babyfinland
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BRICS plan to revive the global economy
Brazil, Russia, India, China and South Africa are worried about the world economy and they want fundamental reforms.
Pepe Escobar
We interrupt this programme to announce the end of two centuries of Western domination.
Well, not yet. At least not this Thursday, in Washington, when finance ministers and central bank governors of the BRICS group of emerging powers - Brazil, Russia, India, China and South Africa - get together on the margins of a G-20 meeting.
Brazilian finance minister Guido Mantega started the ball rolling last week, when he announced the BRICS would “talk about what to do to help the European Union get out of this situation” - ie the European-wide financial meltdown.
Hold your horses. Was this an emerging cavalry to the rescue? Could this be the end of the eurozone (eurotrash?) self-induced liquidity panic? Or was it just the BRICS graphically showing the writing on the global economic wall?
The basic (Brazilian) idea was for BRICS financial muscle to buy some extra European sovereign debt. But only “solid” bonds - from Germany or the UK - would qualify. The rationale is that BRICS would win by diversifying reserves - China at $3.2tn, Brazil at over $350bn, India at over $320bn - and making more money than investing in US Treasury bonds.
But the thing is selected BRICS have already started diversifying their reserves for quite a while – especially China.
India was not very enthusiastic about the Brazilian idea.
Nor was Russia; Moscow, via Arkady Dvorkovich, President Dmitry Medvedev’s chief economic adviser, stated flat out the Europeans must come up with a clear strategy for rescuing the PIGS (Portugal, Ireland and Italy, Greece, Spain) before Moscow starts buying more eurozone bonds.
No wonder Brazil finally decided to drop the idea.
We want a bite of your apple
The context of this G-20 meeting is quite juicy; on one side, we have the Europeans almost imploring the Americans to support the idea of a tax on financial transactions - already flat out rejected by Wall Street, via US Secretary of the Treasury Timothy Geithner.
On the other side, we have the Americans absolutely fed up with the eurozone financial circus that is directly threatening the global economy.
In steps “saviour” China. But how?
Ask not what Beijing could do to Europe; ask what Europe has done to Beijing.
Well, not much.
NATO’s bombing of Libya into democracy - or weaponised Islamists running Tripoli - translated into massive losses for China, including the lightning repatriation of over 36,000 Chinese workers, and the cancellation of dozens of contracts.
NATO’s war also happened to be fundamentally opposed by the BRICS. Libyans formerly known as rebels have already threatened to sideline Brazilian, Chinese and Russian companies when it comes to dividing the fresh Libyan loot.
What China is flirting with is the possibility of leading a BRICS response in the form of credit lines to the eurozone - instead of bond buying. Only China - with its stratospheric reserves - would be able to pull it off.
But what Beijing really wants can be gleaned from what top adviser to China’s central bank Li Daokui said at the recent World Economic Forum in Dalian: “The incremental parts of our foreign reserve holdings should be invested in physical assets.”
Translation; “We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way.”
Daokui said there is an astonishing “$10tn” waiting to be invested in the US; over the collective dead body of the Republican party, one might add.
Daokui also said only after “the US Treasury market stabilises” would China be willing to “liquidate more of our holdings of Treasuries.”
The operational word here is “liquidate” - not “diversify”.
That is, Beijing really wants to get rid of all those US dollars. Meanwhile, it will keep buying any available foreign assets in sight - as well as, inevitably, US dollars.
So Europeans should not get too excited; Beijing is as fond of euro debt as it is of dollar debt.
The IMF secret
The European Union does not need a bail out. It is already drowning in a tsunami of euros. What it needs is political will.
The only realistic solution for the European crisis would be a move towards a federal Europe (think of the United States of Europe).
That would imply that the accumulated debt of all these countries - Portugal, Italy, Ireland, Greece, Spain - would be Europe’s debt (and also imply, on a positive register, no more speculation). The economy would be centralised, managed on a European-wide scale.
There’s absolutely no evidence European-wide citizens are ready to accept such a project. Thus, the crisis is never-ending.
The BRICS’s ultimate fear is that this perpetual eurozone wasteland, plus American stagnation, will lead to a global contraction wreaking havoc all across Asia, South America and Africa.
