West bells China and says catch the mice

Ah Chia SG

West bells China and says catch the mice

By Lau Nai-keung

First, there was G7, the group of seven industrialized countries. Then came G8. Now the buzz revolves around G2, making it explicit that China has been recognized as a new "superpower". But China is not ready for this new status.

So what happened to all the brouhaha over G7 (or G8)? The G7 has enjoyed a free princely feast for years, and is thoroughly drunk on its importance. The US has made a mess of itself, forcing many in the West to look for a country that can help fix the problems it has created - but is unable to solve. As for G20 members, most of them are trying to solve their own problems, created by the global economic crisis. The European Union (EU), being a member of G20, would have been the ideal US partner in G2. But it is in no better shape than the US. The same is true of Japan.

So the global onus seems to have fallen on China, which with its $2 trillion foreign reserves and an amazing 8 percent growth despite worldwide recession is seen by many to have the ability to help fill the trillions-dollar black hole created by the West. It's a different matter altogether that China, as a developing country, is itself a victim of the West's economic misdeeds and is desperately trying to solve its own problems.

But why do the rich nations expect the developing world to help them out of the economic mess? Whenever developing economies have needed help to emerge out of a crisis (mostly created by the rich world), the G7 and the Bretton Woods organizations they run have prescribed bitter pills.

During the Asian financial crisis, for example, the International Monetary Fund offered the "Washington Consensus" to Southeast Asian economies, which incidentally were victims of Western investment bankers and hedge fund operators' machinations. Since these bankers are at the root of the present crisis, should we prescribe the same medicine for the West: Tighten your belt and monetary policy, and let the economy just shrink and, voila! Before you know, you'll be back in good economic health.

West bells China and says catch the mice

These are not times to experiment, or prescribe the bitter pill for the West, which concocted it in the first place to con the world. But one thing is for sure, if the West does not change its extravagant consumption habit and wasteful lifestyle, it cannot emerge out of the crisis without scars.

A crisis of this magnitude can only be resolved with every player playing its role. US President Barack Obama was elected to the Oval Office on the promise of change. But do we see any fundamental change? The West has the propensity to continue with its lavish lifestyle, expecting the rest of the world to foot the bill.

American kids are taught in high schools the principle of "no taxation without representation". This is the basic tenet of "freedom and democracy" that the West wants to proselytize us with. It's high time we told the West to please walk its talk, and let responsibility start with rights.

If the West really wants China to help clear the mess it has created, it has to give the Middle Kingdom more say in matters pertaining to the global economy. But despite all the fancy talk about G2, China is still worse than a junior partner, discriminated against in many fields. Even though China is willing to loosen its purse strings and buy sick enterprises or mines, it cannot because the West won't allow it to. The sauce for the gander in this is not sauce for the goose.

What the West wants from China is: Pay as told without knowing why and for what. Why? The answer is simple: If the West goes down, China goes down too. China is supposed to play the role of a responsible stakeholder for the US and the G7, whereas in the true spirit of G2, it should be an equal partner.

There's no denying the fact that if world economy falls apart, China too will go into depression. But it can't be denied either that it will emerge stronger than others from the pit.

Of course, it's not in China's interest to see the situation deteriorate. It is willing to help too. As a true stakeholder in the global economy, it will try its best to minimize the damage caused by the industrialized West and protect itself and its neighbors, which together constitute about 60 percent of the world population. It won't do it to please the West, or to save the West from the perils of its own creation, or to become a "superpower", and that's precisely why it deserves to be treated as an equal partner by the rest of the world.

China has been playing as important a role as in many international matters, and it will work for a world without domination, a world where every country - large and small, rich and poor - will have a fair chance to develop and prosper.

Not so long ago, China was weak and poor, and its people have not forgotten what the accompanying shame, subjugation and deprivation meant. It will not collude with the US or the G7 and never become a bully on the world stage. Instead, true to what it preaches, it will endeavor to bring peace and development to every nook and cranny of the world.

The author is a member of the Hong Kong Special Administrative Region Basic Law Committee of the National People's Congress Standing Committee.

http://www.chinadaily.com.cn/opinion/

4sg SG

West has to walk the talk.

