Daily Archives: November 15, 2008

G-20 leaders shaping a New World Order


Leaders and head of states attending the G20 summit on Financial Markets and the World Economy pose for a family picture at the National Building Museum on November 15, 2008 in Washington. Leaders of the Group of 20 richest economies and emerging economic heavyweights are meeting in Washington to craft a joint strategy to deal with the rapidly spreading global financial crisis.

U.S. economic mettle is tested as emboldened leaders from throughout the world gather in Washington.

CNN | Nov 14, 2008

By Steve Hargreaves

NEW YORK (CNNMoney.com) — The role of the United States as the world’s economic leader will be tested this weekend when 20 significant world leaders meet in Washington to address the global financial crisis.

Some European leaders are hailing the summit as the next Bretton Woods – a reference to the historic talks in the latter days of WWII that, in effect, made the dollar the world’s dominant currency and laid the foundation for the economic order of the past 60 years.

The United States basically ran those meetings. Close to prevailing in the war, it was the world’s undisputed military and economic leader.

But today, with the current credit crisis partly rooted in America, and with the rising economic might of China and a unified Europe, that dominance is being challenged.

“The Europeans see themselves as taking a position equal to the U.S.,” said Irene Finel-Honigman, an international affairs professor at Columbia University specializing in international banking. “We’re looking at a different composition of players and a different powerplay. It’s going to be fascinating to watch.”
Europe’s heavy hand

To bolster their position, the Europeans come to the meeting emboldened by their belief that the credit crisis didn’t originate on their soil.

They say that means the more tightly regulated European banking model has triumphed over the more lax laws favored in America.

“The initial response was accusing the U.S. of cowboy capitalism,” said Finel-Honigman. “But as the weeks passed, it’s become clear we’re all in this together.”

Together or not, deep divisions still exist between the United States and the Europeans, who initially called for this meeting and will be pushing an agenda heavy on new rules.

Their proposals include: Greater oversight of hedge funds and investment banks; increasing how much money banks need to keep in reserve; more transparent and universal accounting standards; and limits on executive pay.

All that would be accompanied by a new global network of regulators -regulators that would presumably have power over U.S. banks, a potential non-starter with the Bush administration.

“Self-regulation to solve all problems, it’s finished,” French President Nicholas Sarkozy was quoted saying in the Guardian newspaper last month. “Laissez-faire, it’s finished. The all-powerful market that is always right, it’s finished.”

Moreover, the Europeans are expected to come to the talks presenting a more united front than ever. And they are likely to use one voice to gain international support to counter U.S. policies which many blame for this crisis.

The United States

For the United States, the main goal of the summit will be to derail many of these new regulations, said Robert Brusca, chief economist at Fact and Opinion Economics, a Manhattan consultancy.

It’s a goal Brusca seems to fully support.

“The last thing we need is another powerless, toothless, cumbersome global agency,” he said. “You need to let [banks] run their business, the government isn’t going to run it any better.”

The Bush Administration is of the same mindset.

While Bush has agreed some more regulation is needed, particularly when it comes to unifying accounting standards and increasing transparency, he is wary of too much government involvement.

“We must recognize that government intervention is not a cure-all,” Bush said in statement just before the summit Thursday, which seemed almost designed to temper European expectations. “History has shown that the greater threat to economic prosperity is not too little government involvement in the market – but too much.”


U.S. President George W. Bush (R) holds hands with his friend Saudi Arabia’s King Abdullah as he arrives at the G20 Summit on Financial Markets and the World Economy at the National Building Museum in Washington, November 15, 2008.

Brusca said the United States should instead focus on what he views as more fundamental causes of this economic crisis – mainly China’s unwillingness to let its currency, the yuan, rise in value.

The low yuan, Brusca argues, makes Chinese goods unfairly competitive, and prods U.S. consumers to buy too much. This gives China its huge trade surplus, which it has used to buy U.S. Treasurys, mortgage-backed securities and other products that allowed all these banks to lend so freely in the first place.

