16 September 2010
by
Alex Newman
Source: The New American
The Federal Reserve has been a nightmare
for the American people. It inflates the money supply, thereby devaluing
already-existing money and placing a massive hidden tax on the people
via rising prices. It also uses its monopoly power to cause interest
rates to go up or down, usurping the rightful place of the market and
causing massive malinvestment and generally an improper and unproductive
allocation of resources.
The Fed also causes the boom-and-bust cycle through its
manipulations of the currency and credit supply. It serves as the
government’s partner in perpetually expanding the “welfare-warfare
state,” allowing the state to spend far more than it could ever hope to
reasonably raise through direct taxation. And of course, the fact that
all Federal Reserve notes enter the economy as debt with interest
attached (but never created) has led to a situation where it is
literally mathematically impossible to pay off the debt. In sum, the
consequences of such a system have been disastrous for average Americans
— hence the growing calls to audit and even end the Fed.
But now, imagine such a system at the global level. And it isn’t just
a mental exercise; the global central bank is already emerging. As bad
as the Fed has been for America — and indeed the world — a similar
system at the international level would be far worse. Disaster might
even be an understatement.
International Liquidity and Inflation
One of the most serious threats posed by a global central bank and world
fiat currency is the fact that it would allow the emerging planetary
regime to print its own money and finance its activities independently.
That means wealth could be secretly siphoned away from all of humanity
to pay for armies, tax collectors, courts, bureaucracies, law
enforcement, wealth redistribution, propaganda, and much more. With no
limits. But to advocates of such a system, that is one of its primary
benefits.
“A super-sovereign reserve currency not only eliminates the inherent
risks of credit-based sovereign currency, but also makes it possible to
manage global liquidity. A super-sovereign reserve currency managed by a
global institution could be used to both create and control the global
liquidity,” wrote Chinese central-bank boss Zhou Xiaochuan in his public
paper calling for a world currency. “The centralized management of its
member countries’ reserves by the Fund will be an effective measure to
promote a greater role of the SDR [Special Drawing Rights, the
International Monetary Fund’s first effort at a world currency] as a
reserve currency.” Of course, communists have always supported control
of “liquidity” (Karl Marx was a strong advocate of central banks with a
monopoly on currency and credit). But to people who care about freedom
and prosperity, the communists’ support should be a huge red flag.
The United Nations has also backed global currency proposals for the
same reason. In a report earlier this year calling for the end of the
dollar’s status as a reserve currency and a new monetary regime
controlled by the International Monetary Fund, the UN’s World Economic and Social Survey
for 2010 points out that, “Such emissions of international liquidity
could also underpin the financing of investment in long-term sustainable
development.” The term “sustainable development” — especially when used
by the UN — is often used to refer to stronger central planning,
population reduction, more land in government hands, and other ideas
repugnant to average Americans and the U.S. Constitution. Other schemes
for “international liquidity” could be even worse.
Hiding behind the passive voice, a separate report by the UN Conference
on Trade and Development adds in the concept of wealth redistribution:
“It has been suggested that in order for the SDR to become the main form
of international liquidity and means of reserve holding, new SDR
allocations should be made according to the needs of countries.” It then
promotes worldwide central planning to “stabilize global output growth”
by issuing more SDRs or retiring them as the emerging global government
deems necessary. As it stands, wealth redistribution around the world
is bad enough. Surrendering that power to a global institution would be a
nightmare.
In its report published earlier this year, the IMF also recently came
out in favor of allowing it to print its own money to provide
“international liquidity.” “A global currency, bancor, issued by a
global central bank would be designed as a stable store of value that is
not tied exclusively to the conditions of any particular economy,” the
paper says. “The global central bank could serve as a lender of last
resort, providing needed systemic liquidity in the event of adverse
shocks and more automatically than at present.” In laymen’s terms, the
IMF, with its power to “emit liquidity” out of thin air, would be
empowered to “bail out” companies, governments, and whomever it wished.
If you thought the Fed handing out trillions of dollars to the big banks
and other insiders was bad, just wait until a global central bank
exercises that power.
Allowing the emerging global government to supply its own money would
free it from the constraints of having to raise money through national
contributions or direct international taxation. But of course, printing
all of this new “liquidity” and financing all of its ambitious projects
would be inflationary by definition. And this inevitably would represent
a massive problem.
Even John Maynard Keynes, the original proponent of the world currency
called “bancor,” understood the concept well. In 1919, he wrote in his
book The Economic Consequences of the Peace, “By a continuous
process of inflation, governments can confiscate, secretly and
unobserved, an important part of the wealth of their citizens.”
To understand the effects, one can look to history and examine examples
such as what occurred in the Weimar Republic of Germany, where the money
supply was inflated to such an extent, to finance government spending
and war debt, that Germans actually found their money more valuable to
burn as fuel than to use to purchase items. Or, in more recent years,
the tragedy of hyperinflation in Zimbabwe, where inflation exceeded
millions of percent per year and it could cost a person billions of
dollars for a loaf of bread, provides a more current warning. Even in
America — with a comparably stable currency up until now — inflation has
wreaked havoc on the economy and the lives of citizens, as we have
become a country where husbands and wives must both work to make ends
meet. And these all happened in a world where there was still a check on
unlimited inflation of fiat money — the fact that citizens could quit
using it and purchase other currencies that were not losing their value
as quickly. But under a global fiat monetary regime, there would be no
such option.
Economists who have been proven correct over the decades about the
economic consequences of creating money out of thin air are already
sounding the alarm. “A world paper currency and world central bank would
heighten the moral hazard and lead to a global inflationary regime such
as we’ve never seen,” noted Lew Rockwell, the chairman of the Ludwig
von Mises Institute. That is, the “easy” money and credit would cause
people to borrow and spend way beyond their means, creating an
unprecedented global bubble that would at some point inevitably burst.
“There would be no escape from political control at that point.”
And the consequences would be dire. “Inflation tears apart the whole
fabric of stable economic relationships,” explained the legendary
free-market economist Henry Hazlitt. “It leads men to demand
totalitarian controls. It ends invariably in bitter disillusion and
collapse.”
Closer Integration and Total Control
Existing monetary unions are often seen as the model for a global
currency by advocates of such a system. But surrendering control over
money to supranational institutions has consequences, as the people of
the Eurozone are discovering. For one, according to data compiled by the
European Central Bank, economic growth has slowed dramatically in
countries using the euro since the introduction of that single currency —
a phenomenon not observed in other areas of the world.
But more importantly, the goal of keeping the monetary union intact is
leading to ever greater fiscal and political integration as rules are
harmonized and authority continues shifting from nations toward European
institutions. During the height of the crisis in Greece, other European
governments were forced to bail out the Greek regime over fears that it
could bring down the euro. But on top of that, Eurozone heads of state
and government got together and used the crisis as an excuse for pushing
deeper integration and the imposition of “economic governance” at the
European level.
“We commit to promote a strong coordination of economic policies in
Europe. We consider that the European Council must improve the economic
governance of the European Union and we propose to increase its role in
economic coordination and the definition of the European Union growth
strategy,” announced the euro-area heads of state and government in a
statement. “The current situation demonstrates the need to strengthen
and complement the existing framework to ensure fiscal sustainability in
the euro zone and enhance its capacity to act in times of crises.”
Around the same time, IMF boss Dominique Strauss-Kahn joined the calls
for deeper integration in Europe, offering IMF funds with strings
attached. “The launching of the euro was only a first step,” he
explained. “You can’t have a single currency without having a more
coordinated economic policy.” And indeed, such economic control will
also lead to more political control — just as we have seen with the
transformation of the European Common Market into the European Union.
Obviously, if the euro is the model for a world currency, the same
phenomenon would occur at the world level. That would mean closer
integration among the nations of the world, the vast majority of which
are ruled by totalitarian regimes of various varieties. A world fiat
currency, then, would be the surest way to accelerate the development of
a true global government and the accompanying destruction of national
sovereignty. But to planetary currency enthusiasts, that is a non-issue.
Noting that there would be critics of the development of a world central
bank, especially in America, Council on Foreign Relations insider and
global fiat currency promoter Jeffrey Garten points out in an article
for Newsweek, “Among their many charges, critics will protest
the establishment of ‘world government.’ But we have a World Trade
Organization with legally binding powers over trade disputes. We have a
World Health Organization for communicable disease with the ability to
quarantine entire countries. And a World Court functions today that has
considerable legal and moral clout.” Dismissing critics protesting the
establishment of a world government by pointing out that it already
exists in rudimentary form is hardly likely to pacify those critics.
But what would a global currency really mean aside from the destruction
of the dollar and the U.S. economy? “A global central bank would be a
disaster,” financial guru Bob Chapman, editor of the International
Forecaster, told The New American. “It means the acceptance of
world slavery.” Chapman also pointed out that the present international
monetary system was being deliberately destroyed precisely to bring
about a global currency like the bancor. “It’s just not fiscal and
monetary policy. It is every facet of your life that these elitists want
to control.” And they’re moving rapidly toward that goal.
In addition to printing money, the emerging global central bank and its
affiliates are already usurping other powers traditionally exercised at
the national level. In his Newsweek article, Garten calls for the
new planetary central bank to be the “lead regulator” of all sorts of
financial institutions, monitor risks, push national authorities to
“modify their policies,” coordinate national “stimulus programs,”
orchestrate a “global-stimulus plan,” force taxpayers around the world
to bail out companies, and even act as a bankruptcy court. The IMF, in
its own report, called for global “imbalance” taxes, capital controls,
and a true world financial regulatory regime. A lot of that is already
coming into being, but as the new monetary order develops, the agenda
will only accelerate.
And as if all that wasn’t bad enough, there is no accountability for
this newly empowered IMF. Jim Rickards, the director of market
intelligence for Omnis, explained that, while the IMF has articles of
association and some governance rules, the true power structure behind
it is the G20, which is “completely unaccountable.”
Options, Solutions
As the international monetary crisis unfolds with a collapsing dollar,
there will need to be some sort of reforms. The question is which ones.
