Spotlight G-20: Franco-German Axis Can Help Set Up a Fair Debt Work-out Procedure

Nuria Molina, Guest Blogger
Part of a Triple Crisis series leading up to the Nov. 11-12 G-20 meetings.

For better or worse, the Franco-German axis has always been the driver of European integration. Now the unholy alliance could go one step further, this time for the better, and push for a debt work-out procedure to ensure a fair and orderly resolution of sovereign debt crises.

The ways in which debt crises have been dealt with in developing countries in the past, and nowadays in Europe, are having devastating impacts on vulnerable sectors of society. When debt crises come hand in hand with financial crises ordinary people always pay twice: first, taxpayers’ money is used to bail out financial institutions; and secondly, citizens are deprived of essential services as the state implements harsh austerity measures to win back the confidence of markets.

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Spotlight G-20: The G-20, Global Recovery, and Global Economic Rebalancing: Rhetoric and Reality

Nancy Alexander, Guest Blogger
Part of a Triple Crisis series leading up to the Nov. 11-12 G-20 meetings.

The G-20 aims to accelerate the global recovery through a global economic rebalancing process which, among other things, requires consumers in advanced deficit countries, such as the U.S., to cut spending and consumers in emerging surplus countries, such as China, to expand spending.

To accomplish this, the G-20 countries committed themselves to certain policies and asked the IMF to track their implementation through a “Mutual Assessment Process” (MAP).  However, the MAP may take countries to a dead end for several reasons.

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Spotlight G-20: Revamp the International Monetary System

Aldo Caliari, Guest Blogger
Part of a Triple Crisis series leading up to the Nov. 11-12 G-20 meetings.

In the last few years the global economy has faced dangerous increases in exchange rate volatility. Global imbalances, after receding temporarily, are again on the rise.

These problems are certainly not new, but the currency tensions have rarely been so high since the fall of the Bretton Woods system in 1971. Countries are engaging in competitive devaluations to capture a higher share of diminishing export markets. The need for a monetary stimulus by the US –however necessary that stimulus is— threatens to further undermine the effectiveness of developing countries’ tools to keep their currencies in check.

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Spotlight G-20: We Need an International Commodity Reserve Currency

Leanne Ussher
Part of a Triple Crisis series leading up to the Nov. 11-12 G-20 meetings.

At the recent G20 meeting of finance ministers in Seoul, Timothy Geithner was right to put forward a proposal that asks countries to cap their current account surplus, but the manner in which he suggested such goals be achieved offered little incentive for surplus countries to commit to such restrictions. This is why solutions for global imbalances put forth by luminaries such as John Maynard Keynes and Nicholas Kaldor were grand plans to change the system.

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Spotlight G-20: Unpopular Sarkozy Gets it Right on Financial Transactions Taxes in G-20

Sarah Anderson, Guest Blogger
Part of a Triple Crisis series leading up to the Nov. 11-12 G-20 meetings.

Nicolas Sarkozy has taken a lot of well-deserved heat for his austerity measures.  But I have to hand it to the French President for one thing – he’s stood tough in his push to increase taxes on the financial sector.

Despite an icy response from the U.S. Treasury Department, Sarkozy and German Chancellor Angela Merkel have continued to push for a G-20 agreement on financial transactions taxes (FTTs, or what many in the United States call “financial speculation taxes”).

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Spotlight G-20: For the Must-Do List: Retire the Dysfunctional Key Currency System

Jane D’Arista, Guest Blogger
Part of a Triple Crisis series leading up to the Nov. 11-12 G-20 meetings.

The most recent development in the blame-game over international payments imbalances is what the Brazilian finance minister has termed “currency wars”.  The US shares his concern about competitive devaluations in the sense that it blames trade balances on currency manipulation by surplus countries, pointing to China’s refusal to allow market forces to influence the value of the yuan.  As Secretary Timothy Geithner argued before the October meeting of G-20 finance ministers and central bankers in South Korea, this gives China a “huge” short-term advantage that is unfair to all its trading partners. Meanwhile, other countries see the 10 percent decline in the dollar against major currencies from June to October as the primary cause of currency tensions and Brazil’s central bank governor views the Federal Reserve’s prospective quantitative easing as a form of intervention that will create “serious distortions”.

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Climate Negotiations: Clouds over Cancún?

Miquel Muñoz, Guest Blogger

In the last weeks, two hurricanes have threatened Cancún. Hurricane Paula veered east, hurricane Richard southwest, both sparing the resort city and venue for the upcoming UN Climate Change Conference (COP 16). If this post was about the last COP in Copenhagen, the headlines would be unmistakable: “Hurricane Threatens Climate Negotiations.” For Cancún, conversely, a better analogy can be found in Copenhagen’s winter weather: grey and overcast. This would fittingly describe the level of expectations for Cancún.

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Averting the Next Food Crisis: What role for food reserves?

Sophia Murphy, Guest Blogger

The 36th meeting of the FAO’s Committee on Food Security (CFS) concluded in archetypal UN fashion: one and a half hours of apparently aimless milling about followed by a call to order, a ten minute exchange during which it becomes clear that the milling about was actually about last – very last – minute negotiations, and, finally, adoption of the report by acclamation. So ended the first meeting of a revamped piece of the UN system — a small but fascinating piece.

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Brazil: Lula’s Labor Legacy

Janine Berg, Guest Blogger

When Time magazine awarded Brazil’s President Lula the most influential world leader spot in its 2010 ranking of most influential people, Michael Moore, who wrote the excerpt on Lula, heralded the creation of the Bolsa Familia programme as well as the expansion of public education and health care.  These are important achievements, but one of the great successes of Brazil of the past eight years that has gone largely unnoticed outside Brazil is the creation of 12.5 million formal jobs during his tenure.  During the 2000s, formal job growth outpaced informal job growth by a three-to-one ratio, reversing the trend of growing informality that had marked the 80s and 90s.  And all this occurred at the same time that the minimum wage doubled in real terms.

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