“They have abused the rules of the game, and politically, this is very dangerous,” he said.

The Bush administration may raise this issue at the talks. Getting China to raise the yuan was, after all, one of the administration’s highest priorities just a few years ago.

China, Russia, and everyone else

When a consensus is achieved by the G-20 it carries a lot of weight. With its 19 nations plus the European Union, it represents 90% of the world’s economy and 75% of its population. But reaching a consensus is the toughest part for such a big and powerful group.

And at this summit, China, Russia, and most developing countries will be pushing for more power, not just within the G-20, but in other, more exclusive clubs like the G-7, the World Trade Organization, and the International Monetary Fund.

With all these nations pushing for such disparate things, it’s unlikely much will get done, at least this time around.

The Europeans are unlikely to push China to reform its currency because of what China will likely ask in return, said Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations.

“China isn’t going to give up its export-led growth strategy for the sake of the international system unless it gets a bigger stake in that system – meaning a much bigger voice within the International Monetary Fund and a corresponding reduction in Europe’s exaggerated influence,” Mallaby wrote in a recent op-ed in the Wall Street Journal. “Naturally, the Europeans aren’t proposing it.”

And despite America coming to the table with a black eye from selling these rotten mortgage backed securities around the globe, nearly everyone says the country, with its massive economy and long history of solid stewardship, is still in the driver’s seat when it comes to setting worldwide economic policy.

“There is no other country that could offer the leadership that would cause the G-20 to come up with anything even worth thinking about,” said George Magnus, a senior economic advisor at the Swiss bank UBS.

That means the Europeans are unlikely to get the type of oversight they’re proposing.

Combine the wide range of interests, the complexity of the problem, and the fact that the U.S. is being represented by a lame duck president – Barack Obama is not expected to attend – and it’s unlikely anything will get accomplished besides, maybe, a commitment to meet again.

“I have quite low expectations of what’s likely to be achieved,” said Magnus. “This is just the beginning of a long and crucial dialogue.”

Groups to call for New World Order during G-20 summit

GMA | Nov 14, 2008

MANILA, Philippines – More than 40 international and regional networks and movements from different parts of the world vow to stage global protests calling for fundamental structural changes and a new global economic and financial system that is more responsive to the needs of the poor and the developing countries.

This was announced as the world’s richest 20 countries are expected to meet Saturday to address the current global financial meltdown.

The time is ripe to seek an “alternative path” and turn the crisis into an opportunity for advancing a “people’s agenda for change,” Lidy Nacpil, coordinator of the Jubilee South-Asia Pacific Movement on Debt and Development (JS-APMDD), said in a statement.

Nacpil, who is currently in Washington DC—the site of the G-20 summit, announced that 14 countries in Asia, 7 in Africa, 14 in Latin America and Caribbean, 8 in Europe and 1 in North America (USA) will be staging simultaneous protests in time for the “elite jamboree.”

In the Philippines, civil society groups led by Freedom from Debt Coalition will march to the US Embassy from the Mehan Garden in Manila to highlight the “culpability of the Bush administration” in the global financial, fuel and climate crises.

In a global call signed by 209 international, regional and national networks, the groups demanded “new national, regional, and global financial institutions based on economic democracy and equity, ecological sustainability and environmental justice, gender, racial, ethnic and international justice and equality, and self-determination and sovereignty of peoples and nations.”

The groups also called to end “market fundamentalism…that preached deregulation, privatization, the over-leveraging of banks and trade and capital liberalization that have damaged communities and the environment.”