Instead of “currency reform” coming “from the marble palaces of the
monetary elites,” economist Lew Rockwell of the Mises Institute points
out, “private currencies traders the world over could, on their own,
give rise to a new currency rooted in gold and traded by means of
digital media.” This would be far superior for numerous reasons, he
argues. “Under a gold standard, the physical metal is the limit and the
market is the master. Under a global paper system, the paper provides no
limit whatsoever and the politicians are the masters.”
And indeed, while the elites push their fiat world currency,
entrepreneurs have already been working on making gold a sort of
currency without the need for government dictates. “Money was invented
in pre-history by people interacting peacefully with one another to help
improve their situation by trading. Money is not an invention of
government,” explained James Turk, founder of GoldMoney, a company
holding over a billion dollars in assets that allows customers to
purchase, store, and trade precious metals. “There is a better solution.
It was the one created by Sir Isaac Newton and given to King William
III. We now call it the classical gold standard, which lasted from circa
1700 to 1914. If governments are to issue currency, it must be tied to
gold. It is this link that provides essential discipline needed to rein
in the aspirations of politicians to spend money, even money the
government doesn’t have,” he told The New American, adding that
the bankers pushing for a world fiat currency “will do everything they
can to continue this special privilege that they have assumed for
themselves.”
Omnis’ Rickards also has some ideas about how America can put a freeze
on the emergence of the global paper currency: cuts in taxes and
spending; higher interest rates to strengthen the dollar; and,
eventually, getting back on the gold standard. “The U.S. is in the best
position to go back to the gold standard,” he explained, pointing out
that, with an estimated 8,000 tons, America has more gold than any other
country. “The first country that goes to the gold standard will — in
effect — dominate the world of finance because they will have the
currency that everybody wants. ... Would you rather have a gold-backed
dollar or a paper SDR?” What’s missing right now, he said, is just the
political will to do it.
“What you’re going to see over the next few years is a global struggle
between the forces who want to create new forms of paper and just give
it a different name and a different issuer and continue to flood the
world with paper liquidity and keep the game going on the one hand,
versus people who will recognize that the only true form of money is
gold and will start bidding up the price of gold against the dollar,”
Rickards predicted.
John McManus, president of The John Birch Society, has a similar view of
how to rectify the current situation without moving toward an
international central bank to manage a global fiat currency. “If the
currency is a commodity like gold or silver, it does not have to be
managed. The free market place will manage it,” he explains in Dollars and Sense,
a short video presentation on the monetary system. “Money should be a
commodity valuable to all people; and there’s no management needed.”
It is ironic that the likely imminent collapse of the world’s current
fiat “reserve currency” is being used as an excuse to implement a global
fiat currency. But it is extremely serious. Escaping the elites’
clutches would become almost impossible as wealth is steadily
transferred from humanity to the banking oligarchy and its
ever-expanding global government. And so the scheme must be prevented.
Showing posts with label global currency. Show all posts
Showing posts with label global currency. Show all posts
Tuesday, March 18, 2014
Waking up to a World Currency
15 September 2010
by Alex Newman
Source: The New American
If all the advocates of a world fiat currency (a currency not backed by a precious commodity like gold) were to scream at once, workers in world capitals, business centers, colleges, and news media may be deafened. And if global financial elites have their way, America will move quickly toward accepting a planetary fiat currency issued by a world central bank. Calls for a new global monetary regime are nothing new. After World War II left the world’s financial system in disarray, political leaders and financial gurus met at Bretton Woods, New Hampshire, from July 1-22, 1944, to plan the post-war economic order. Economist John Maynard Keynes and the British government proposed the creation of a world currency called the “bancor,” and the U.S. government proposed a world currency to be known as “unitas.” But for a lot of reasons, mostly American reluctance, the schemes never took off. Instead, the Bretton Woods agreement resulted in the U.S. dollar — its value at the time tied to gold — being crowned “the” world reserve currency. But the dollar’s place as the unchallenged world currency began being displaced with the dollar’s decoupling from gold in 1971. A new system emerged: The dollar retained its position as the world’s reserve currency, but now it was backed not by gold, but only by trust and the fact that oil and other commodities were traded around the world in dollars. Since then, the U.S. government has been growing itself and its power through creating money via the inflationary power of the Federal Reserve, thus making the dollar increasingly less stable, prompting vigorous calls for a world currency to stabilize world financial markets. That has especially been true as markets have imploded.
Leading the Charge
Naturally, prominent globalist leaders and central bankers have been at the forefront of promoting world-currency schemes. And they are confident that the groundwork has been sufficiently laid to achieve the goal. Russian President Dmitry Medvedev has been among the most vocal supporters. At the G-8 meeting last year, he actually pulled a “united future world currency” coin out of his pocket bearing the words “unity in diversity.” Then, he explained to the audience that it “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.” In June of this year, he was at it again. “We are making plans for the future. We are talking about creating other reserve currencies, and we are counting on other countries to understand this,” Medvedev told an economic forum in St. Petersburg, Russia.
At the same forum, French President Nicolas Sarkozy concurred, saying world powers “should think together about a new international currency system” at the upcoming G-20 summit. He also said the world’s financial system was “outdated” and should be replaced. “We all need to think about the foundations for a new international financial system,” he urged. “We’ve been based on the Bretton Woods institutions of 1945, when our American friends were the only superpower. My question is: Are we still in 1945? The answer here is, ‘no.’”
Numerous other prominent national leaders have jumped on the international fiat-currency bandwagon as well — too many to list in a short article. But perhaps more importantly, powerful central bankers around the world are also pushing the issue. Former Fed boss and current chairman of Obama’s “Economic Recovery Advisory Board” Paul Volcker, for example, has long been a strong proponent of a global fiat currency and a global central bank. He is widely reported to have said, “A global economy needs a global currency.” And he has repeatedly called for such a system, hoping to see it emerge during his lifetime.
In China, the “people’s” central-bank boss Zhou Xiaochuan has also frequently called for a new reserve currency. In a 2009 report published on the central bank’s website entitled “Reform the International Monetary System,” Xiaochuan explained that “the desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.”
When asked about the communist-Chinese regime’s idea at a Council on Foreign Relations event, tax-dodging U.S. Treasury Secretary Timothy Geithner, a regular proponent of global regulation, after acknowledging that he had not read it yet, said, “We’re actually quite open to that.” The dollar immediately plunged. And while Geithner promptly backtracked on his statement, as the saying goes, the cat was already out of the bag.
At a separate Council on Foreign Relations event earlier this year, European Central Bank boss Jean-Claude Trichet gave a speech entitled “Global Governance Today.” While different in important respects from calls to empower the International Monetary Fund as the world central bank, which seems to be the consensus view on how to quickly achieve a world currency, Trichet offered a vision that would ultimately lead to the same end. “We need a set of rules, institutions, informal groupings and cooperation mechanisms that we call ‘global governance,’” he said, praising the progress that has already been made in “strengthening the mandate of existing international institutions” but noting that “no market can survive without a set of rules. This is particularly true at the international level.”
In terms of the international monetary system, he applauded the fact that central banks around the world were already “able to take quick, decisive and coordinated action at short notice.” But “the crisis also showed that gaps in the system of global governance — in terms of both efficiency and legitimacy — have to be filled,” he explained, pointing out that the process was already ongoing.
“Overall, the system is moving decisively towards genuine global governance that is much more inclusive,” Trichet said. “The significant transformation of global governance that we are engineering today is illustrated by three examples. First, the emergence of the G20 as the prime group for global economic governance at the level of ministers, governors and heads of state or government. Second, the establishment of the Global Economy Meeting of central bank governors under the auspices of the [Bank for International Settlements (BIS)] as the prime group for the governance of central bank cooperation. And third, the extension of Financial Stability Board membership to include all the systemic emerging market economies.” In other words, the BIS, the central bank of central banks (which was almost disbanded for supporting the Nazis), is becoming increasingly powerful, along with global financial regulatory institutions. And for Trichet, this is a positive development.
He added, “Global governance is of the essence to improve decisively the resilience of the global financial system,” and concluded by saying, “The crisis has driven an historic change in the framework of global governance. In my view this transformation was overdue.” And indeed, the economic crisis has given a major boost to advocates of a world financial and monetary regime.
Global Institutions
With the onset of the global financial crisis, which interestingly enough was largely brought on by an asset bubble caused via currency manipulation by the United States’ version of a central bank — the Federal Reserve — international authorities have become increasingly vocal about the supposed need for a world fiat currency controlled by a single world central bank. The United Nations and the International Monetary Fund are the most prominent among them. And both of these quasi-governmental institutions have recently issued reports blasting the dollar and calling for a world fiat currency.
“A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency,” said the UN’s World Economic and Social Survey for 2010. “The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency.” The new UN report said that the IMF should be given the authority to print its own fiat currency, claiming that the new system “must not be based on a single currency or even multiple national currencies but instead, should permit the emission of international liquidity — such as [Special Drawing Rights] — to create a more stable global financial system.” SDRs are “assets” issued by the IMF with a value currently based on multiple national fiat currencies.
Late last year, another UN report from a different arm of the institution offered similar analyses and suggestions. “In the discussion about necessary reforms of the international monetary and financial system, the problem of the United States dollar serving as the main international reserve asset has received renewed attention,” said the report, published by the UN Conference on Trade and Development. The paper also pointed to SDRs as the potential international reserve currency.
Earlier in 2009, another UN panel also called for talks on setting up a new international monetary system and moving away from the dollar. And the calls are only becoming more frequent and respected as time goes on.
Then there is the International Monetary Fund, a likely candidate for the position of global central banker, which in some ways has already taken on the role. Like other figures within the organization, IMF boss Dominique Strauss-Kahn — an avowed socialist — has repeatedly called for global regulation and a world currency controlled by the “Fund.”
“One day, the fund might even be called upon to provide a globally issued reserve asset, similar to — but in important respects different from — the SDR,” he explained in a speech earlier this year, saying it would be “intellectually healthy to explore” the creation of a new IMF-backed world reserve currency before it is “needed.” A few months later, he told the High-Level Conference on the International Monetary System that “crisis is an opportunity” and “a new global currency issued by a global central bank, with robust governance and institutional features, could provide a nominal anchor and risk-free asset for the system.”
