Socio-Economics History Blog

Socio-Economics & History Commentary

IMF Director Warns of War

  • This looks like 1929 – 1939 all over again. Global economic depression, rising protectionism, major disagreements between regional powers…. social unrest.. rising unemployment…etc.. Finally ending in war: as in world war !
     
  • Joe Kishore comments :
     
    Dominique Strauss-Kahn, managing director of the International Monetary Fund, warned on Monday that the global economic situation is “dire” and could lead to social upheaval and war. The statement is the latest in a series of worried pronouncements from leading international figures in the financial and political establishment.
     
    The IMF is projecting a 1 percent decline in the global economy this year, which Strauss-Kahn noted would be “the first setback of the world economy in over 50 years.” The IMF chief was speaking before a meeting of the International Labour Organization (ILO) in Geneva, Switzerland.
     
    The economic crisis, Strauss-Kahn said, would affect “dramatically unemployment for many countries. It will be at the roots of social unrest, some threats to democracy and maybe for some cases, it can also end in war.”
     
    Without citing specific countries, Strauss-Kahn also warned of regions of the world where “the financial collapse risk does exist.” The implications of the economic collapse for working people internationally are still in their initial stages. The ILO predicted in January that up to 50 million jobs would be eliminated throughout the world in 2009. This is likely an underestimation, as the economic crisis has sharply accelerated over the past several months.
     
    Strauss-Kahn’s position is one of concern over the prospect of mass opposition to the policies of the ruling elite as the economic situation deteriorates. He pleaded for the capitalist powers to implement policies that would prevent the crisis from “becoming a wasteland of unemployment.” The major architects of the capitalist system over the past several decades are keenly aware that they have created an economic catastrophe that threatens social upheaval.
     
    While Strauss-Kahn did not specify what he meant by the danger of war, his remarks came in the midst of hardening conflicts between the major powers over economic policy in the run-up to the G-20 summit meeting of major economies in London next month.
     
    On Tuesday, German President and former IMF chief Hörst Koehler echoed some of Straus-Kahn’s concerns and urged the countries participating in the G-20 summit to come up with a common plan for restructuring the world financial order. “I stand by my suggestion of organising a Bretton Woods II under the auspices of the United Nations to push forward a fundamental reform of the international economic and financial system,” Koehler said. He warned that the outcome is “test for democracy as a whole. Many citizens are unsettled. The coming months will be very tough.”
     
    In the back of the minds of many heads of state and figures such as Strauss-Kahn is no doubt the last time world leaders gathered in London to discuss a financial crisis. At the 1933 London conference, the major powers failed to come up with any coordinated agreement to respond to the Great Depression. The breakdown of the conference accelerated protectionist and beggar-thy-neighbor policies, which intensified the slump and exacerbated national antagonisms, culminating in the eruption of World War II.
     
    As in 1933, world leaders are today proclaiming the need for international coordination, even as they fiercely defend the national interests of their respective financial and corporate elites.
      ……
    The United States has initiated a policy of printing vast quantities of money—in part to finance the very debt that it is creating to bail out its banks. This potentially inflationary policy has generated an extremely nervous reaction from other powers, most noticeably China, which has over $1 trillion in dollar-denominated assets. These assets would plunge in value in the event of a major decline in the value of the dollar.
     
    The head of the Chinese central bank argued on Monday for a new international currency to replace the dollar as the world reserve currency. On Tuesday, Li Xiangyang of the government-backed Chinese Academy of Social Sciences called the Fed’s new policy of purchasing US Treasuries “irresponsible.” He said that China would likely ask for “specific measures” on the part of the US to ensure the value of Chinese holdings.
      ……
    Whatever the hopes of Strauss-Kahn and Koehler for a more coordinated policy that will help head off social conflict, there is an inexorable logic to the class interests involved. On the one hand, the ruling class in every country will work ruthlessly to impose the burden of the economic crisis on the backs of working people. This is already taking place through massive job- and wage-cutting and attacks on social programs. On the other hand, the economic crisis will exacerbate the struggle over resources between the major powers—a struggle that, within the capitalist system, can ultimately be resolved only through war.

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March 26, 2009 Posted by | Economics, GeoPolitics | , , , , , , , , , | Comments Off on IMF Director Warns of War

Mexico – The Next Iraq ?

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March 26, 2009 Posted by | Economics | , , | 1 Comment

End of the US Dollar Era?

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March 26, 2009 Posted by | Economics | , , | 1 Comment

GATA – Gold Price Manipulation

  • What GATA (Gold Anti Trust Action) says is true. By suppressing gold price, interest rates have been kept artificially low for too long. Central banks manipulate gold price lower because gold is the real alternative to fiat currencies. With Quantitative Easing fiat currencies are in trouble.
     
  • Things are about to change. The price of gold has been kept like a beach ball under water for too long. When it corrects, it will launch upwards dramatically. And the USD will collapse.

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March 26, 2009 Posted by | Economics | , , , , , | 2 Comments

EU President – US Plan is a Way to Hell !

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  • The gloves are off. The attacks have begun. China and Russia have weighed in on their calls for a new reserve currency. Now the EU president is openly attacking US policies. Do you smell an earthquake coming?? At G20 next week?? May we live in interesting times? Looks like coming true.
     