Public opinion in the developing world has long memories. Many would dream that as much as the IMF “helped” the global South by applying its dreaded “structural adjustments” - deregulating everything in sight and transferring more wealth to the already wealthy - the BRICS might now impose their own rules to “save” Europe.
That would mean, in practice, permanent seats at the UN Security Council for the “B” and “I” in BRICS (“R” and “C” already have then). Brazil would demand real free trade in agriculture. And China would demand real freedom of investment.
But everyone knows that won’t happen.
Still the facts on the ground force China to support the eurozone one way or another. It’s natural for Beijing to buy at least some European debt - thus lifting the euro and accumulating political capital for itself.
But as the Financial Times correctly evaluated, “China does not hand out free lunches”. As much as Moscow and Brasilia, Beijing is urging the Europeans to get their act together.
Even mired in crisis Western Europe, as a whole, is still the number one economy in the world; according to The Economist, a little less than 24 per cent of the global total, compared to the BRICS at 21 per cent. Yet the Europeans hold 32 per cent of the votes at the IMF, while the BRICS control only 11 per cent. That leads us to what the BRICS as a whole are really after.
The BRICS want to force a new correlation of forces at the IMF. To this end, the strategy is to softly undermine the power of the US dollar a little further, and to defy Europe a little more forcefully; but without betting on the US dollar, or the euro, or both, crashing.
This strategy will eventually lead to the BRICS becoming more integrated with each other than being dependent on the West. Call it the road map for the definitive end of two centuries of Atlanticist domination.
http://english.aljazeera.net/indepth/opinion/2011/09/201192292011236419.html
Brazil, Russia, India, China and South Africa are worried about the world economy and they want fundamental reforms.
Pepe Escobar
We interrupt this programme to announce the end of two centuries of Western domination.
Well, not yet. At least not this Thursday, in Washington, when finance ministers and central bank governors of the BRICS group of emerging powers - Brazil, Russia, India, China and South Africa - get together on the margins of a G-20 meeting.
Brazilian finance minister Guido Mantega started the ball rolling last week, when he announced the BRICS would “talk about what to do to help the European Union get out of this situation” - ie the European-wide financial meltdown.
Hold your horses. Was this an emerging cavalry to the rescue? Could this be the end of the eurozone (eurotrash?) self-induced liquidity panic? Or was it just the BRICS graphically showing the writing on the global economic wall?
The basic (Brazilian) idea was for BRICS financial muscle to buy some extra European sovereign debt. But only “solid” bonds - from Germany or the UK - would qualify. The rationale is that BRICS would win by diversifying reserves - China at $3.2tn, Brazil at over $350bn, India at over $320bn - and making more money than investing in US Treasury bonds.
But the thing is selected BRICS have already started diversifying their reserves for quite a while – especially China.
India was not very enthusiastic about the Brazilian idea.
Nor was Russia; Moscow, via Arkady Dvorkovich, President Dmitry Medvedev’s chief economic adviser, stated flat out the Europeans must come up with a clear strategy for rescuing the PIGS (Portugal, Ireland and Italy, Greece, Spain) before Moscow starts buying more eurozone bonds.
No wonder Brazil finally decided to drop the idea.
We want a bite of your apple
The context of this G-20 meeting is quite juicy; on one side, we have the Europeans almost imploring the Americans to support the idea of a tax on financial transactions - already flat out rejected by Wall Street, via US Secretary of the Treasury Timothy Geithner.
On the other side, we have the Americans absolutely fed up with the eurozone financial circus that is directly threatening the global economy.
In steps “saviour” China. But how?
Ask not what Beijing could do to Europe; ask what Europe has done to Beijing.
Well, not much.
NATO’s bombing of Libya into democracy - or weaponised Islamists running Tripoli - translated into massive losses for China, including the lightning repatriation of over 36,000 Chinese workers, and the cancellation of dozens of contracts.
NATO’s war also happened to be fundamentally opposed by the BRICS. Libyans formerly known as rebels have already threatened to sideline Brazilian, Chinese and Russian companies when it comes to dividing the fresh Libyan loot.
What China is flirting with is the possibility of leading a BRICS response in the form of credit lines to the eurozone - instead of bond buying. Only China - with its stratospheric reserves - would be able to pull it off.
But what Beijing really wants can be gleaned from what top adviser to China’s central bank Li Daokui said at the recent World Economic Forum in Dalian: “The incremental parts of our foreign reserve holdings should be invested in physical assets.”
