A Mixed Bag From the G20
When I heard about the G20 communique out of Sydney over the weekend, I was heartened. The media were reporting that the world’s 20 largest industrial nations were pledging to “inject” $2 trillion into the global economy. While the sum of $2 trillion is not that big of a deal in a $100 trillion global economy, I thought it was still the right idea. After all, after four years of austerity, it’s the first time we’ve heard anything about growth.
The announcement also came on the heels of last week’s comments by President Obama indicating that he was abandoning his “Grand Bargain” cuts to Social Security and further austerity goals. into a debt collapse that would play out over generations and sentence our kids and grandkids to poverty forever. can always meet any o michael kors outlet bligations that are denominated in dollars, but it was nonetheless a very effective scare tactic used by the debt doomsday crowd. For anyone interested, I was one the only person, ever, to get debt scold David Walker to actually admit that the Social Security checks would never bounce.
When I heard about the G20 statement and read Obama’s comments, I was hopeful that we were finally coming to an inflection point where countries would begin to jettison these terrible policies of cuts and austerity and embark on a new path of growth.
Then I read the G20 statement.
Right off the bat, they start talking about price stability and central bank monetary policy. This was basically invoking the “Confidence Fairy,” as if to say that if they can ensure price stability, then there will be this boom in spending and investment. It’s a restatement of the belief that monetary policy can fix everything, even though, six years into this crisis, we barely have economic growth in dozens of countries, despite all this unprecedented central bank action.
The Confidence Fairy was followed by a remark about inhibiting volatility in asset prices and exchange rates and how nations need to combat volatility by building a “fiscal buffer.” That brought us right back to the austerity stuff. The G20 said we need to make sure that countries are “fiscally responsible” so they have the wherewithal to combat currency swings. Really? Why we would want to damp down exchange rate volatility in a world of floating exchange rates is beyond me. The world went on floating exchange rates for a reason, but I digress.
After that, there were some points made about emphasis on the private sector. The communique talks about focusing on building infrastructure by creating “regulatory and market based incentives” and utilizing private inf michael kors outlet rastructure banks. You can probably guess what the regulatory and market incentive stuff is all about. It means cutting what they see as regulatory impediments, such as environmental protections. As for the market incentives, that’s code for “profits,” and when you throw in infrastructure banks, that means profits to the financial sector, which would get to finance, own and basically rent out that beautiful new infrastructure that we the people would utilize.
They finalize the statement by making some incoherent points on tax policy (“Profits should be taxed where economic activities deriving the profits are performed and where value is created.”) and then make a commitment to do some michael kors outlet thing about “too big to fail” banks.
In the entire communique there was not a single word about ending austerity and instead boosting government spending and investment to create the debt free income the private sector desperately needs right now. Instead, it was repetition of a doctrine that has been basically useless.
For some reason, we cannot seem to get away from this mentality. Even so, I have to stay an optimist here. This is the first time tha michael kors outlet t I am seeing the word “growth” in any official policy statement. Before this weekend and before Obama’s comments late last week, everything was about debt reduction.