And it’s not just Strauss-Kahn. In a barely noticed paper published in April of this year, the Fund went even further than the UN or Strauss-Kahn. It outlined the future global fiat currency, to be run by a transformed and newly empowered IMF.
The paper, published by the IMF’s Strategy, Policy, and Review Department and entitled “Reserve Accumulation and International Monetary Stability,” offers very specific proposals which — not surprisingly — would involve handing it massive new powers over the global economy and “making the special drawing right (SDR) the principal reserve asset in the [International Monetary System].” And this is merely the short-term policy; the IMF wants to go further, with the creation of a global currency called the bancor.
Of course, even the IMF says its schemes will not likely come about quickly or easily. “It is understood that some of the ideas discussed are unlikely to materialize in the foreseeable future absent a dramatic shift in appetite for international cooperation,” it says in the report. Some analysts have suggested a war with Iran or a crash of China’s economy could trigger such a shift.
Trend Toward Monetary Unions
Monetary unions, where a collection of national governments surrender their power over money to international institutions, are popping up around the world. In recent decades, there has been a declining number of currencies as more countries abandon their own currencies to use a multinational currency, such as the euro.
Africa already contains a patchwork of regional supranational currencies, including one in West Africa, another in Central Africa, and a group of countries that use the South African Rand. A plan to introduce a continental currency — sometimes referred to as the “afro” — controlled by the already existing African Union’s African Central Bank is set for completion in less than two decades. In Asia, calls for a regional monetary union are growing stronger. Arabian nations, through the Gulf Cooperation Council, are planning their own common currency right now.
In closer proximity to the United States, a group of Caribbean nations formed the Eastern Caribbean Currency Union. All use the East Caribbean dollar. More recently, a number of leftist Latin American regimes created the SUCRE under the leadership of socialist despot Hugo Chavez. And a South American currency is currently in the works. Significant numbers of nations have also unilaterally abandoned their own currencies and switched to the dollar, such as Ecuador and El Salvador. In Europe, while not officially joining the Eurozone, numerous small countries have also switched to the euro. And this is exactly what many proponents of a global fiat currency are promoting as a means to that end. Once there are fewer currencies and the principal of supranational currency is established, such as has already occurred with the euro, it becomes easier to simply merge them.
A 2007 article for the Council on Foreign Relations’ magazine Foreign Affairs entitled “The End of National Currency” offered some insight into the strategy being pursued. Benn Steil, the powerful group’s director of international economics, suggests a very specific proposal: “Governments should replace national currencies with the dollar or the euro or, in the case of Asia, collaborate to produce a new multinational currency over a comparably large and economically diversified area.... Most of the world’s smaller and poorer countries would clearly be best off unilaterally adopting the dollar or the euro, which would enable their safe and rapid integration into global financial markets. Latin American countries should dollarize; eastern European countries and Turkey, euroize.”
And that is precisely the argument of the most prominent global currency enthusiasts. Columbia economics Professor Robert Mundell, who could not be reached by press time, is one of them. He is a Nobel-prize winner, a key advisor to the communist Chinese regime, and also known as the “father” of the euro. And he argues that the world should move toward a new global currency system called the “DEY” — a “basket” of dollars, euros, and yen controlled and issued by a global central bank, possibly a newly empowered IMF. Eventually, the architecture would lead to a truly global fiat currency.
“My approach is rather to start out with arrangements for stabilizing exchange rates, and move from there to a global currency. It would start off from the situation as it is at present and gradually move it toward the desired solution. We could start off with the three big currencies in the world, the dollar, euro, and yen, and with specified weights, make a basket of them into a unit that could be called the DEY,” Mundell explained in a 2005 speech called “The case for a world currency.” “The DEY could then become the platform on which to build a global currency, which I shall call the INTOR.”
His “basic plan” for the world currency would be implemented in three stages, he said. First, stabilization of exchange rates. Next, a monetary union under the DEY consisting of most of the world’s economy. And finally, the creation of the INTOR. While Mundell acknowledged that it might be difficult, he expressed optimism about the currency’s prospects, saying, “The next big crisis might be the occasion for a reconvening of a Bretton Woods type conference to establish the conditions for a new international monetary system.” With the United States looking at a likely second round of economic turmoil and its dollar becoming increasingly unstable as interest payments on the national debt take up an ever larger part of all taxes collected, such a “crisis” is probably closer than Americans would like to imagine.
Other prominent advocates agree with the Mundell strategy for achieving a world currency managed by a global central bank. “We’ll probably get there by the merger of monetary unions,” explained Morrison Bonpasse, founder and president of the Single Global Currency Association and author of The Single Global Currency: Common Cents for the World, in an interview with The New American. “But there are several possible routes. One is to continue the current regionalization of currencies, to include North America, and creation, expansion and merger of monetary unions; and then combine those currencies into one. Another is for smaller countries to continue to ‘ize’ their nations’ legal tender, as in ‘dollarize’ and ‘euroize.’ … Once the ‘tipping point’ is reached where one currency supports approximately 40-50 percent of the world’s GDP, the movement will accelerate to anoint that currency as the single global currency.” The organization’s target date: 2024.
Clearly, the move toward regional currencies is picking up traction, especially during this decade.
Already Emerging
Some argue that the global central bank and all that it entails are already taking solid form or, worse, already here.
“What the IMF is doing is, they’ve positioned themselves and are actually beginning the process of issuing debt for the first time,” explained James Rickards, senior managing director for market intelligence and co-head of threat finance and market intelligence at Omnis, a leading consulting firm. “So what that means is the IMF is acting like a central bank because it’s leveraging its balance sheet,” he told The New American, saying SDRs could replace the dollar and become the international reserve currency in two to five years. And it’s already going on. “In terms of paper currency, a leveraged balance sheet, and the creation of liquidity out of thin air, the IMF is clearly the way they’re going because, as I said, they’ve already done it.... It’s not speculation, it’s actually happening,” he said, noting that the shift away from dollars has already started and would accelerate.
The IMF has indeed taken some extraordinary steps recently. Last year, for example, for the first time in the Fund’s history, it issued bonds denominated in SDRs. The Chinese regime promptly gobbled up $50 billion worth, with the IMF saying in a statement that the sale “offers China a safe investment instrument” and that it was part of a broader plan to “boost the Fund’s capacity to help its membership — particularly the developing and emerging market countries — weather the global financial crisis, and facilitate an early recovery of the global economy.” And of course, there’s still more.
“The other thing the IMF has done — not for the first time, really for the second time, but the first time in quite a large size — is to issue SDRs,” explained Rickards. “The IMF is issuing its own paper currency,” and, like all fiat currencies, it’s backed by nothing, Rickards said. “I view all of these as pilot programs. In other words, they’re kind of testing the plumbing.... Now the IMF is positioned to — in effect, and I think this is the plan — to become a global central bank which can issue its own currency called SDRs, leverage its balance sheet through borrowing, and then create assets by making loans and investing in securities, all under the auspices of the IMF executive committee, which is basically the same set of people as the G20.”
At recent G20 confabs, the centralization of the world’s monetary system has indeed been a hot topic. Headlines around the world announced — boldly and with good cause — the imminent arrival of a “new world order,” a global currency, a world central bank, and a planetary monetary-policy regime. The early 2009 G20 declaration, for example, said, “We have agreed to support a general SDR allocation which will inject $250 billion into the world economy and increase global liquidity.” In simpler terms, printing international fiat money.
Now, the regulatory regime is going global, too. And fast. The same G20 meeting also led to the Financial Stability Forum being transformed into the Financial Stability Board, usurping financial regulatory authority traditionally held by national central banks around the world. The new “board” is rapidly becoming a global financial regulator as its mandate expands to include overseeing action to address vulnerabilities in the financial system, setting guidelines, and even managing “contingency planning for cross-border crisis management.”
Media Support
No strategy for dramatic, unpopular change would be complete without a public media campaign. So, of course, among the prominent voices throwing their weight behind a global fiat currency and a global central bank are some of the most influential media outlets in the world. Already in 1988, The Economist wrote an article predicting a global currency within 30 years, saying, “This means a big loss of economic sovereignty, but the trends that make the [new hypothetical global currency] so appealing are taking that sovereignty away in any case.”
A decade later, the New York Times took up the issue with a piece from prominent CFR insider and global central bank promoter Jeffrey Garten calling for a “global Fed.” After praising the development of various unconstitutional institutions in the United States, most notably the Federal Reserve, Garten wrote, “The world needs an institution that has a hand on the economic rudder when the seas become stormy. It needs a global central bank.” Ten years after that, Garten penned a piece for the Financial Times, once again advocating “the establishment of a Global Monetary Authority.”
In a 2008 Newsweek article entitled “We Need a Bank of the World,” Garten claimed, “The financial crisis is global, and only an international central bank can deal with it.” The piece called for world leaders to “begin laying the groundwork for establishing a global central bank” because “the Fed no longer has the capability to lead singlehandedly.”
The year after that article, Garten was at it again, this time in Businessweek. “If critics could suspend the hyperventilating for a few minutes, they’d realize a global central bank is becoming a necessity in today’s complex, interconnected world economy,” he wrote. The piece also cites Tim “TurboTax” Geithner, who said, “We need a common global solution to these markets, not separate regional solutions.”
Meanwhile, the Washington Post ran a 2009 story praising the International Monetary Fund’s transformation into a bank of the world. “Bowing to a new economic world order, the IMF would grant fresh powers to the likes of China, India and Brazil. It would have vastly expanded authority to act as a global banker to governments rich and poor,” wrote Post staff writer Anthony Faiola. “And with more flexibility to effectively print its own money, it would have the ability to inject liquidity into global markets in a way once limited to major central banks.” The article also mentioned “the IMF’s transformation into a veritable United Nations for the global economy” and quoted various experts praising the developments.
Even the supposedly more free-market-friendly press in the United States has also backed the scheme. “World money, with a world central bank, seems a next logical step,” wrote Wall Street Journal editor emeritus Robert Bartley in a 2003 opinion piece for the newspaper. “A world money would be an extraordinary boon to international stability.” He was writing from Mundell’s monetary conference at his castle in Italy.
The world elite is on a mission. Its plan to impose a global fiat monetary regime on humanity is well under way. And if serious resistance is not mounted soon, the new world monetary order could be just around the corner.