Translation; “We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way.”
Daokui said there is an astonishing “$10tn” waiting to be invested in the US; over the collective dead body of the Republican party, one might add.
Daokui also said only after “the US Treasury market stabilises” would China be willing to “liquidate more of our holdings of Treasuries.”
The operational word here is “liquidate” - not “diversify”.
That is, Beijing really wants to get rid of all those US dollars. Meanwhile, it will keep buying any available foreign assets in sight - as well as, inevitably, US dollars.
So Europeans should not get too excited; Beijing is as fond of euro debt as it is of dollar debt.
The IMF secret
The European Union does not need a bail out. It is already drowning in a tsunami of euros. What it needs is political will.
The only realistic solution for the European crisis would be a move towards a federal Europe (think of the United States of Europe).
That would imply that the accumulated debt of all these countries - Portugal, Italy, Ireland, Greece, Spain - would be Europe’s debt (and also imply, on a positive register, no more speculation). The economy would be centralised, managed on a European-wide scale.
There’s absolutely no evidence European-wide citizens are ready to accept such a project. Thus, the crisis is never-ending.
The BRICS’s ultimate fear is that this perpetual eurozone wasteland, plus American stagnation, will lead to a global contraction wreaking havoc all across Asia, South America and Africa.
Public opinion in the developing world has long memories. Many would dream that as much as the IMF “helped” the global South by applying its dreaded “structural adjustments” - deregulating everything in sight and transferring more wealth to the already wealthy - the BRICS might now impose their own rules to “save” Europe.
That would mean, in practice, permanent seats at the UN Security Council for the “B” and “I” in BRICS (“R” and “C” already have then). Brazil would demand real free trade in agriculture. And China would demand real freedom of investment.
But everyone knows that won’t happen.
Still the facts on the ground force China to support the eurozone one way or another. It’s natural for Beijing to buy at least some European debt - thus lifting the euro and accumulating political capital for itself.
But as the Financial Times correctly evaluated, “China does not hand out free lunches”. As much as Moscow and Brasilia, Beijing is urging the Europeans to get their act together.
Even mired in crisis Western Europe, as a whole, is still the number one economy in the world; according to The Economist, a little less than 24 per cent of the global total, compared to the BRICS at 21 per cent. Yet the Europeans hold 32 per cent of the votes at the IMF, while the BRICS control only 11 per cent. That leads us to what the BRICS as a whole are really after.
The BRICS want to force a new correlation of forces at the IMF. To this end, the strategy is to softly undermine the power of the US dollar a little further, and to defy Europe a little more forcefully; but without betting on the US dollar, or the euro, or both, crashing.
This strategy will eventually lead to the BRICS becoming more integrated with each other than being dependent on the West. Call it the road map for the definitive end of two centuries of Atlanticist domination.
http://english.aljazeera.net/indepth/opinion/2011/09/201192292011236419.html
vampirarchist
vampirarchist
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I would still very much like to see the MTW response to all of this.
getfiscal
getfiscal
Mike Nelson here.
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the article says china has 10 trillion it wants to invest in american stocks. the NYSE had a market value of "US$13.39 trillion as of Dec 2010." so like pepe thinks that china has enough money to buy the NYSE. i'm putting on my skepticism hat.
babyfinland
babyfinland
tardy on these heaters
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getfiscal posted:
the article says china has 10 trillion it wants to invest in american stocks. the NYSE had a market value of "US$13.39 trillion as of Dec 2010." so like pepe thinks that china has enough money to buy the NYSE. i'm putting on my skepticism hat.
the claim is repeated here
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011987/china-to-liquidate-us-treasuries-not-dollars/
it's not pepe's opinion, it's a statement from a chinese economist
getfiscal
getfiscal
Mike Nelson here.
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i don't know how that number was arrived at when china's foreign reserves of american debt aren't even a quarter of $10 trillion.
babyhueypnewton
babyhueypnewton
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vampirarchist posted:
I would still very much like to see the MTW response to all of this.
why would they respond at all? I don't see how this is relevant in the slightest.
