Triple Crisis blogger Ilene Grabel was recently interviewed by the Real News Network on why the major institutions governing international economic affairs in Europe, the G20, IMF, ECB and European governments, have failed to develop comprehensive responses to the eurozone crisis.
Spotlight G20: Eurocrisis Solutions for Whom?
Triple Crisis blogger Matías Vernengo was recently interviewed by the Real News Network on Europe’s new fiscal compact, which he argues is based on the interests of bankers, large companies and the European elite.
Spotlight G20: Is a Universal Social Net Good Macro Economics?
Triple Crisis blogger Jayati Ghosh was recently interviewed by the Real News Network on the call for a social protection floor in G20 countries and the G20’s response in its final declaration.
Spotlight G20: The IMF must heed G20 decisions
The G20 meeting in Cannes earlier this month was derailed by the pressing eurozone crisis. Actors were disappointed if they were looking for concrete action on global imbalances and the food crisis, let alone the new global monetary system that French President Nicolas Sarkozyboasted would be the goal of the summit when he first took the helm as host. But behind the scenes, the G20 actually delivered on a set of “coherent conclusions” on the management of speculative capital flows in emerging markets that should not be overlooked, especially by the International Monetary Fund (IMF).
Sarkozy assumed his role as head of the G20 during a period of excessive volatility in global capital markets that continues to this day. Because of loose monetary policy, low interest rates and a slow recovery in the North Atlantic, accompanied by high interest rates and rapid growth in emerging markets, the world’s investors flocked from north to south – to Brazil, Chile, South Korea, Taiwan and others. More recently, in response to eurozone jitters, capital has retreated from emerging markets to the “safety” of the United States – showing how dangerous speculative capital flows can be. New work released by the IMF this week suggests they are picking and choosing their direction from the G20.
Spotlight G20: Euro Crisis, Neo-Liberalism and Undoing the Welfare State
Triple Crisis blogger Gerald Epstein was recently interviewed by the Real News Network on why the German elite that have profited from the eurozone want to use crisis as an opportunity to undo the welfare state.
Spotlight G20: Emerging markets and Europe
C.P. Chandrasekhar (also available in Portuguese)
For some time now the focus of the discussion on the European crisis has been on Greece. Its wider dimensions, though recognised, were not emphasized. Among those dimensions was the real possibility of a banking crisis in Europe, since a haircut on bank loans to governments as part of the attempt at crisis resolution is unavoidable. Even if the banks are able to prevent that, an actual default failing resolution would hit them.
In the event of a European banking crisis, it cannot remain a regional problem given global financial integration. It would also affect emerging markets, whose growth is seen as crucial to bolstering the “multi-speed” global economy.
Spotlight G20: G20 commitments to tax and development: a progress report card
David McNair, guest blogger, part of our 2011 Spotlight G20 Series
Back in September I was sitting in the salubrious office of an official from one of International Financial Institutions – when he slouched back in his chair, sighed and said ‘I can’t even bear to read those G20 communiqués – they are so vacuous.’ That evening, I found myself at a dinner hosted by DC law firm Jones Day where former Mexican President Zedillo branded the G20 ‘a disappointment.’
But last week Christian Aid welcomed the G20’s bold pronouncements on tax havens, financial transparency and development. President Sarkozy went as far as to say that havens that didn’t comply would be excluded from the international community. A whole programme of work on tax and development was agreed.
This was a major coup for organisations like Christian Aid and the Tax Justice Network that just three years ago were struggling to garner political support for these issues.
Spotlight G20: Avoiding a European Nightmare: Combining Structural Adjustment with an Effective Social Protection Floor
Louka T. Katseli, guest blogger, part of our 2011 Spotlight G20 Series
While markets expect eurozone leaders to exercise effective leadership and take action to resolve the eurozone’s sovereign debt crisis, citizens in peripheral European countries are trying to make ends meet under drastic cuts in wages and pensions, rising taxes and massive layoffs.
While the public debate and the media focus their attention either on European banks and their recapitalization needs or on the planned rescheduling of private bond holdings and the future capital needs and powers of the European Financial Stability Facility– the euro zone’s rescue fund– the anxious voices of impoverished families in Greece, Ireland, Portugal , Italy or Spain are not even recorded.
While the future of the euro hinges on the collective capacity of member countries to safeguard financial stability and avoid further contagion, the future of decent jobs for young Europeans is under threat, fueling massive protests by angry youth in most European countries.
While talks in academic circles focus on the exigency of further deepening European integration via a fiscal union, European solidarity and the legitimacy of the European social model are questioned in the streets and squares of several European capitals.
Spotlight G20: The rules of austerity are still marked by a double-standard ideology
Bhumika Muchhala, guest blogger, part of our 2011 Spotlight G20 Series
Yet again, the G20 Summit, held in Cannes last week, yielded insipid communiqués that merely rehashed past commitments, outlined policies the G20 countries are already doing, and reiterated the EU’s party line to assuage markets on the eurozone debt crisis. The FT reports that the G20 has once again proved meager results despite lofty promises, casting its own irrelevance against the gloomy realities of the world economy.
Drawing a parallel between the ineffectual coordination in the G20 forum with that of the EU’s internal faultlines and lack of democratic policymaking, analysts have remarked that the G20 is a microcosm of the multitude of global malaise: persistent imbalances, the failure of democratic and collective action, and the lack of structural reforms.
At the core of the G20’s macro-policy agenda is an elite consensus that there is too much sovereign debt in the world and so governments have to reign in public budgets through fiscal austerity. As both Paul Krugman and Gerry Epstein have pointed out, this was the case in last year’s Seoul summit, which called for ‘fiscal consolidation programmes’ in developed countries despite massive levels of unemployment.
Spotlight G20: Mario Draghing the Feet on Monetary Policy: Or what should central banks do
Matías Vernengo, part of our 2011 Spotlight G20 Series
Central Banks have been at the epicenter of the current crisis, and have been, for good and for bad, fundamental for the policy response mounted to avoid a new Great Depression. Recently Christina Romer argued that the Fed should start targeting nominal Gross Domestic Product (GDP) instead of inflation. As I noted previously (see here), this is strange since it is far from clear that the Fed actually targets just inflation, or that targeting nominal output would make any significant difference.
Further, the idea that a central bank has the ability to actually hit a targeted level of output, or inflation for that matter, under the current circumstances in particular, is wishful thinking. Central banks can ease the credit conditions by reducing interest rates, a range of rates from the short to the long, to stimulate spending, and pump money into the system, fundamentally to avoid systemic crisis caused by bankruptcies. The ability of Ben Bernanke or Mario Draghi, the newly appointed head of the European Central Bank (ECB) that reduced the rate of interest in Europe as his first measure (see here), to further reduce interest rates and with that help the staggering recovery in the US or the free fall in the periphery of Europe is very limited.