Link: http://www.thenewamerican.com/economy/economics/item/4498-waking-up-to-a-world-currency.
by Alex Newman
Source: The New American
If all the advocates of a world fiat currency (a currency not backed by a precious commodity like gold) were to scream at once, workers in world capitals, business centers, colleges, and news media may be deafened. And if global financial elites have their way, America will move quickly toward accepting a planetary fiat currency issued by a world central bank. Calls for a new global monetary regime are nothing new. After World War II left the world’s financial system in disarray, political leaders and financial gurus met at Bretton Woods, New Hampshire, from July 1-22, 1944, to plan the post-war economic order. Economist John Maynard Keynes and the British government proposed the creation of a world currency called the “bancor,” and the U.S. government proposed a world currency to be known as “unitas.” But for a lot of reasons, mostly American reluctance, the schemes never took off. Instead, the Bretton Woods agreement resulted in the U.S. dollar — its value at the time tied to gold — being crowned “the” world reserve currency. But the dollar’s place as the unchallenged world currency began being displaced with the dollar’s decoupling from gold in 1971. A new system emerged: The dollar retained its position as the world’s reserve currency, but now it was backed not by gold, but only by trust and the fact that oil and other commodities were traded around the world in dollars. Since then, the U.S. government has been growing itself and its power through creating money via the inflationary power of the Federal Reserve, thus making the dollar increasingly less stable, prompting vigorous calls for a world currency to stabilize world financial markets. That has especially been true as markets have imploded.
Leading the Charge
Naturally, prominent globalist leaders and central bankers have been at the forefront of promoting world-currency schemes. And they are confident that the groundwork has been sufficiently laid to achieve the goal. Russian President Dmitry Medvedev has been among the most vocal supporters. At the G-8 meeting last year, he actually pulled a “united future world currency” coin out of his pocket bearing the words “unity in diversity.” Then, he explained to the audience that it “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.” In June of this year, he was at it again. “We are making plans for the future. We are talking about creating other reserve currencies, and we are counting on other countries to understand this,” Medvedev told an economic forum in St. Petersburg, Russia.
At the same forum, French President Nicolas Sarkozy concurred, saying world powers “should think together about a new international currency system” at the upcoming G-20 summit. He also said the world’s financial system was “outdated” and should be replaced. “We all need to think about the foundations for a new international financial system,” he urged. “We’ve been based on the Bretton Woods institutions of 1945, when our American friends were the only superpower. My question is: Are we still in 1945? The answer here is, ‘no.’”
Numerous other prominent national leaders have jumped on the international fiat-currency bandwagon as well — too many to list in a short article. But perhaps more importantly, powerful central bankers around the world are also pushing the issue. Former Fed boss and current chairman of Obama’s “Economic Recovery Advisory Board” Paul Volcker, for example, has long been a strong proponent of a global fiat currency and a global central bank. He is widely reported to have said, “A global economy needs a global currency.” And he has repeatedly called for such a system, hoping to see it emerge during his lifetime.
In China, the “people’s” central-bank boss Zhou Xiaochuan has also frequently called for a new reserve currency. In a 2009 report published on the central bank’s website entitled “Reform the International Monetary System,” Xiaochuan explained that “the desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.”
When asked about the communist-Chinese regime’s idea at a Council on Foreign Relations event, tax-dodging U.S. Treasury Secretary Timothy Geithner, a regular proponent of global regulation, after acknowledging that he had not read it yet, said, “We’re actually quite open to that.” The dollar immediately plunged. And while Geithner promptly backtracked on his statement, as the saying goes, the cat was already out of the bag.
At a separate Council on Foreign Relations event earlier this year, European Central Bank boss Jean-Claude Trichet gave a speech entitled “Global Governance Today.” While different in important respects from calls to empower the International Monetary Fund as the world central bank, which seems to be the consensus view on how to quickly achieve a world currency, Trichet offered a vision that would ultimately lead to the same end. “We need a set of rules, institutions, informal groupings and cooperation mechanisms that we call ‘global governance,’” he said, praising the progress that has already been made in “strengthening the mandate of existing international institutions” but noting that “no market can survive without a set of rules. This is particularly true at the international level.”
In terms of the international monetary system, he applauded the fact that central banks around the world were already “able to take quick, decisive and coordinated action at short notice.” But “the crisis also showed that gaps in the system of global governance — in terms of both efficiency and legitimacy — have to be filled,” he explained, pointing out that the process was already ongoing.
“Overall, the system is moving decisively towards genuine global governance that is much more inclusive,” Trichet said. “The significant transformation of global governance that we are engineering today is illustrated by three examples. First, the emergence of the G20 as the prime group for global economic governance at the level of ministers, governors and heads of state or government. Second, the establishment of the Global Economy Meeting of central bank governors under the auspices of the [Bank for International Settlements (BIS)] as the prime group for the governance of central bank cooperation. And third, the extension of Financial Stability Board membership to include all the systemic emerging market economies.” In other words, the BIS, the central bank of central banks (which was almost disbanded for supporting the Nazis), is becoming increasingly powerful, along with global financial regulatory institutions. And for Trichet, this is a positive development.
He added, “Global governance is of the essence to improve decisively the resilience of the global financial system,” and concluded by saying, “The crisis has driven an historic change in the framework of global governance. In my view this transformation was overdue.” And indeed, the economic crisis has given a major boost to advocates of a world financial and monetary regime.
Global Institutions
With the onset of the global financial crisis, which interestingly enough was largely brought on by an asset bubble caused via currency manipulation by the United States’ version of a central bank — the Federal Reserve — international authorities have become increasingly vocal about the supposed need for a world fiat currency controlled by a single world central bank. The United Nations and the International Monetary Fund are the most prominent among them. And both of these quasi-governmental institutions have recently issued reports blasting the dollar and calling for a world fiat currency.
“A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency,” said the UN’s World Economic and Social Survey for 2010. “The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency.” The new UN report said that the IMF should be given the authority to print its own fiat currency, claiming that the new system “must not be based on a single currency or even multiple national currencies but instead, should permit the emission of international liquidity — such as [Special Drawing Rights] — to create a more stable global financial system.” SDRs are “assets” issued by the IMF with a value currently based on multiple national fiat currencies.
Late last year, another UN report from a different arm of the institution offered similar analyses and suggestions. “In the discussion about necessary reforms of the international monetary and financial system, the problem of the United States dollar serving as the main international reserve asset has received renewed attention,” said the report, published by the UN Conference on Trade and Development. The paper also pointed to SDRs as the potential international reserve currency.
Earlier in 2009, another UN panel also called for talks on setting up a new international monetary system and moving away from the dollar. And the calls are only becoming more frequent and respected as time goes on.
Then there is the International Monetary Fund, a likely candidate for the position of global central banker, which in some ways has already taken on the role. Like other figures within the organization, IMF boss Dominique Strauss-Kahn — an avowed socialist — has repeatedly called for global regulation and a world currency controlled by the “Fund.”
“One day, the fund might even be called upon to provide a globally issued reserve asset, similar to — but in important respects different from — the SDR,” he explained in a speech earlier this year, saying it would be “intellectually healthy to explore” the creation of a new IMF-backed world reserve currency before it is “needed.” A few months later, he told the High-Level Conference on the International Monetary System that “crisis is an opportunity” and “a new global currency issued by a global central bank, with robust governance and institutional features, could provide a nominal anchor and risk-free asset for the system.”
And it’s not just Strauss-Kahn. In a barely noticed paper published in April of this year, the Fund went even further than the UN or Strauss-Kahn. It outlined the future global fiat currency, to be run by a transformed and newly empowered IMF.
The paper, published by the IMF’s Strategy, Policy, and Review Department and entitled “Reserve Accumulation and International Monetary Stability,” offers very specific proposals which — not surprisingly — would involve handing it massive new powers over the global economy and “making the special drawing right (SDR) the principal reserve asset in the [International Monetary System].” And this is merely the short-term policy; the IMF wants to go further, with the creation of a global currency called the bancor.
Of course, even the IMF says its schemes will not likely come about quickly or easily. “It is understood that some of the ideas discussed are unlikely to materialize in the foreseeable future absent a dramatic shift in appetite for international cooperation,” it says in the report. Some analysts have suggested a war with Iran or a crash of China’s economy could trigger such a shift.
Trend Toward Monetary Unions
Monetary unions, where a collection of national governments surrender their power over money to international institutions, are popping up around the world. In recent decades, there has been a declining number of currencies as more countries abandon their own currencies to use a multinational currency, such as the euro.
Africa already contains a patchwork of regional supranational currencies, including one in West Africa, another in Central Africa, and a group of countries that use the South African Rand. A plan to introduce a continental currency — sometimes referred to as the “afro” — controlled by the already existing African Union’s African Central Bank is set for completion in less than two decades. In Asia, calls for a regional monetary union are growing stronger. Arabian nations, through the Gulf Cooperation Council, are planning their own common currency right now.
In closer proximity to the United States, a group of Caribbean nations formed the Eastern Caribbean Currency Union. All use the East Caribbean dollar. More recently, a number of leftist Latin American regimes created the SUCRE under the leadership of socialist despot Hugo Chavez. And a South American currency is currently in the works. Significant numbers of nations have also unilaterally abandoned their own currencies and switched to the dollar, such as Ecuador and El Salvador. In Europe, while not officially joining the Eurozone, numerous small countries have also switched to the euro. And this is exactly what many proponents of a global fiat currency are promoting as a means to that end. Once there are fewer currencies and the principal of supranational currency is established, such as has already occurred with the euro, it becomes easier to simply merge them.
A 2007 article for the Council on Foreign Relations’ magazine Foreign Affairs entitled “The End of National Currency” offered some insight into the strategy being pursued. Benn Steil, the powerful group’s director of international economics, suggests a very specific proposal: “Governments should replace national currencies with the dollar or the euro or, in the case of Asia, collaborate to produce a new multinational currency over a comparably large and economically diversified area.... Most of the world’s smaller and poorer countries would clearly be best off unilaterally adopting the dollar or the euro, which would enable their safe and rapid integration into global financial markets. Latin American countries should dollarize; eastern European countries and Turkey, euroize.”