“We believe that the system must be changed and can be changed,” Nacpil said. “We say no to summit called by lame duck US President George W. Bush and other G8 leaders. Their only agenda is to stabilize the current financial system in the interest of the global capitalist elite. The reforms they propose will only give greater power to institutions like the IMF and the World Bank which, in the first place, bear a big part of the responsibility for this financial crisis as well as the climate, food and energy crises. What should be done, instead, is to install economic structures and policies that place people’s needs first and give people greater control over resources and the decisions that affect their lives.” – GMANews.TV

Japanese ‘giving up on sex’

Japan is facing a crisis in the bedroom that threatens the very future of the nation, according to the head of the nation’s Family Planning Association.

Telegraph | Nov 14, 2008

By Julian Ryall in Tokyo

A new study by Dr. Kunio Kitamura has revealed that more than one third of all couples in Japan have effectively given up on sex, with most complaining they are too tired after work or that it is “boring.”

“The results are a surprise because the numbers keep going up each year,” said Dr. Kitamura.

In 2004, 32 per cent of Japanese admitted to not having sexual intercourse in the previous month. That number has now risen to 37 per cent, according to a report that will be presented to the Ministry of Health and Welfare next year.

“Of course, if people are not having sex then there will be fewer children,” Dr. Kitamura said.

Japan’s birth rate stood at 1.34 in 2007, far below the replenishment rate of 2.08 babies that is required for a stable population.

The country’s population, which peaked at around 127.7 million in 2006, is predicted to decline to 95 million by 2050. And if drastic measures to encourage people to have more sex and more children don’t succeed then there will be a mere 47.7 million Japanese at the turn of the next century.

The Japanese government recognises that it has a problem with a declining birth rate, which will inevitably lead to a population dominated by elderly people who will need to have their pensions and health care funded by a shrinking group of workers, and is seeking ways to halt the decline.

Proposals for increased payments for parents, more time off work after the birth of a child and increased access to health and education opportunities have been welcomed, but have not led to a flood of new arrivals.

Dr. Kitamura has a more basic approach to the problem: achieving a balance between work and life and communication.

“People are working too hard today and the most important piece of advice I would give to couples is for them to go home as early as possible after work and communicate with their partners,” he says. “Not communicating is the main reason why so many marriages are sexless.”

Bin Laden Is Alive and `Largely Isolated,’ CIA Director Says

Bloomberg | Nov 13, 2008

By Jeff Bliss

Al-Qaeda leader Osama bin Laden is alive and “largely isolated,” said CIA Director Michael Hayden, who added that U.S. intelligence had disrupted a terrorist attack that “would have rivaled the destruction of 9/11.”

Hayden, speaking in Washington to the Atlantic Council of the United States, an international relations group, said that while al-Qaeda has suffered setbacks, the terrorist organization is “determined and adaptive.”

“This war — and no one should mistake it as anything else — is far from over,” Hayden said. He didn’t give details on the disrupted attack.

Al-Qaeda is working with extremists in Somalia to establish more of a foothold there, which could further destabilize the east African country, Hayden said. Al-Qaeda also has increased operations in north Africa and in Yemen, where the U.S. embassy in the capital of Sana’a was attacked in September.

Bin Laden “appears to be largely isolated from the day-to- day operations of the organization he leads,” Hayden said. “The truth is, we simply don’t know what would happen if bin Laden is killed or captured, but I’m willing to bet that it would work in our favor.”

For months, Hayden has told reporters about U.S. intelligence and military successes against the terrorist group. Yet he said the group has proven it is resilient.

He repeated his assertion that al-Qaeda in Iraq, or AQI, is “on the verge of strategic defeat,” leading the group to transfer operatives out of the country to attack elsewhere.

The flow of money, weapons and fighters out of Iraq “is as much a concern now as the ongoing threat of AQI attacks inside the country itself,” Hayden said.

Al-Qaeda also has succeeded in using the northern tribal region of Pakistan as a base of operations, the CIA director said, adding that cross-border attacks into Afghanistan are “more violent and aggressive.”

Still, U.S. success in keeping al-Qaeda’s leadership pinned to this remote region has made it difficult for the group to plan operations, Hayden said.