Impper
Impper
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getfiscal posted:
i don't know how that number was arrived at when china's foreign reserves of american debt aren't even a quarter of $10 trillion.
i imagine it takes years and even decades to purchase debt when you're talking trillions of dollars
babyfinland
babyfinland
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babyhueypnewton posted:vampirarchist posted:
I would still very much like to see the MTW response to all of this.why would they respond at all? I don't see how this is relevant in the slightest.
lol
dm
dm
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Twentieth-century civilization has collapsed. This post is concerned with the political and economic origins of this event, as well as with the great transformation which it ushered in.
germanjoey
germanjoey
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i'm always confused as to way south africa is tossed in with those other 4. while they can be seen as massive, nascent powers awakening into their own right, outside of direct american hegemony, south africa is still in many respects dealing with the effects of colonialism. hmm, i guess its b/c each of the five represent different poles of the world (brazil - south america, china - asia, russia - eastern europe, india - south asia / middle east, south afria - africa)?
drwhat
drwhat
mt.real
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as american and european assets and debt become cheaper, china (+ brics, sure, whatever) will inevitably own more of them because the people making investments on china's behalf seem to understand that turning their funny money treasury bonds into ownership of real physical things in the world makes piles of sense. there doesn't have to be any coordinated plan for this to occur and it has been occurring for a long time. no big deal. just more musical capitalism chairs
drwhat
drwhat
mt.real
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germanjoey posted:
i'm always confused as to way south africa is tossed in with those other 4. while they can be seen as massive, nascent powers awakening into their own right, outside of direct american hegemony, south africa is still in many respects dealing with the effects of colonialism. hmm, i guess its b/c each of the five represent different poles of the world (brazil - south america, china - asia, russia - eastern europe, india - south asia / middle east, south afria - africa)?
the BRICS group is actually an official thing now instead of just being a market buzzwordy thing and they went to the trouble of inviting south africa a few months ago, seems to not have much to do with economic power and more about making it a more explicitly political group directly in opposition to the Old Power
you can of course make the argument that SA has economic power compared to the average african nationstate but that doesn't seem to be the real justification
getfiscal
getfiscal
Mike Nelson here.
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yeah it is gimmicky but the idea is that these will be poles of power in a reshaped world down the line. i know everyone thinks that china wants a strong african partner for resources but i actually think they are looking at ways of being a leading force in the lives of african consumers. like they already sell a lot to africa but they want to be there selling consumer durables to the african middle class and such. they already do this too but i think they are trying to build that market share. so they buy resources and sell back durables or whatever. note also that many times they ship in chinese workers to handle the resources directly, bypassing black africans entirely.
what's the point of all that? well, it is because ten years from now chinese labour costs will probably be so high that more and more manufacturing (which is already constantly decreasing share of chinese employment) will shift to africa. like chinese firms will finally bring africans on board and exploit the labour. and you might see shenzhen style growth in various cities in africa then. but they want those factories and mines and shit to be owned by china, selling chinese-owned goods to african consumers who work for them. obviously this has already happened in a lot of ways, but i mean i think it makes sense to be bullish on africa.
what's the point of all that? well, it is because ten years from now chinese labour costs will probably be so high that more and more manufacturing (which is already constantly decreasing share of chinese employment) will shift to africa. like chinese firms will finally bring africans on board and exploit the labour. and you might see shenzhen style growth in various cities in africa then. but they want those factories and mines and shit to be owned by china, selling chinese-owned goods to african consumers who work for them. obviously this has already happened in a lot of ways, but i mean i think it makes sense to be bullish on africa.
vampirarchist
vampirarchist
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Indonesia should join and represent the Muslim world. Of course BRICS will expand eventually.
babyfinland
babyfinland
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vampirarchist posted:
Indonesia should join and represent the Muslim world. Of course BRICS will expand eventually.
Turkey too
vampirarchist
vampirarchist
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Turkey will come crawling back to the EU once its attempts at neo-Ottomanism fail and the new Arab regimes reject their influence.