And that is precisely the argument of the most prominent global currency enthusiasts. Columbia economics Professor Robert Mundell, who could not be reached by press time, is one of them. He is a Nobel-prize winner, a key advisor to the communist Chinese regime, and also known as the “father” of the euro. And he argues that the world should move toward a new global currency system called the “DEY” — a “basket” of dollars, euros, and yen controlled and issued by a global central bank, possibly a newly empowered IMF. Eventually, the architecture would lead to a truly global fiat currency.
“My approach is rather to start out with arrangements for stabilizing exchange rates, and move from there to a global currency. It would start off from the situation as it is at present and gradually move it toward the desired solution. We could start off with the three big currencies in the world, the dollar, euro, and yen, and with specified weights, make a basket of them into a unit that could be called the DEY,” Mundell explained in a 2005 speech called “The case for a world currency.” “The DEY could then become the platform on which to build a global currency, which I shall call the INTOR.”
His “basic plan” for the world currency would be implemented in three stages, he said. First, stabilization of exchange rates. Next, a monetary union under the DEY consisting of most of the world’s economy. And finally, the creation of the INTOR. While Mundell acknowledged that it might be difficult, he expressed optimism about the currency’s prospects, saying, “The next big crisis might be the occasion for a reconvening of a Bretton Woods type conference to establish the conditions for a new international monetary system.” With the United States looking at a likely second round of economic turmoil and its dollar becoming increasingly unstable as interest payments on the national debt take up an ever larger part of all taxes collected, such a “crisis” is probably closer than Americans would like to imagine.
Other prominent advocates agree with the Mundell strategy for achieving a world currency managed by a global central bank. “We’ll probably get there by the merger of monetary unions,” explained Morrison Bonpasse, founder and president of the Single Global Currency Association and author of The Single Global Currency: Common Cents for the World, in an interview with The New American. “But there are several possible routes. One is to continue the current regionalization of currencies, to include North America, and creation, expansion and merger of monetary unions; and then combine those currencies into one. Another is for smaller countries to continue to ‘ize’ their nations’ legal tender, as in ‘dollarize’ and ‘euroize.’ … Once the ‘tipping point’ is reached where one currency supports approximately 40-50 percent of the world’s GDP, the movement will accelerate to anoint that currency as the single global currency.” The organization’s target date: 2024.
Clearly, the move toward regional currencies is picking up traction, especially during this decade.
Already Emerging
Some argue that the global central bank and all that it entails are already taking solid form or, worse, already here.
“What the IMF is doing is, they’ve positioned themselves and are actually beginning the process of issuing debt for the first time,” explained James Rickards, senior managing director for market intelligence and co-head of threat finance and market intelligence at Omnis, a leading consulting firm. “So what that means is the IMF is acting like a central bank because it’s leveraging its balance sheet,” he told The New American, saying SDRs could replace the dollar and become the international reserve currency in two to five years. And it’s already going on. “In terms of paper currency, a leveraged balance sheet, and the creation of liquidity out of thin air, the IMF is clearly the way they’re going because, as I said, they’ve already done it.... It’s not speculation, it’s actually happening,” he said, noting that the shift away from dollars has already started and would accelerate.
The IMF has indeed taken some extraordinary steps recently. Last year, for example, for the first time in the Fund’s history, it issued bonds denominated in SDRs. The Chinese regime promptly gobbled up $50 billion worth, with the IMF saying in a statement that the sale “offers China a safe investment instrument” and that it was part of a broader plan to “boost the Fund’s capacity to help its membership — particularly the developing and emerging market countries — weather the global financial crisis, and facilitate an early recovery of the global economy.” And of course, there’s still more.
“The other thing the IMF has done — not for the first time, really for the second time, but the first time in quite a large size — is to issue SDRs,” explained Rickards. “The IMF is issuing its own paper currency,” and, like all fiat currencies, it’s backed by nothing, Rickards said. “I view all of these as pilot programs. In other words, they’re kind of testing the plumbing.... Now the IMF is positioned to — in effect, and I think this is the plan — to become a global central bank which can issue its own currency called SDRs, leverage its balance sheet through borrowing, and then create assets by making loans and investing in securities, all under the auspices of the IMF executive committee, which is basically the same set of people as the G20.”
At recent G20 confabs, the centralization of the world’s monetary system has indeed been a hot topic. Headlines around the world announced — boldly and with good cause — the imminent arrival of a “new world order,” a global currency, a world central bank, and a planetary monetary-policy regime. The early 2009 G20 declaration, for example, said, “We have agreed to support a general SDR allocation which will inject $250 billion into the world economy and increase global liquidity.” In simpler terms, printing international fiat money.
Now, the regulatory regime is going global, too. And fast. The same G20 meeting also led to the Financial Stability Forum being transformed into the Financial Stability Board, usurping financial regulatory authority traditionally held by national central banks around the world. The new “board” is rapidly becoming a global financial regulator as its mandate expands to include overseeing action to address vulnerabilities in the financial system, setting guidelines, and even managing “contingency planning for cross-border crisis management.”
Media Support
No strategy for dramatic, unpopular change would be complete without a public media campaign. So, of course, among the prominent voices throwing their weight behind a global fiat currency and a global central bank are some of the most influential media outlets in the world. Already in 1988, The Economist wrote an article predicting a global currency within 30 years, saying, “This means a big loss of economic sovereignty, but the trends that make the [new hypothetical global currency] so appealing are taking that sovereignty away in any case.”
A decade later, the New York Times took up the issue with a piece from prominent CFR insider and global central bank promoter Jeffrey Garten calling for a “global Fed.” After praising the development of various unconstitutional institutions in the United States, most notably the Federal Reserve, Garten wrote, “The world needs an institution that has a hand on the economic rudder when the seas become stormy. It needs a global central bank.” Ten years after that, Garten penned a piece for the Financial Times, once again advocating “the establishment of a Global Monetary Authority.”
In a 2008 Newsweek article entitled “We Need a Bank of the World,” Garten claimed, “The financial crisis is global, and only an international central bank can deal with it.” The piece called for world leaders to “begin laying the groundwork for establishing a global central bank” because “the Fed no longer has the capability to lead singlehandedly.”
The year after that article, Garten was at it again, this time in Businessweek. “If critics could suspend the hyperventilating for a few minutes, they’d realize a global central bank is becoming a necessity in today’s complex, interconnected world economy,” he wrote. The piece also cites Tim “TurboTax” Geithner, who said, “We need a common global solution to these markets, not separate regional solutions.”
Meanwhile, the Washington Post ran a 2009 story praising the International Monetary Fund’s transformation into a bank of the world. “Bowing to a new economic world order, the IMF would grant fresh powers to the likes of China, India and Brazil. It would have vastly expanded authority to act as a global banker to governments rich and poor,” wrote Post staff writer Anthony Faiola. “And with more flexibility to effectively print its own money, it would have the ability to inject liquidity into global markets in a way once limited to major central banks.” The article also mentioned “the IMF’s transformation into a veritable United Nations for the global economy” and quoted various experts praising the developments.
Even the supposedly more free-market-friendly press in the United States has also backed the scheme. “World money, with a world central bank, seems a next logical step,” wrote Wall Street Journal editor emeritus Robert Bartley in a 2003 opinion piece for the newspaper. “A world money would be an extraordinary boon to international stability.” He was writing from Mundell’s monetary conference at his castle in Italy.
The world elite is on a mission. Its plan to impose a global fiat monetary regime on humanity is well under way. And if serious resistance is not mounted soon, the new world monetary order could be just around the corner.
Link: http://www.thenewamerican.com/economy/economics/item/4498-waking-up-to-a-world-currency.
Obama Exploiting Ukraine to Empower IMF and Dictatorships
11 March 2014
by Alex Newman
Source: The New American
The globalist establishment, Russian authorities, and the Obama administration are pushing hard for a series of controversial “reforms” aimed at massively expanding the power and resources of the International Monetary Fund (IMF) while further scaling back U.S. influence at the institution. Using various pretexts — and especially the crisis in Ukraine — governments and dictatorships, including Vladimir Putin’s Russia, are even threatening to proceed with the radical plot to empower the IMF whether the U.S. Congress approves it or not.
The most important and far-reaching elements of the “reform” agenda include a doubling of taxpayer resources available to the IMF. Member governments would have to supply twice as much taxpayer funding to meet their “quota” under the agreement. Even more important, the reforms would also dramatically reduce U.S. influence while handing more power to what propagandists refer to as “emerging markets.” In reality, “emerging markets” would continue to have no influence whatsoever at the powerful globalist institution. The dictators and governments that rule them, however, would be given far more authority to dictate IMF policy and decisions.
Chief among the regimes that would be empowered under the “reforms” is the communist dictatorship ruling over mainland China, which for years has been calling for the IMF to become a sort of planetary central bank in charge of a global currency. Other governments that would have more influence include those ruling over the rest of the so-called BRICS — primarily socialist and communist regimes in Brazil, Russia, India, and South Africa. All of the “BRICS” regimes have been strongly pushing for more control over the IMF in recent years, even as they push to radically expand its mandate to include a planetary currency.
“We support the reform and improvement of the international monetary system, with a broad based international reserve currency system providing stability and certainty,” the five BRICS regimes said in a joint 2013 declaration, calling for Third World dictators to have a greater say in the IMF and the emerging global monetary regime. “We welcome the discussion about the role of the [IMF’s] SDR [a proto-global currency known as Special Drawing Rights] in the existing international monetary system including the composition of SDR’s basket of currencies.”
The biggest barrier thus far to the IMF “reforms,” reportedly agreed to in 2010, has been the U.S. Congress, which is so far refusing to approve the funding. In a statement, however, the Obama administration said it was working on overcoming that obstacle. Among other demands, the administration wants lawmakers to approve a shift of some $63 billion from a “crisis” fund to the IMF’s general accounts to comply with the 2010 reform “commitments” made by the Obama administration and the IMF board.
“We are working with Congress to approve the 2010 IMF quota legislation, which would support the IMF’s capacity to lend additional resources to Ukraine, while also helping to preserve continued U.S. leadership within this important institution,” the White House said in a “fact sheet” released last week, exploiting the ongoing fiasco in central Europe to advance the controversial agenda to empower the IMF and its less-than-friendly member regimes. The radically expanded U.S. “quota” would presumably be met going forward by borrowing from foreign governments or the Federal Reserve, which simply conjures currency into existence out of thin air and usuriously lends it to the Treasury at interest.
