TripleCrisis

The New IMF and Argentina

There has been a certain view, that was already quite popular around the time Strauss-Kahn still managed the IMF, that with Christine Lagarde the Fund has become less orthodox, not just regarding capital controls, but now also supposedly on fiscal issues. See for example the article in the NYTimes by Liz Alderman.

In the last World Economic Outlook, the Fund argues (WEO, p. 110) that Argentina’s inflation results from excessively expansionary policies (no analysis backs this claim and the effects of a more devalued currency and commodity prices are not discussed) and suggests (p. 42) that monetary tightening is necessary. Also, the report continues the tone of the previous WEO, suggesting that in developed countries fiscal adjustment should continue to reduce the debt burden, and in developing ones, like Argentina, to avoid overheating.

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Beware the Wrong Lessons from Poverty and Income Data

Jeff Madrick

The young are sinking into poverty faster than the elderly because the social safety net is working and the economy isn’t.

The poverty data released by the Census Bureau last week may well be the straw that broke the camel’s back — the camel being those deliberately blind people who can’t seem to acknowledge that most Americans are doing poorly. Average Americans should not be the ones who have to shoulder the burden of balancing the budget, even if it needed balancing soon.

The poverty rate is now as high as it was during the war on poverty of the 1960s — about 15 percent. The Census also revealed that median household income went nowhere under George W. Bush and is now down to its lowest level since 1997, essentially before the Clinton boom.

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The G-20's opportunity on food reserves

Sophia Murphy, Guest Blogger

G-20 development ministers meet on Friday in Washington, D.C. One of the items on their agenda is a proposal developed in June for the G-20 agriculture ministers to allow the World Food Program to develop a pilot proposal for an emergency food reserve. The decision was possibly the most important outcome in an otherwise thin summit communiqué: however circumscribed, we know that food price volatility correlates with low stocks, and that providing stocks is a proven way to curb excessive volatility. We also know that in emergencies, in most of the poorest countries, it takes an average of 90 days to bring food into food-deficit areas. 90 days is too long. The costs of working in emergency conditions are also too high, in both resources and human life. There are cheaper, better ways to ensure food is available when it’s needed: a reserve in the food-vulnerable regions is one of them.

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The G-20’s opportunity on food reserves

Sophia Murphy, Guest Blogger

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Low carbon economy: a reality check

Sunita Narain

As an environmentalist who looks for answers, I am clear that there is a huge amount of buzz about low carbon economy and there is an equal amount of confusion about what this means. Nobody wants to accept that in the current economic model, the technology pathway is constrained. There is just so much any country can do to reduce its emissions, without changing the way it does business or the business of business itself. This is the crisis and challenge of climate change. This is why the world is struggling to find an agreement on an issue, which is both obvious and serious.

India is no different from the rest of the world. In fact it is at the bottom of the development trajectory – it has a long way to go to meet its growth needs and the way ahead will only add to pollution. This is inevitable. It will need the ecological space to increase its emissions.

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Economic Crises and the Governance of the Global Economic System

Mehdi Shafaeddin

Is the governance of global economy conducive to growth, development and stability?

Would the coming G20 and WTO ministerial meetings remedy the systemic deficiencies? I doubt so.

A series of crises have hit the world economy during the last few years. There is a deadlock in the negotiations in the Doha Round. In fact, there is a lack of confidence in the governance of the global economy in general, reflected in the jump in the price of gold by over 100% between November 2008 and July 2011. Although the current economic recession is not as severe as that of the 1930s, it is the worse since then. Had the international community agreed on the proposals made by Keynes on the governance of the world economy and the establishment of International Trade Organization (ITO), the situation would have been different.

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Spooked into austerity, we dig our own economic grave

Jayati Ghosh

The stupidity of the current macroeconomic stance in the UK is surprising in itself; but when combined with similar voices in Europe and the US, it is downright astonishing. Three years after the collapse of Lehman Brothers, the global economy is not going through a recovery from financial crisis, but simply entering act two after a brief intermission. On current form this play is a farce that will end in tragedy.

Policy discussion on both sides of the Atlantic is dominated by extreme fiscal hawks, who wrongly see public spending as the problem rather than at least part of the solution. The emphasis on fiscal rectitude is accompanied by the inability to rein in finance. All this condemns economies to financial instability, depressed and even contracting GDP and worsening conditions for ordinary citizens.

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The Global Crisis as a (Brothers) Grimm Story

Mark Blyth

I am currently writing a book about how austerity became the policy response to the crisis. One of the questions I struggle with in writing this book is how simple can you make the story without it becoming a children’s fable. In order to find out, I decided to write it up as a children’s fable (See below). I think it shows that when you strip it down to its essentials, it’s a pretty simple story, even if it’s a rather GRIMM (sic) tale.

The Global Crisis as a (Brothers) Grimm Story

Once upon a time in the land of US, the ‘job creators’ decided to send as many of the jobs they created as possible to THEM. THEM would make cheaper stuff to send back to US to buy, so more profits and cheaper stuff for US. Everyone wins! Yippee! So THEM made lots of stuff for US, and US sent THEM lots of cash to pay for the stuff they made.

But rather than spend the cash US sent THEM, THEM decided to give it back to US so US could buy even more stuff from THEM. THEM made even more money doing so, and sent it back to US!

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Obama Pushes NAFTA Style Trade Policy Despite 2008 Promise

Triple Crisis blogger Timothy A. Wise was recently interviewed by The Real News Network on President Obama’s Trans-Pacific Partnership Agreement (TPP), based on his recent LATN Brief, “U.S. Trade Policy: ‘Still Waiting for a “21st Century Trade Agreement’,” co-authored with Kevin P. Gallagher. He argues that the TPP is simply an extension of the failed NAFTA model that creates asymmetry between trading partners and primarily protects the rights of multinational firms.

Download the full LATN Brief, which is based on the Task Force on North American Trade Policy Report, now available in Spanish. Read Wise’s recent blog on the TPP.

U.S. Trade Policy: Moving backwards in the 21st century

Timothy A. Wise

Three years into the Obama Administration, progressives have no shortage of complaints about the president’s economic policies, which seem very much at odds with Candidate Obama’s soaring rhetoric. Economic policies have been centrist at best. Unfortunately, the President’s trade policies may be further to the right than that. He is now counting primarily on Republican votes to push three Bush-era trade agreements, with Korea, Colombia, and Panama. And his trade negotiators are in Chicago wrapping up a negotiating session on the Trans-Pacific Partnership Agreement (TPP), which he promised would be his signature “21^st century trade agreement,” unencumbered by Bush-era provisions.

Administration proposals, however, are very last-century, drawing more from the disastrous North American Free Trade Agreement (NAFTA) than they do from forward-looking reform proposals. On the campaign trail in 2008 Candidate Obama criticized NAFTA and other trade agreements for giving “broad rights to investors.” So what are his 21^st century TPP proposals? By all accounts, a broadening of rights for investors.

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