  • The Telegraph UK reports :
     
    Barack Obama and Gordon Brown’s plans to increase spending on economic recovery have been described as “a road to hell” by the European Union presidency. 
     
    Internal European divisions are growing over the Prime Minister and US President’s strategies to fight the economic crisis just one week before a critical G20 summit in London.
     
    Mirek Topolanek, the Czech prime minister who is running a caretaker EU presidency after the collapse of his government on Tuesday, highlighted European splits over fiscal stimulus plans promoted by Mr Obama, with Mr Brown’s support. 
     
    Mr Topolanek warned the European Parliament that the Obama administration’s stimulus package and financial bail-out “will undermine the stability of the global financial market”.
     
    ”All of these steps, these combinations and permanency is the way to hell,” he told Euro-MPs in Strasbourg ”We need to read the history books and the lessons of history and the biggest success of the EU is the refusal to go this way.”
     
    His comments reveal European disunity just eight days ahead of the G20 summit of the world’s industrialised countries in London next Thursday.

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March 26, 2009 Posted by | Economics | , , , , , , | 1 Comment

Single Global Currency

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March 26, 2009 Posted by | Economics | , , , | 11 Comments

Hybrid Car Wars

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  • Honda Insight versus Toyota Prius.

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March 26, 2009 Posted by | Science & Technology | | Comments Off on Hybrid Car Wars

Japan Exports Drop Record 49% as Global Slump Deepens

  • The stock market has rocketed 20+% so the economy must have improved a lot right? The way the stock market has charged higher you would think all our problems are over. Many say stock market price movement is a 6-12 months leading indicator of economic conditions. I don’t think so. World economy is getting much worse.
     
  • Bloomberg reports :
     
    Japan’s exports plunged a record 49.4 percent in February as deepening recessions in the U.S. and Europe sapped demand for the country’s cars and electronics.Shipments to the U.S., the country’s biggest market, tumbled an unprecedented 58.4 percent from a year earlier, the Finance Ministry said today in Tokyo. Automobile exports slid 70.9 percent.
     
    The collapse signals
    gross domestic product may shrink this quarter at a similar pace to the annualized 12.1 percent contraction posted in the previous three months, the sharpest since 1974. Prime Minister Taro Aso is compiling his third stimulus package as companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers.
     
    “There’s a still of lot of weakness out there; that’s going to be a big drag on production and most people are looking for the first-quarter GDP to be as bad as the previous quarter,” said
    David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “Japan is as dependent on exports as anybody.” 
       …..
    Sharpest Since 1980
    Last month’s drop in exports was the sharpest since at least 1980, when the government started to keep comparable data. Economists predicted a 47.6 percent decline.
     
    Toyota, forecasting its first net loss in 59 years, yesterday said overseas shipments plunged 69 percent in February. Demand fell across all regions. Exports to Europe dropped a record 54.7 percent, shipments to Asia declined 46.3 percent and goods sent to China slumped 39.7 percent.
     
    Imports fell a record 43 percent, helping Japan post its first trade surplus in five months. The 82.4 billion yen ($842 million) surplus was still 91.2 percent lower than the same month a year earlier.
     
    Sentiment among Japan’s largest manufacturers probably fell to a 33-year low this month, economists predict the Bank of Japan’s Tankan survey will show next week.
      ….
    Worst Recession
    Finance Minister Kaoru Yosano said on March 22 that a new stimulus package of as much as 20 trillion yen, double the amount pledged since October, is “not out of line” as the world’s second-biggest economy heads for its worst recession since 1945. The spending would add to public debt already estimated at 170 percent of gross domestic product.
     
    “There’s been a structural shock to the manufacturing sector,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “Yes, the government can create demand temporarily, but that can’t fill the export gap forever.”
     
    Japan has become more reliant on exports in the past decade, making it especially vulnerable to changes in global commerce, which the World Trade Organization forecasts will shrink 9 percent this year, the most since World War II. During Japan’s expansion of 2002 to 2007, exports as a portion of GDP rose to 15.6 percent from 10.4 percent.
     
    Fared Worse
    Asia’s largest economy fared worse last month than its neighbors. Exports from South Korea fell 17.1 percent, about half the pace of the decline in the previous month. Taiwan’s shipments slid 28.6 percent after dropping a record 44.1 percent in January.
     
    “The fact that these other countries are doing a little better might give Japan some encouragement that world demand is bottoming out,” said Action Economics’ Cohen. “It should only be a matter of time before Japan shows the same stabilization.”
     
    There are signs that China, Japan’s second-largest overseas market, is stabilizing. The World Bank said last week that government spending on roads, power grids and housing is “working” to take up the slack left by plunging exports.
      
    “For some sectors like the chemical and raw-material industries, they’re seeing some rebound in demand coming from China,” said BNP’s Shiraishi. “Basically, demand for key industries — transportation machinery, electronics, general machinery — those aren’t recovering.”
       

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March 26, 2009 Posted by | Economics | , , , , | Comments Off on Japan Exports Drop Record 49% as Global Slump Deepens