Having apparently lost hope of getting the legislation through on its own, the administration is now trying to tie the IMF funding demands to a bill showering U.S. taxpayer funds on Ukraine’s new rulers. “It is imperative that we secure passage of IMF legislation now so we can show support for the IMF in this critical moment and preserve our leading influential voice in the institution,” Obama Treasury Secretary Jack Lew said last week in a congressional hearing, just months after demanding a debt-ceiling hike. It remains unclear whether the GOP-controlled House will submit to the administration’s demands.
In a report from Reuters citing “sources,” however, the news agency reported that Russian officials are working to push ahead the drastic IMF reforms without the support of the U.S. government, which holds a controlling share of votes at the institution because U.S. taxpayers are its primary source of funds. If the Kremlin and its allies succeed in advancing the reforms without U.S. congressional approval, the news agency claimed, it could result in Washington, D.C., losing its veto even over major IMF decisions. Moving ahead without Congress, though, would reportedly require “complicated” changes to IMF rules.
The anonymous “sources” cited in the Reuters article claimed that the G20 governments — the regimes ruling China and Russia are both among the members — would give the U.S. government until IMF and World Bank meetings next month to obey. If Congress remains uncooperative, the “sources,” presumably speaking to the news agency in a bid to pressure U.S. lawmakers, said the G20 regimes would be “taking more aggressive measures” to ram through the reforms empowering the controversial global institution.
“It was agreed that in the absence of progress by the United States on the 2010 package by the April meeting of the IMF and G20, that there will be formulated a list of 'bad options,' which will allow [us] to move forward in this matter, excluding the opinions of the United States,” one of the three unnamed sources told Reuters. In other words, either the U.S. Congress does the bidding of foreign governments at the G20, or those regimes will advance the radical agenda anyway.
In an editorial, the establishment mouthpieces at the New York Times urged lawmakers to promptly obey, too. “As Congress moves forward with providing financial assistance to Ukraine in the form of loan guarantees, lawmakers should also ratify much-delayed reforms that would strengthen the International Monetary Fund and give it more resources to lend to troubled nations like Ukraine,” the Times editorial board argued on Monday, adding that the Obama administration had “led a global effort” to increase IMF funding to over $750 billion while curtailing U.S. power at the institution.
“Some Republicans in the House have steadfastly refused to let the reforms come to a vote, arguing unconvincingly that the fund doesn’t need the money,” the Times complained, presumably also suggesting that the IMF and the nations it shackles with debt need the money more than struggling U.S. taxpayers. “Ukraine’s troubles serve as evidence that it’s important to increase the fund’s resources.”
Ironically, the Times suggested that it was in “America’s interest” that authorities in Ukraine and other countries receive bailouts from U.S. taxpayers through organizations such as the IMF rather than from Russia directly. The claim is especially ridiculous considering that the Kremlin is leading the push to adopt the IMF “reforms” without approval from the U.S. Congress. The argument becomes even more absurd when realizing that Moscow is participating in the IMF bailouts agreement for Ukrainian officials. And it borders on lunacy when considering a New York Times report last week acknowledging that much of the “aid” to Ukraine will end up in Russian institutions anyway.
“Providing Ukraine with $1 billion in loan guarantees from the American government is a good start, but that will not be enough to get the country back on its feet,” the Times editorial concludes. “Congress needs to go one step further and give the I.M.F. the resources it needs to help troubled nations like Ukraine.”
The conservative-leaning Heritage Foundation, while claiming that the United States “clearly” benefits from the existence of the IMF, also conceded that, “many conservatives have rightly pointed to the IMF as an enabler of moral hazard.” Those critics, the group said, “are concerned that American tax dollars are being used for IMF programs that bail out bad decisions by other governments that follow reckless fiscal and monetary policies (e.g., the flawed policies that Ukraine pursued under Yanukovych until 2011 when the IMF ended its previous program for the country).”
In response to those concerns, Heritage Research Fellow for Economic Freedom James Roberts offered Congress some suggestions. “Refuse the Obama Administration’s attempt to link urgent assistance to Ukraine to approval of the IMF governance reform package that has been pending for three years,” he advised. “Insist that the 2010 reform package be revised so that the U.S. retains the unilateral right to appoint its own representative to the executive board; and demand the abolition of the NAB [New Arrangements to Borrow] supplemental facility so that it cannot be used in the future as an additional source of potentially morally hazardous lending during the next ‘crisis’.”
Critics of the IMF and the long-term agenda of the institution and its backers, however, suggest that a better solution would be for the U.S. government to withdraw from the controversial outfit altogether. Not only is Washington, D.C., foisting unfathomable levels of odious debt on the American people to fund such globalist institutions, the IMF is now openly proposing wholesale global wealth confiscation and plundering. As if that was not bad enough, the IMF and the globalist establishment that controls it are openly working to turn the institution into a global central bank in charge of a planetary fiat currency if and when the U.S. dollar loses its status as international reserve.
For Americans, Ukrainians, and indeed, humanity, the IMF represents nothing but expensive trouble — and it is only going to get worse if current trends continue. U.S. lawmakers who take their oath of office seriously must refuse to submit.
Alex Newman, a foreign correspondent for The New American, is normally based in Europe. He can be reached at anewman@thenewamerican.com.
Link: http://www.thenewamerican.com/economy/item/17817-obama-exploiting-ukraine-to-empower-imf-and-dictatorships.
by Alex Newman
Source: The New American
The globalist establishment, Russian authorities, and the Obama administration are pushing hard for a series of controversial “reforms” aimed at massively expanding the power and resources of the International Monetary Fund (IMF) while further scaling back U.S. influence at the institution. Using various pretexts — and especially the crisis in Ukraine — governments and dictatorships, including Vladimir Putin’s Russia, are even threatening to proceed with the radical plot to empower the IMF whether the U.S. Congress approves it or not.
The most important and far-reaching elements of the “reform” agenda include a doubling of taxpayer resources available to the IMF. Member governments would have to supply twice as much taxpayer funding to meet their “quota” under the agreement. Even more important, the reforms would also dramatically reduce U.S. influence while handing more power to what propagandists refer to as “emerging markets.” In reality, “emerging markets” would continue to have no influence whatsoever at the powerful globalist institution. The dictators and governments that rule them, however, would be given far more authority to dictate IMF policy and decisions.
Chief among the regimes that would be empowered under the “reforms” is the communist dictatorship ruling over mainland China, which for years has been calling for the IMF to become a sort of planetary central bank in charge of a global currency. Other governments that would have more influence include those ruling over the rest of the so-called BRICS — primarily socialist and communist regimes in Brazil, Russia, India, and South Africa. All of the “BRICS” regimes have been strongly pushing for more control over the IMF in recent years, even as they push to radically expand its mandate to include a planetary currency.
“We support the reform and improvement of the international monetary system, with a broad based international reserve currency system providing stability and certainty,” the five BRICS regimes said in a joint 2013 declaration, calling for Third World dictators to have a greater say in the IMF and the emerging global monetary regime. “We welcome the discussion about the role of the [IMF’s] SDR [a proto-global currency known as Special Drawing Rights] in the existing international monetary system including the composition of SDR’s basket of currencies.”
The biggest barrier thus far to the IMF “reforms,” reportedly agreed to in 2010, has been the U.S. Congress, which is so far refusing to approve the funding. In a statement, however, the Obama administration said it was working on overcoming that obstacle. Among other demands, the administration wants lawmakers to approve a shift of some $63 billion from a “crisis” fund to the IMF’s general accounts to comply with the 2010 reform “commitments” made by the Obama administration and the IMF board.
“We are working with Congress to approve the 2010 IMF quota legislation, which would support the IMF’s capacity to lend additional resources to Ukraine, while also helping to preserve continued U.S. leadership within this important institution,” the White House said in a “fact sheet” released last week, exploiting the ongoing fiasco in central Europe to advance the controversial agenda to empower the IMF and its less-than-friendly member regimes. The radically expanded U.S. “quota” would presumably be met going forward by borrowing from foreign governments or the Federal Reserve, which simply conjures currency into existence out of thin air and usuriously lends it to the Treasury at interest.
Having apparently lost hope of getting the legislation through on its own, the administration is now trying to tie the IMF funding demands to a bill showering U.S. taxpayer funds on Ukraine’s new rulers. “It is imperative that we secure passage of IMF legislation now so we can show support for the IMF in this critical moment and preserve our leading influential voice in the institution,” Obama Treasury Secretary Jack Lew said last week in a congressional hearing, just months after demanding a debt-ceiling hike. It remains unclear whether the GOP-controlled House will submit to the administration’s demands.
In a report from Reuters citing “sources,” however, the news agency reported that Russian officials are working to push ahead the drastic IMF reforms without the support of the U.S. government, which holds a controlling share of votes at the institution because U.S. taxpayers are its primary source of funds. If the Kremlin and its allies succeed in advancing the reforms without U.S. congressional approval, the news agency claimed, it could result in Washington, D.C., losing its veto even over major IMF decisions. Moving ahead without Congress, though, would reportedly require “complicated” changes to IMF rules.
The anonymous “sources” cited in the Reuters article claimed that the G20 governments — the regimes ruling China and Russia are both among the members — would give the U.S. government until IMF and World Bank meetings next month to obey. If Congress remains uncooperative, the “sources,” presumably speaking to the news agency in a bid to pressure U.S. lawmakers, said the G20 regimes would be “taking more aggressive measures” to ram through the reforms empowering the controversial global institution.
“It was agreed that in the absence of progress by the United States on the 2010 package by the April meeting of the IMF and G20, that there will be formulated a list of 'bad options,' which will allow [us] to move forward in this matter, excluding the opinions of the United States,” one of the three unnamed sources told Reuters. In other words, either the U.S. Congress does the bidding of foreign governments at the G20, or those regimes will advance the radical agenda anyway.