Ah Chia SG

See Michael Hudson's views on the current economic and financial crisis:

MICHAEL HUDSON

http://www.youtube.com/results

http://www.michael-hudson.com

Ah Chia SG

Gordon Brown Spills the Beans on the IMF

By MICHAEL HUDSON

Last month the G-20 authorized the International Monetary Fund to increase its loan resources to $1 trillion. It’s not hard to see why. Weakening currencies in the post-Soviet states threaten to raise default rates on foreign-currency mortgages as collapse of the Baltic real estate bubble drags down Swedish banks, while the Hungarian property plunge threatens Austrian banks.

It seems reasonable to infer that creditor-nation banks hope to be bailed out. The IMF is expected to lend the Baltic, central European and other debtor-country governments money to pay them. These hapless debtor economies are then to follow IMF “conditionalities” to squeeze enough money out of their populations to pay foreign creditors – and repay the Fund by imposing yet more onerous taxes on their labor and industry, making them even more high-cost and therefore pushing them even further into trade and credit dependency.

This is why there have been so many riots recently in Latvia, Lithuania, Estonia and Ukraine, as was the case for so many decades throughout the Latin American countries that introduced the term “IMF riot” to the global vocabulary.

For fifty years the IMF has organized such payouts to creditor nations. Loans are made to debtor-country governments to “promote exchange-rate and price stability.” In practice this means pouring tens of billions of dollars into currency markets to make bad gambles against raiders.

This is supposed to avert the beggar-my-neighbor nationalism and financial protectionism that aggravated depression in the 1930s. But the practical effect of IMF lending is to demand that debtor countries impose onerous IMF “conditionalities” that stifle their domestic markets. This is why the IMF was left with almost no customers until last year’s debt crisis deranged the world’s foreign exchange markets.

It is supposed to be merely incidental that the largest IMF shareholders, the United States and Britain, happen to be the major creditor nations and their banks the main beneficiaries of IMF loans. But in a Parliamentary question-and-answer session on May 6, Britain’s Prime Minister Gordon Brown spilled the beans.

Under pressure for his notorious “light-touch regulation” as Chancellor of the Exchequer (1997-2007), he undid half a century of rhetorical pretense by announcing that he was pressuring the IMF to bail out Britain in its nasty dispute with the Icelandic owners of a British bank that went under.

He was in a position to know the nitty-gritty of who owed what and which nation’s monetary authorities were responsible for which banks. So when he said that he was strong-arming the IMF and other organizations to force Iceland’s government to pay for his own government’s mistakes, he must have known this was breaking the unwritten law of pretending that the IMF is not the servant of creditor nations in bilateral disputes with smaller economies...

http://www.counterpunch.org/hudson05112009.html

How the IMF Props Up the Bankrupt Dollar System

One of the crucial pillars of support for today's Dollar System is Washington's control of the International Monetary Fund, the IMF. The way this actually works is carefully disguised, behind a facade of technocrats and economic theory of free market ideology.

In reality, the IMF is a modern era collection agency for the Dollar Empire. It collects its tribute, through major international banks, who use the dollars to further extend the power of American financial and corporate hegemony, in effect the driving motor of what is globalization...

...Globalization is a word used today, often without precision. If we use the word globalization to refer to the entire process of IMF and WTO-led neo-colonialism under the Dollar System, then it is a descriptive term.

It describes the creation of a global dollar imperium, a Pax Americana. Establishment critics of the IMF system such as Joseph Stiglitz, himself a former Clinton adviser and World Bank official, make accurate charges against the IMF. They assume, however, that it is merely misguided policy that leads to the problems.

The entire IMF institution, along with the World Bank and WTO, however, have been deliberately developed to advance this globalization of the Dollar System, the second pillar of Pax Americana after the military power.

It is no mistaken policy, no result of bureaucratic blunders.

That is the crucial point to be understood.

The IMF exists to support the Dollar System.

http://www.serendipity.li/hr/imf_and_dollar_system.htm

4sg SG

Very clever these politicians......prop up the value of toilet paper by printing more toilet paper..............

4sg SG

The West is telling China to toil the line. A hidden message, telling China not to withdraw the trillions dollar worth of treasury bills.......

charlize SG

It is like the lesser of 2 evils.

Follow or be prepared for total anarchy and collapse in the global economy.