's strategic competitor/enemy
list. The uneasily quantitative trillion-dollar question remains how, in which
terms, and until when will Beijing agree to keep financing the non-stop
build-up of Washington's overwhelming war machine.
The Full Spectrum Dominance-driven Washington/Wall Street plutocracy would
interpret Obama's trip to Asia as serving essentially to warn China that the US
intends to remain a formidable Asian power. India - a US nuclear partner - was
charmed to kingdom come. And so was Indonesia. Those 40,000 US troops in Japan
plus the Okinawa base, as well as the 28,000 US troops in South Korea, are not
going anywhere.
The US internal situation - exhibiting every possible woe from the total
debacle of the middle class to the rise of fascistic tendencies - is not even
an afterthought for the Full Spectrum Dominance-driven Washington/Wall Street
plutocracy.
As for the G-20, this is roughly the bottom line: nothing can stop the US
dollar going down. Big banks will have a ball getting money for nothing in the
US and chicks for free all over emerging markets. Average Americans will be
left with housing prices and wages down. China won't be lectured: by the way,
the yuan has actually appreciated since 2005 from 8.2 to the US dollar to 6.6;
and it will appreciate another 15% up to 2015, following a timeline established
by Beijing, not Washington.
South America, with its string of progressive governments now with much better
coordination capacities, may show the world how to dance the integration
shuffle, and how to escape the US dollar dictatorship, doing deals in their own
currencies. Brazilian Finance Minister Guido Mantega has been saying out loud
what his colleagues have been whispering: the time of the US dollar as reserve
currency is over. The move is toward a basket of currencies. The BRICs will
become increasingly more coordinated. And with China liberalizing the offshore
yuan market, sooner or later the Hong Kong-US dollar peg will become history.
France is next in holding the G-20 presidency. It's no secret that the
embattled, mega-unpopular, micro-Napoleonic and macro-narcissistic Nicolas
Sarkozy will pull all stops to come up with "his" Bretton Woods II next year in
Paris, and thus save the world, not to mention his reelection in 2012.
Now that's a soap opera worth waiting for. Till then, let's rap. From the Mao
to the Deng to the Jiang to the Hu/ You think you can keep on telling us what
to do...
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