In an editorial, the establishment mouthpieces at the New York Times urged lawmakers to promptly obey, too. “As Congress moves forward with providing financial assistance to Ukraine in the form of loan guarantees, lawmakers should also ratify much-delayed reforms that would strengthen the International Monetary Fund and give it more resources to lend to troubled nations like Ukraine,” the Times editorial board argued on Monday, adding that the Obama administration had “led a global effort” to increase IMF funding to over $750 billion while curtailing U.S. power at the institution.
“Some Republicans in the House have steadfastly refused to let the reforms come to a vote, arguing unconvincingly that the fund doesn’t need the money,” the Times complained, presumably also suggesting that the IMF and the nations it shackles with debt need the money more than struggling U.S. taxpayers. “Ukraine’s troubles serve as evidence that it’s important to increase the fund’s resources.”
Ironically, the Times suggested that it was in “America’s interest” that authorities in Ukraine and other countries receive bailouts from U.S. taxpayers through organizations such as the IMF rather than from Russia directly. The claim is especially ridiculous considering that the Kremlin is leading the push to adopt the IMF “reforms” without approval from the U.S. Congress. The argument becomes even more absurd when realizing that Moscow is participating in the IMF bailouts agreement for Ukrainian officials. And it borders on lunacy when considering a New York Times report last week acknowledging that much of the “aid” to Ukraine will end up in Russian institutions anyway.
“Providing Ukraine with $1 billion in loan guarantees from the American government is a good start, but that will not be enough to get the country back on its feet,” the Times editorial concludes. “Congress needs to go one step further and give the I.M.F. the resources it needs to help troubled nations like Ukraine.”
The conservative-leaning Heritage Foundation, while claiming that the United States “clearly” benefits from the existence of the IMF, also conceded that, “many conservatives have rightly pointed to the IMF as an enabler of moral hazard.” Those critics, the group said, “are concerned that American tax dollars are being used for IMF programs that bail out bad decisions by other governments that follow reckless fiscal and monetary policies (e.g., the flawed policies that Ukraine pursued under Yanukovych until 2011 when the IMF ended its previous program for the country).”
In response to those concerns, Heritage Research Fellow for Economic Freedom James Roberts offered Congress some suggestions. “Refuse the Obama Administration’s attempt to link urgent assistance to Ukraine to approval of the IMF governance reform package that has been pending for three years,” he advised. “Insist that the 2010 reform package be revised so that the U.S. retains the unilateral right to appoint its own representative to the executive board; and demand the abolition of the NAB [New Arrangements to Borrow] supplemental facility so that it cannot be used in the future as an additional source of potentially morally hazardous lending during the next ‘crisis’.”
Critics of the IMF and the long-term agenda of the institution and its backers, however, suggest that a better solution would be for the U.S. government to withdraw from the controversial outfit altogether. Not only is Washington, D.C., foisting unfathomable levels of odious debt on the American people to fund such globalist institutions, the IMF is now openly proposing wholesale global wealth confiscation and plundering. As if that was not bad enough, the IMF and the globalist establishment that controls it are openly working to turn the institution into a global central bank in charge of a planetary fiat currency if and when the U.S. dollar loses its status as international reserve.
For Americans, Ukrainians, and indeed, humanity, the IMF represents nothing but expensive trouble — and it is only going to get worse if current trends continue. U.S. lawmakers who take their oath of office seriously must refuse to submit.
Alex Newman, a foreign correspondent for The New American, is normally based in Europe. He can be reached at anewman@thenewamerican.com.
Link: http://www.thenewamerican.com/economy/item/17817-obama-exploiting-ukraine-to-empower-imf-and-dictatorships.
Friday, July 12, 2013
Myanmar president approves law on central bank autonomy
Jul 11, 2013
Source: Reuters
Source: Reuters
(Reuters) - Myanmar's president has signed a law giving the central bank more autonomy from the Finance Ministry and opening the way for development of the fledgling banking sector.
State-owned MRTV television reported the enactment by President Thein Sein late on Thursday and said details would be published in newspapers on Friday.
But there was nothing in any of Friday's papers, including the New Light ofMyanmar, a state daily that carries official announcements.
The law is part of a series of economic and political reforms pushed through by the quasi-civilian government of Thein Sein, in office since nearly half a century of military rule ended in March 2011.
Rules governing the central bank have to be adopted within three months of the law coming into force.
"In fact, rules and regulations have already been drawn up. So we can expect them to emerge very soon," Win Hteik, a senior central bank official, told Reuters.
He said the governor and three deputy-governors would in future be nominated by the president and approved by parliament.
He also said the regulations could include details of how joint-venturebanks could be set up with foreign lenders.
Foreign banks are not allowed to operate in Myanmar at present, and when they are allowed in, they will initially only be able to run joint ventures with local banks.
The date for their entry has not been set, although more than 30 foreign banks already have representative offices.
The website of the existing Central Bank of Myanmar, which is part of the Finance Ministry, says its aim is "to preserve the internal and external value of the Myanmar currency".
Helped by the International Monetary Fund, the central bank introduced a managed float of the kyat in April 2012 as part of the unification of the exchange rate system.
It first floated at 818 per dollar, a level in line with the black market at the time but which the IMF and economists said was overvalued. Since then, the kyat has fallen and the central bank's daily reference rate was set at 980 on Thursday. (Reporting by Aung Hla Tun; Writing by Alan Raybould; Editing by Nick Macfie)
Tuesday, June 4, 2013
European Union Backs Down on China Tariffs
June 4, 2013
By JAMES KANTER and KEITH BRADSHER
Source: The New York Times
By JAMES KANTER and KEITH BRADSHER
Source: The New York Times
BRUSSELS — The European Union moved on Tuesday to impose tariffs of 11.8 percent on solar panels from China, only one-quarter of the expected level, as an intensive Chinese diplomatic effort over the past week appeared to result in Brussels officials backing down.
Karel De Gucht, the union’s trade commissioner, said that the tariffs would bounce up in early August to 47.6 percent if the government in Beijing does not remedy what the European Union contends is a systematic effort by Chinese firms to sell solar panels in Europe below the cost of making them, a practice known as dumping.
“The ball is in China’s court,” he said, referring to negotiations expected over the next two months. The period of the lower tariff “is a window of opportunity of 60 days,” he said. But windows “can also shut,” he warned.
Earlier, the trade commissioner had indicated he would stand firm behind recommended duties of as high as 47.6 percent in order to defend the credibility of European Union trade rules. But pressure had been mounting on him to back off.
Premier Li Keqiang of China bypassed Mr. De Gucht during a visit to Germany last week and persuaded Chancellor Angela Merkel to call for further negotiations. He then went over Mr. De Gucht’s head on Monday night with a phone conversation with the European Commission president, José Manuel Barroso.
Mr. Li warned that China was ready to retaliate if the European Union took action. The state-run Xinhua news agency said that Mr. Li had warned Mr. Barroso that “there would be no winners in a trade war.”
The solar panels represent one of the largest categories of Chinese exports to the European Union, worth more than 6 percent of China’s exports to the Continent.
“Our action today is an emergency measure to give lifesaving oxygen to a business sector in Europe that is suffering badly from this dumping,” Mr. De Gucht at a news conference in Brussels.
“This is not protectionism,” insisted Mr. De Gucht, adding that the United States had also applied duties to Chinese solar exports. China was carrying out “dumping that has the potential to destroy an important industry within Europe if we do not act today,” he said.
He said Chinese exporters had captured 80 percent of European Union’s market share, and he suggested that “massive overcapacity” in China had led the Chinese to flood the European market. China is “producing today one and half times the amount of solar panels the world needs,” he said.
In a nod to the heavy lobbying in Europe against the duties, Mr. De Gucht said “cheap and plentiful seems great, but ultimately this will lead to a race to the bottom” where “everyone loses.”
Western governments and trade associations have long contended that Beijing has helped several Chinese industries take over global markets through a combination of huge loans from state-owned banks, extensive government research programs, protection of the domestic Chinese market from imports and sometimes even industrial espionage.
China’s rapid expansion in renewable energy, a national priority, has long been cited as an extreme example.
China went from a negligible player in the solar panel industry as recently as 2006 to the dominant world producer now, with two-thirds or more of global manufacturing capacity in the sector following $18 billion in loans from state banks.
That expansion contributed to the bankruptcy of or capacity cutbacks at a score of American and European solar companies in the last three years. Chinese solar panel companies have also suffered lately from overcapacity, with Suntech Power of Wuxi, China, putting its main operating unit into bankruptcy in March.
Li Junfeng, a senior Chinese government energy policy maker who is also the president of the Chinese Renewable Energy Industries Association, expressed delight when told that the European Union had sharply lowered its target for the preliminary tariffs.
“That’s really good news,” said Mr. Li, a senior energy official at the National Development and Reform Commission, China’s main economic planning agency. “At 11 percent, the Chinese companies can do very good business — it doesn’t affect them very much.”
The European Union’s decision to impose much lower initial duties than expected could greatly reduce the incentive for the Chinese government to offer concessions in further negotiations.
Yet individual Western companies, in the solar industry and other sectors, have been very wary of taking any public stand against China, which has become the world’s largest market in industries ranging from steel to cellphones to automobiles. Chinese officials have considerable discretion in issuing factory permits, export licenses and even visas for visiting executives, making most companies leery of publicly voicing any criticism whatsoever of China or any support for trade actions against it.
Mr. De Gucht has become so frustrated with the unwillingness of European companies to publicly support any trade action against China that he said last month that he was prepared to launch a trade case against China on certain kinds of telecommunications equipment even without the public support of any European companies in the sector.
SolarWorld, a German company, has brought anti-dumping and anti-subsidy cases against China in the United States and the European Union in the past two years. But its executives waited to file the cases until the company was already financially struggling. SolarWorld is also unusual in that it is not a diversified company but dependent on a single narrow sector in which China’s market is still a small although growing share of global demand.
On Tuesday, Milan Nitzschke, a vice president of SolarWorld, a German company that is part of the coalition of European firms that filed the anti-dumping case with the European Commission in July 2012, said in a telephone interview, “I’m not against giving a time window for negotiations, but China has to move.”
A settlement should require the Chinese to make “an agreement on prices and volumes, so that there is not dumping onto the market,” Mr. Nitzschke, who is also president of EU ProSun, the European coalition.
