Category Archives: great depression

Hastening the Bankruptcy of the US Financial-Military World Order

Washington is unable to call all the shots

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Keen observers of America, if not effective managers of their own economies, these countries argue that the root of the global financial crisis is that the US makes too little and spends too much.

Challenging the American empire will be the focus of meetings in Yekaterinburg, Russia, today and tomorrow for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other leaders of the six-nation Shanghai Co-operation Organisation. The alliance comprises Russia, China, Kazakhstan, Tajiki-stan, Kyrgyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia.

The attendees (who will be joined on Tuesday by Brazil for trade discussions) have assured American diplomats that dismantling the US financial and military hegemony is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the US or for the dollar as a vehicle for trade among these countries.

The meeting is an opportunity for China, Russia and India to “build an increasingly multipolar world order”, as Mr Medvedev put it in a St Petersburg speech this month. What he meant was this: we have reached our limit in subsidising the US military encirclement of Eurasia while also allowing the US to appropriate our exports, companies and real estate in exchange for paper money of questionable worth.

An “artificially maintained unipolar system”, Mr Medvedev said, was based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks”. Full Story

Bulldozing U.S. Cities Back to Nature

US cities may have to be bulldozed in order to survive

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic “shrink to survive” proposals being considered by the Obama administration to tackle economic decline.

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The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the “rust belt” of America’s Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.

“The real question is not whether these cities shrink – we’re all shrinking – but whether we let it happen in a destructive or sustainable way,” said Mr Kildee. “Decline is a fact of life in Flint. Resisting it is like resisting gravity.” Full Story

U.S. Children Sinking into Poverty

ECONOMY-US: One in Five Children Sinking Into Poverty

U.S. children’s quality of life is expected to decline through 2010 due to the impacts of the financial crisis, said a new report by the Foundation for Child Development (FDC), released on Wednesday.

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According to the report, progress in U.S. children’s quality of life has fluctuated since 2002, and began a decline in 2008 as a result of the recession.

The Child Well-Being Index (CWI) is an annual evidence-based composite measure of trends over time in the quality of life for U.S. children from birth to age 18 conducted by Duke University’s Foundation for Child Development Child and Youth Well-Being Index Project. It tracks changes as compared to 1975 base year values.

This year, the Project also produced a Special Focus Report that offers projections of the impact the recession is likely to have on children’s well-being through 2010, based on analysis of past recessions.

“America is doing a really bad job relative to other countries,” said Reihan Salam, a fellow at the New America Foundation, referring to the well-being of U.S. children.

According to the CWI, although the recession is predicted to end in 2010, the well-being of children is not expected to improve during that time period.

The percentage of children in poverty is expected to peak at 21 percent and more than eight million children, or 27 percent, are expected to have at least one parent working full-time year-round in 2010. Full Story

U.S. Towns Want to Dissolve, Disincorporate

Towns Rethink Self-Reliance as Finances Worsen

As the recession batters city budgets around the U.S., some municipalities are considering the once-unthinkable option of dissolving themselves through “disincorporation.”

Benefits of this move vary from state to state. In some cases, dissolution allows residents to escape local taxes. In others, it saves the cost of local salaries and pensions. And residents may get services more cheaply after consolidating with a county.

In Mesa, Wash., a town of 500 residents about 250 miles east of Portland, Ore., city leaders have initiated talks with county officials about the potential regional impact of disincorporating. Mesa has been hit by a combination of the recession and lawsuits that threaten its depleted coffers, leaving few choices other than disincorporation, said Robert Koch, commissioner of Franklin County, where Mesa is located.

Two California towns, Rio Vista and Vallejo, have said they may need to disincorporate to address financial difficulties; Vallejo filed for bankruptcy protection last year. Civic leaders in Mountain View, Colo., have alerted residents that they are left with few options but to disincorporate because the town can’t afford to pay salaries and services.