[account deactivated]
babyfinland
babyfinland
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vampirarchist posted:
Turkey will come crawling back to the EU once its attempts at neo-Ottomanism fail and the new Arab regimes reject their influence.
also when pigs fly
vampirarchist
vampirarchist
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discipline posted:
hahahhaa the arabs much much much much much prefer turkish hegemony over zionist and american hegemony
Actually I'm speculating that Egypt will get its act together and become a regional hegemon again, Turkey is going to lose its credibility by intervening in Syria in the next few months
babyfinland
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vampirarchist posted:discipline posted:
hahahhaa the arabs much much much much much prefer turkish hegemony over zionist and american hegemonyActually I'm speculating that Egypt will get its act together and become a regional hegemon again, Turkey is going to lose its credibility by intervening in Syria in the next few months
lol
babyfinland
babyfinland
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Armenia is gonna be PISSED.
getfiscal
getfiscal
Mike Nelson here.
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You are an old man who thinks in terms of nations and peoples. There are no nations; there are no peoples. There are no Russians. There are no Arabs. There is no third world. There is no west. There is only one holistic system of systems; one vast interwoven, interacting, multivariate multinational dominion of dollars. Petrodollars, electrodollars, reichmarks, rubles, rin, pounds and shekels. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things today. That is the atomic, subatomic and galactic structure of things today. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things. You have meddled with the primal forces of nature, and you will atone! Am I getting through to you, Mr. Beale? You get up on your little twenty-one inch screen and howl about America and Democracy. There is no America. There is no democracy. There is only IBM and ITT and AT &T and Dupont, Dow, Union Carbide and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state? Karl Marx? They pull out their linear programming charts, statistical decision theories, and minimax solutions and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations inexorably determined by the immutable by-laws of business. The world is a business, Mr. Beale! It has been since man crawled out of the slime. And our children will live to see that perfect world in which there is no war or famine, oppression or brutality. One vast and ecumenical holding company for whom all men will work to serve a common profit and in which all men will own a share of stock, all necessities provided, all anxieties tranquilized, all boredom amused.
babyfinland
babyfinland
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and then there's Syria.
vampirarchist
vampirarchist
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why do the Arab Spring countries even need a hegemon to guide over them. can't the Arabs learn to strive together as newly democratized states together
germanjoey
germanjoey
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getfiscal posted:
You are an old man who thinks in terms of nations and peoples. There are no nations; there are no peoples. There are no Russians. There are no Arabs. There is no third world. There is no west. There is only one holistic system of systems; one vast interwoven, interacting, multivariate multinational dominion of dollars. Petrodollars, electrodollars, reichmarks, rubles, rin, pounds and shekels. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things today. That is the atomic, subatomic and galactic structure of things today. It is the international system of currency that determines the totality of life on this planet. That is the natural order of things. You have meddled with the primal forces of nature, and you will atone! Am I getting through to you, Mr. Beale? You get up on your little twenty-one inch screen and howl about America and Democracy. There is no America. There is no democracy. There is only IBM and ITT and AT &T and Dupont, Dow, Union Carbide and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state? Karl Marx? They pull out their linear programming charts, statistical decision theories, and minimax solutions and compute the price-cost probabilities of their transactions and investments just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations inexorably determined by the immutable by-laws of business. The world is a business, Mr. Beale! It has been since man crawled out of the slime. And our children will live to see that perfect world in which there is no war or famine, oppression or brutality. One vast and ecumenical holding company for whom all men will work to serve a common profit and in which all men will own a share of stock, all necessities provided, all anxieties tranquilized, all boredom amused.
animedad
animedad
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What do you think the Russians talk about in their councils of state? Karl Marx? They pull out their linear programming charts, statistical decision theories, and minimax solutions and compute the price-cost probabilities of their transactions and investments just like we do.
getfiscal
getfiscal
Mike Nelson here.
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[account deactivated]
tapespeed
tapespeed
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babyfinland posted:vampirarchist posted:
Indonesia should join and represent the Muslim world. Of course BRICS will expand eventually.Turkey too
Doubt it, BRICS sounds steadfast and reliable, BRICSIT sounds like its gonna make my butt real uncomfortable after 5 minutes. Its a PR nightmare
getfiscal
getfiscal
Mike Nelson here.
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good effort tape but i think an improvement would have been:
i heard they are adding kenya, haiti and senegal too
gonna call it SHITBRICKS
i heard they are adding kenya, haiti and senegal too
gonna call it SHITBRICKS
drwhat
drwhat
mt.real
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yeah with a name like BRICS they can't really add anyone ever into the name
South Korea should join maybe for a K but i guess they're too whitey already
South Korea should join maybe for a K but i guess they're too whitey already