[R-G] U.S. takes back seat as power balance shifts

[Suzanne de Kuyper]

Maybe not!   The assumptions the positive article are based are that that
the financial meltdowns world wide  are a collective  accident.  Maybe not.
Time will tell, or, has told while, in shock, we were not listening.

Suzanne

On Fri, Apr 3, 2009 at 7:35 PM, Sid Shniad <shniad at sfu.ca> wrote:

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> http://www.theglobeandmail.com/servlet/story/RTGAM.20090403.wg20analysis03/BNStory/International/?page=rss&id=RTGAM.20090403.wg20analysis03
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> Globe and Mail
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> April 3, 2009
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> Analysis
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> U.S. takes back seat as power balance shifts
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> Doug Saunders
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> London — In a conference hall built atop the Blitz-scarred ruins of the
> east London Docklands, the leaders of the world's largest rich and poor
> nations huddled for a few hours yesterday and put an end to the postwar era.
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> “The old Washington consensus is over; today we have reached a new
> consensus,” British Prime Minister Gordon Brown, who convened the summit and
> proposed many of its ideas, declared at its conclusion yesterday. “I think a
> new world order is emerging.”
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> It was no mere rhetoric. No longer, after yesterday's G20 declaration, is
> the world governed by the logic and structures that have defined it since
> the final days of the Second World War, when the similarly momentous 1944
> Bretton Woods summit set up global institutions, including the International
> Monetary Fund and the World Bank, to rebuild Europe and Asia under U.S.
> guidance.
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> “Since Bretton Woods, the world has been living on a financial model, the
> Anglo-Saxon model. … Clearly, today, a page has been turned,” French
> President Nicolas Sarkozy declared in a statement broadcast at the same time
> as Mr. Brown's.
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> Significantly, U.S. President Barack Obama didn't challenge those
> assessments and played a major role in building a 19-nation agreement that
> comes very close to making them true.
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> The Bretton Woods institutions, and the U.S. government's financial arms,
> have overseen the expanding world economy for six decades and they were at
> the centre of yesterday's proposals to rescue that economy from its
> debt-driven collapse.
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> But their role, and the shape of the world, is permanently altered. Until
> 2009, the fundamental goal of the IMF and its sister organizations was to
> deregulate the world economy, to remove restrictions from finance capital.
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> Under yesterday's agreement, those organizations will serve as regulators:
> As well as keeping the financial system working and rescuing nations from
> bankruptcy, the IMF and new organizations will aggressively police the
> worldwide credit, finance and banking systems to prevent a recurrence of the
> bad-credit spiral that led to the current crisis.
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> In exchange, they will become far less U.S.-dominated: In exchange for
> substantial contributions to the fund, formerly developing countries such as
> China, India and Brazil will play a larger role controlling them.
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> Joseph Stiglitz, the Columbia University economist who has been a leading
> critic of the “Washington consensus” of freewheeling finance, described
> yesterday's agreement as a seismic event in financial history.
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> “It's a historic moment when the world came together and said we were wrong
> to push deregulation,” he said. “It is a major step forward.”
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> Yet it is not as dramatic a change as some leaders had hoped. This is not
> the “new kind of capitalism” proposed by Mr. Sarkozy, a system that would
> feature more state ownership and protectionism than before. Nor, in the long
> term, is it a turn away from the successful postwar combination of liberal
> economics, privatization and open foreign investment.
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> Instead, it is a shift from the era of unrestrained globalization into a
> new era of what might be called “managed globalization.”
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> The London G20 summit has changed the power relations behind globalization,
> probably permanently. Even if its proposals fail to arrest the deep
> recession, even if yesterday's proposals prove to be a mere speed bump on
> the road to ruin, it will be almost impossible to return to the old system.
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> It was not the headline figure of $1-trillion in new credit, trade finance
> and fiscal assistance – a large part of it coming from China and other
> non-wealthy countries – although that news was enough to send stock markets
> soaring.
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> Nor was it the surprisingly large sums to be spent on the world's poorest
> countries, an amount capable of making a huge difference to hundreds of
> millions of very poor people.
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> The biggest difference lies in the summit itself and in the way it has been
> approached by the United States and its allies. The rise of the G20 as an
> instrument for mending the economy, and the new structure of the IMF, paves
> the way to a world in which the United States is no longer the necessary
> partner in any major economic dealings.
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> The presence of the world's top “developing” countries – notably China,
> India and Brazil – was not tokenism or ornament, as it has largely been at
> past summits. Those countries are now contributors, rather than recipients,
> of finance; without China's $50-billion commitment yesterday, the
> trade-finance package would not have worked.
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> But something important changed yesterday. It is no longer a case of
> Washington bailing out the world, with the help of a small group of wealthy
> European nations and sometimes Canada.
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> Yesterday, to an important degree, the world bailed out the United States.
> Mr. Brown compared it to the Marshall Plan, in which the U.S. government
> injected hundreds of millions into the European and Japanese economies after
> the war in exchange for Washington holding decisive power in most
> international bodies.
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> Yesterday, 65 years after Bretton Woods, the favour was returned.
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