Incorporation brings residents a local government with the ability to raise money through taxes and bond issuances. It also gives them more control of zoning decisions and development, and usually provides for local services such as trash pickup and police as well. Full Article

World Bank President Warns of Social Crisis

Rising unemployment raises threat of social crisis: World Bank

World economic recovery will be slow and rising unemployment could bring the threat of social crisis and protectionism, World Bank President Robert Zoellick said in an interview with Spanish Sunday newspaper El Pais.

“What began as a great financial crisis and became a great economic crisis is now becoming a great crisis of unemployment, and if we don’t take measures there is a risk of a great human and social crisis, with major political implications,” he said.

“That’s a good breeding ground for populist, protectionist policies,” he added.

“The finance ministers of the G7 and the G20 are displaying a certain relief because the contraction has slowed. Although we could still have low or negative growth, the situation is less bad,” he said.

“But economists and industrialists are conscious that the recovery will be slow coming and weaker than expected.”

Dangers remain in the U.S. financial system and in vulnerable emerging markets, Zoellick said.

“Maybe the key thing that has to be cleaned up is the financial system. The USA has taken steps in the right direction, but there are still banks with serious difficulties related to consumer finance, credit cards and real estate.

“On top of that, the United States depends more than Europe on the mortgage securitization market, and that market has yet to recover,” he said.

He said there were risks in Africa, parts of Latin America and in Eastern Europe.

“China could surprise on the upside, it has obtained good results from its stimulus plan. For countries like Mexico and Brazil, the main threat is losing access to finance,” Zoellick said.

Borrowing and Spending: The Way to Hell

Geithner’s global dilemma

See Also:

Proposal of a New Reserve Currency Controlled by the IMF

Proposal of a New Reserve Currency Controlled by the IMF

China challenges power of the dollar as it flexes its economic muscles

China yesterday threw down a challenge to America’s 50-year dominance of the global economy as it proposed replacing the dollar as the world’s main reserve currency with a new global system under the control of the International Monetary Fund.

In a muscle-flexing move that will be seen as an attempt to exploit the big shifts in economic power created by the recession sweeping the West, Beijing said that the dollar’s role could eventually be taken over by the IMF’s so-called Special Drawing Right (SDR), a quasi-currency that was created in 1969.

The audacious proposal emerged in a speech by Zhou Xiaochuan, Governor of the People’s Bank of China, published on the central bank’s website. Unusually, the remarks were released in English as well as Chinese, emphasising China’s dissatisfaction with the global primacy of the dollar.

However, the comments high-lighted China’s growing confidence in its place at the high table of the world’s most important economies, as much as any real expectation that such an unusual suggestion would gain traction. They came with little more than a week left until leaders of the world’s most powerful economies meet at the G20 London summit. Full Story

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Who is the IMF?

from: 50 Years is Enough

The misery, marginalization, and impoverishment forced on millions by the International Monetary Fund and World Bank is unacceptable and renders them illegitimate.

The IMF and World Bank are controlled by rich imperialist countries in corrupt complicity with national elites all over the world. They claim to lead the fight against poverty, but their role as global loan sharks; their cruel imposition of privatization, cuts to social services, and free trade policies; their funding for environmentally disastrous projects; their secrecy and undemocratic decision making processes, make them an enemy of the people worldwide.

Today, these two institutions are on the defensive. Venezuela, Bolivia, and Ecuador are in open revolt against the IMF and World Bank. South African shantytown dwellers are fighting water privatization; Korean workers are striking against “free trade” agreements; and thousands of people successfully blockaded the G8 meeting in Germany earlier this year.

In the U.S., in the heart of empire, millions are struggling against the oppressive system of capitalism for dignity, autonomy and solidarity. Tens of thousands gathered for the first ever United States Social Forum; millions of immigrants have marched for their rights; and in Washington DC,in the belly of the beast, residents are organizing against the policies of gentrification and displacement.

The Grassroots Guide to the IMF and the World Bank (sample from book)

The World Bank (WB) & The International Monetary Fund (IMF)