GREG'S LEGACY

Specialising in the human experience of Living with prostate cancer – warts and all

Others who believe in a new world order

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Some of us think the global economy may collapse bringing about a ‘New World Order’ whilst others are banking on ‘Free Market Forces’ to bring the economy back to ‘Business As Usual‘. This news column will blog news items that might influence one direction or the other

Kevin Rudd is for it: Time For A New World Order

Prime Minister Kevin Rudd has called for a new era of social capitalism and denounced the unfettered capitalism of the past three decades.

“The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes,” (Rudd) writes of those who placed their faith in the corrective powers of the market.

In a message to Mr Obama and the US Congress, Mr Rudd counselled against erecting trade barriers. “Soft or hard, protectionism is a sure-fire way of turning recession into depression as it exacerbates the collapse in global demand.”

Gordon Brown is for it: World Must Not Resort To Protectionism

The international community must not resort to protectionism as it tries to find solutions to tackle the global financial crisis, Gordon Brown said today.

He added that the financial crisis could be “turned into an opportunity” to “kill two birds with one stone” by converting to green, low-carbon economies, thereby creating jobs and boosting growth. He repeated his call for a “green new deal” to turn aspiration into reality.

I hope he is right about seizing the opportunity for a new green deal.  Unfortunately, it may go the other way where the environment is once again sacrificed for the sake of the economy.

The protectionism issue is the one that is going to be hard to manage.  With the collapse of the world economy, it is reasonable for our leaders to look at protecting jobs by promoting the “Buy American”  concept as President Obama has done.  I maintain that, as a minimum, no country should forfeit the ability to feed itself before it succumbs to the ‘needs’ of the global economy.

But there are hurdles to jump:-

US-China currency war threatens the world

 


Getty Images

There is no question that Beijing has pursued a mercantilist strategy of conquering US and European markets by holding down the yuan/renminbi. It has a monthly trade surplus of $40bn, the highest ever recorded by any country. Or put another way, China is exporting its surplus capacity to the rest of the world. It has become a global deflation machine. Even so, Mr. Geithner is playing with fire. Beijing has amassed reserves of $1.9 trillion. From what we know, most of this money is held in the form of US Treasuries and other bonds. Creditors exercise power. Don’t be fooled by claims that China could not deploy this weapon without damaging its own interests. All kinds of things can and do happen when tempers flare, and they were flaring today.

Dominant Social Theme: Will it all blow up?

Free-Market Analysis: The salient point of this article is that “tempers flair,” and that if the United States pushes China too hard, the Chinese leaders will dump Treasuries on the market and in doing so break the fiscal back of the free world. Of course maybe it isn’t so simple as all that. The free-world probably isn’t so free, and these waters swirling between China and America run quite deep.

Blind pursuit of profit by US caused crisis

Chinese and Russian leaders Wen Jiabao and Vladimir Putin have blamed the US for causing the global economic crisis on a gloomy first day of the Davos forum.
Mr Wen blamed the US-led financial system for the world’s deepening economic slump, in the most public indication yet of discord between the US Government and its largest creditor….

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Written by Greg Naylor

1 February 2009 at 12:00 am

Posted in social comment

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