Mr. Nitzschke also said that European Union countries, including Germany, would be more willing to support higher duties if China failed to negotiate in good faith during the next few months.
The European Union, like the United States, designates China as a nonmarket economy, which means that anti-dumping penalties are calculated under special rules that almost always produce very high tariffs -- unless political leaders intervene.
Solar panel production is in some ways a chemicals industry, as much of the cost of a panel lies in the materials that are used to assemble them. Senior executives at two of the world’s largest chemicals companies expressed misgivings on Tuesday about any kind of showdown with China over the solar industry, following the pattern of individual companies being reluctant to endorse trade actions against China.
Thomas M. Connelly Jr., the executive vice president and chief innovation officer at DuPont, said Tuesday before the announcement in Brussels that his company was worried that the uncertainty caused by trade cases was hurting investment in solar panels and in renewable energy industries more broadly. He specifically criticized Europe’s plans to impose tariffs, saying in a telephone interview from Beijing that, “These kinds of trade actions are unhelpful.”
Martin Brudermüller, the vice chairman of BASF, the German chemicals giant, expressed concern about the potential for escalation in the trade dispute. “A tit-for-tat policy will more destabilize than help us,” he said when asked about the dispute during a news conference in Hong Kong on BASF’s ambitious investment plans in China and elsewhere in Asia. The news conference was held several hours before the European announcement.
Wednesday, March 27, 2013
Thursday, February 14, 2013
Euro, shares fall as euro zone recession deepens
1 hr 6 mins ago
By Marc Jones | Reuters
Source: Yahoo News
By Marc Jones | Reuters
Source: Yahoo News
LONDON (Reuters) - The euro and shares fell sharply on Thursday after data showed the euro zone's two biggest economies shrank even more than expected late last year, throwing a first quarter regional recovery into doubt.
The German economy contracted 0.6 percent in the final quarter of 2012, marking its worst performance since the global financial crisis was raging in 2009. Exports, normally the motor of its economy, did most of the damage.
Overall the euro zone's 17-country economy shrank 0.6 percent, with France's 0.3 percent fall slightly worse than forecast.
Germany is expected to rebound but the figures suggest the bloc as a whole could remain in recession in the first quarter of this year, despite a recent jump in market sentiment as fears that the currency bloc could fall apart faded.
"These are horrible numbers. It's a widespread contraction, which does not match this positive picture of stabilization and positive contagion," said Carsten Brzeski, an economist at ING.
The data pushed the euro down 0.9 percent to $1.3324, its lowest in three weeks. European shares likewise fell, with Frankfurt <.gdaxi> and Milan <.ftmib> losing more than 1 percent. Paris <.fchi> and London <.ftse> also suffered heavy drops, and the FTSEurofirst 300 index was 0.4 percent lower.
"We still expect growth to return in the course of 2013 but any return of growth will be very small which means that the social impact of this recession, especially in the peripheral countries, will be still a very severe one," Brzeski added.
German bonds rose as demand for traditional safe-haven assets returned. Bund futures were 55 ticks higher on the day at 142.60, having extended gains after Italian GDP figures also came in weak.
Italy, which holds parliamentary elections in just over a week, suffered its sixth successive quarterly fall in GDP - this time a sharp 0.9 percent - putting it into a longer recession than it suffered during the crisis of 2008/2009.
Italian bond yields rose 3 basis points on the day to 4.42 percent while those on the Spanish equivalent were 2.5 basis points higher at 5.23 percent.
YEN STEADIES
U.S. stock index futures also pointed to a lower open on Wall Street when trading resumes. <.n>
While European shares are down almost 1.5 percent since late January, the U.S. S&P 500 <.spx> index hit a five-year high this week, underscoring the better growth forecasts for the world's largest economy.
Data from the European Central Bank also weighed on Europe as one of its quarterly surveys showed professional forecasters now see no growth in the euro zone this year, having last quarter expected a modest 0.3 percent rise.
The pain is not just in Europe. Japan - under pressure over its aggressive monetary and fiscal policies which are driving down the yen - reported earlier that its GDP shrank 0.1 percent in the fourth quarter, leaving it in recession and crushing expectations of a modest return to growth.
The yen steadied after swinging wildly this week following a muddled warning on currencies from the G7 nations on Tuesday. It slipped against the dollar but gained on the euro after the Bank of Japan announced, as expected, that it would keep the pace of asset purchases and interest rates unchanged.
The dollar traded at 93.35 yen, roughly flat on the day and off its recent lows of 92.83 yen but still well below a 33-month high of 94.46 set on Monday. The euro was down 0.8 percent at 124.50 yen.
The yen's recent rapid depreciation, after years of sharp appreciation, has drawn some criticism from overseas, with rhetoric heating up before a Group of 20 nations meeting on Friday and Saturday in Moscow.
"Usually the BOJ doing nothing causes a bit of disappointment, but since there are concerns about the flak Japan might get at the G20 this weekend for the weakening yen, standing pat will actually be a relief to the market," said Masayuki Doshida, senior market analyst at Rakuten Securities.
IRAN TENSIONS
In commodity markets, oil prices dropped back under $118 a barrel after the GDP data from the euro zone, although the falls were limited by fresh tensions over Iran's nuclear program.
The United Nations nuclear watchdog said it had again failed to clinch a deal in talks with Iran on investigating the country's nuclear program.
"All the discussions about Iran are keeping oil high while it looks like China and the U.S. are growing, which is further supporting prices," Thorbjoern Bak Jensen, analyst at Copenhagen-based Global Risk Management, said.
Markets in China and Taiwan remain shut for the Lunar New Year holiday but Hong Kong resumed trading on Thursday. Metals markets were quiet as a result. Copper hit a 4-month high of $8,346 a tonne on February 4, but has since struggled to find momentum with the Shanghai Futures Exchange closed this week.
Gold, which has been at five-week lows this week, regained some strength, holding at $1,642.50 an ounce as recent losses started to draw buying interest.
(Additional reporting by Marc Jones; Editing by David Stamp)
Euro zone economy falls deeper than expected into recession
2 hrs 3 mins ago
By Philip Blenkinsop and Annika Breidthardt | Reuters
Source: Yahoo News
By Philip Blenkinsop and Annika Breidthardt | Reuters
Source: Yahoo News
BRUSSELS/BERLIN (Reuters) - The euro zone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of a wretched year for the region.
It marked the currency bloc's first full year in which no quarter produced growth, extending back to 1995. For the year as a whole, gross domestic product (GDP) fell by 0.5 percent
Economic output in the 17-country region fell by 0.6 percent in the fourth quarter, EU statistics office Eurostat said on Thursday, following a 0.1 percent output drop in the third.
The quarter-on-quarter drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4 percent drop in a Reuters poll of 61 economists.
Within the zone, only Estonia and Slovakia grew in the last quarter of the year, although there are no figures available yet for Ireland, Greece, Luxembourg, Malta and Slovenia.
The big economies set the tone.
Germany contracted by 0.6 percent on the quarter, official data showed, marking its worst performance since the global financial crisis was raging in 2009.
France's 0.3 percent fall was also slightly worse than expectations.
Worryingly for Berlin, it was export performance - the motor of its economy - that did most of the damage, declining significantly more than imports, although economists expect it to bounce back quickly.
The euro hit a session low against the dollar after the weaker than forecast German reading and dropped again after the release of full euro zone figures.
Back revisions to the French figures showed its output fell by 0.1 percent in each of the first and second quarters of 2012, meaning the country has already experienced one bout of recession in the last twelve months.
While the European Central Bank's pledge to do whatever it takes to save the euro has taken the heat out of the bloc's debt crisis, even its stronger members are gripped by an economic malaise that could push debt-cutting drives off track.
French Prime Minister Jean-Marc Ayrault acknowledged for the first time on Wednesday that weak growth was putting his government's deficit goal for 2013 out of reach.
Resilient Germany is expected to rebound and the bloc as a whole is expected to have improved in the first quarter, as suggested by a pick-up of factory orders in December, but it is not yet clear if growth has returned.
Nick Kounis, economist at ABN AMRO, said the decline of fears the euro could break apart and cheap credit had sown the seeds for the recovery.
"However, ongoing severe budget cuts, rising unemployment, bank deleveraging all point to the recovery being excruciatingly slow," he said, adding the strong euro was also a threat.
The ECB has a wide-ranging projection for euro zone GDP growth in 2013 of between -0.9 and +0.3 percent. ECB Vice President Vitor Constancio said on Tuesday he expected no major change to the forecasts in March.
WEAK PERIPHERY
Dutch GDP dropped 0.2 percent over the quarter, keeping it in recession, and the Austrian economy shrank at the same rate.
For the more embattled members of the currency bloc, matters are worse. The greatest reported decline was in bailed-out Portugal, down 1.8 percent.
Italy suffered its sixth successive quarterly fall in GDP - this time by a sharp 0.9 percent - putting it into a longer slump than it suffered in 2008/2009.
Its recession has been deepened by austerity measures that outgoing Prime Minister Mario Monti introduced to stave off a debt crisis.
With an election due on February 24/25, all sides in a three-way race between Monti's centrist bloc, Pier Luigi Bersani's center-left coalition and Silvio Berlusconi's center-right are pledging to cut taxes to try to kickstart economic growth.
Spain, the euro zone's fourth largest economy, released figures two weeks ago which showed it remained deep in recession after a 0.7 percent contraction in the fourth quarter.
Madrid is also pressing on with austerity measures to cut its debt but may be given more time to meet its deficit targets by the European Commission if its economy worsens further.
There are signs that countries like Spain are starting to benefit from internal devaluations - marked by wage falls and job losses aimed at making companies leaner and more productive.
The ECB predicts the euro zone will pick up later in the year although its currency, if it keeps strengthening, could quickly snuff out any of those hard-won competitive advantages for its high debt members.
More recent data for January have already suggested some upturn in the first months of 2013, in the bloc's stronger members at least, and if improvement comes it is expected to be seen in Germany first.
(Additional reporting by Steve Scherer, Vicky Buffery, Robert-Jan Bartunek, Ethan Bilby, writing by Mike Peacock, editing by Jeremy Gaunt)
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