KEYNES IS BACK THE SUMMIT OF THE G20 FROM 02 APRIL TO LONDON: WHAT FUTURE FOR THE FINANCIAL WORLD? This, just days before the G20 (G7 plus key emerging market countries), many observers, analysts, politicians and citizens wonder about the answers that will bring world leaders meet disorders increasingly menacing malfunctions of financial capitalism in recent years are the centerpiece of the current crisis. If for some, it is important to develop a more regulated financial system that uses a supranational coordination of global finance. For other c is the functioning of financial capitalism that needs reforms while arguing that the liberal system of market economy should not be questioned deeply. This position remains (other evidence) the position of the United States and in some ways that of Great Britain that has no interest in the operation and the neoliberal model the market economy (financial heart of capitalism) is questioned. We must not forget that London is the capital of finance where the law of finance and the quest for efficiency is paramount to the image of the main centers Financial. Regulationist position of Europe at the forefront is the president pseudo-liberal-Keynesian French Sarkozy (sometimes liberal, sometimes we do not know interventionist) and German Chancellor Merkel faces when liberalism and laissez-faire American and disguised of English. Obviously, the position of emerging countries and especially China will be crucial but one thing is sure, is the power relationship between Europe and the U.S. that will determine the outcome of this summit which will be magnificent. The magnitude of the current crisis and its disastrous effects on the real economy in terms of growth and employment shows how the global financial system should be reformed. But a global reform requires concessions from the participants . In theory (speech), one can actually imagine an infinite number of solution (optimal or not) can fix this malfunction total international financial system (IFS) but in reality the feasibility of reform progress remains largely unresolved. Some Observers argue in this sense that the IMF is already there, so just give a bit of power and means to this organization the Bretton Woods institutions (the work of Harry Dexter White: Former Secretary of U.S. Treasury) dating 1944. Yes, you can assign a role increasingly important to the IMF to curb the imperfect functioning of global finance. But for two reasons: i) the real effectiveness of its power, ii)-lack of resources financial, it will never be able to control and take charge e really the future of the IFC. Let me explain
The real effectiveness of the IMF is to (be) limited to a crisis in developing countries (emerging countries or poor countries). Do we still remember that even in recent years, many emerging markets have taken their distance from the Bretton Woods institutions and in particular the IMF. Argentina, Brazil, Uruguay, Venezuela, Malaysia and many others are countries who wanted to escape the neoliberal policies in their countries by paying their debts early with respect to this institution but also the World Bank. Chavez's Venezuela for its part has decided to sever his relationship squarely with the BWI (World Bank and IMF). The management of successive financial crises in emerging countries for years 1990 and subsequent years (1994 Mexican crisis, Asian, 1997, 1998 Russian, Argentinian and Turkish 2001) also shows the limits of the effectiveness of the measures imposed by the IMF to member countries requesting assistance. Whether in emerging countries (with the exception of China and some countries in disagreement with the IMF) or in poor countries, interference increasingly marked the IMF in financial planning and economic policy, social disasters Structural Adjustment Policies (SAPs) are the two major events that forced him to change course. The IMF needs to change course when it is said here and there and bury the cult of the market economy, the fiscal and monetary discipline to face real challenges in developing countries (emerging and poor) who is none other than economic development and macroeconomic stability.
But we must not forget that an institution like the IMF can not really play a decisive role in the rich countries at the current pace of things. It is highly inconceivable to consider that in case of crisis leaders and political authorities of the rich countries (even China or India) accept the interference or the imposition or even the council of a supranational organization that did not accountable voters (potential sovereign). The attitude of these big rich countries during the pivotal period of the IMF at the international level (1944-1973) is the formal example. While the primary mission of the IMF stated in its status-particularly Article IV is "a guarantee of macroeconomic stability and an appropriate exchange rate regime while ensuring the proper functioning of the International Monetary System." But with the exception of a few countries and it was purely cyclical, the IMF has never played a crucial role in financial regulation in rich countries. His main contribution was to have ensured the stability of exchange during the thirty glorious and admit it was not anything anyway. But in a crisis, it is extremely difficult to imagine that rich countries will turn to the IMF. In respect of the rich countries, the IMF plays the role of the board and no more. The Central Banks of these countries and their ministries of finance, not to mention their various specialized agencies already sufficient. The real effectiveness of the IMF's role remains to check the side of some emerging countries and poor countries (who lack access to financial markets have no choice but to seek assistance from the IMF and World Bank). Do not forget that the real net financial flows BWI (IMF and WB) to developing countries (by region and overall for the major emerging countries) is negative between 1990 and 2008 with the exception of a few countries (very poor). The financial crisis crossing the institution (due to borrowing customers, revenues decline) was already causing a special committee is supposed to address the financial situation of the IMF in 2006. Indeed Mr. Rodrigo de Rato ( former Director General of the IMF) noted that the IMF's financial position is becoming more alarming because potential borrowers (emerging) borrow more which is a substantial shortfall. While it is undeniable that the IMF forward still has roles to play in a world increasingly financialised today, but its response capacity and effectiveness of its action depends on the nature, magnitude of the crisis management and especially the country's economic weight concerné.Tout recently (few weeks ago) assistace its financial assistance to Hungary, Romania but also in financial rescue for Iceland in the month of November 2008 confirms this fact.
ii) The limit of the IMF's financial resources is also a major obstacle to what he plays the role of regulator potential of the International Financial System (IFS). Lately, many observers argue that the increase in IMF resources is the best solution for controlling and stabilizing the global finance in the near future. Obviously, there's no harm that we increase the resources of the IMF, but this effort will never live up to the financial challenges of today's world. IMF's budget is estimated at 338 billion U.S. (2007) of which only about 150 billion U.S. dollars of available funds (it can use immediately.) Doubling of these resources brings the IMF funds to about 700 billion U.S. dollars (300 Billion U.S. $ available). It is clear if one refers to the financial issues of today's world that the IMF can not (will) not (ever) play a key role in regulating global finance crisis. A quick glance of sovereign wealth funds of oil-producing countries and China is enough to corroborate this finding. With a strike force estimated at 943 billion U.S. dollars [2007], the Abu Dhabi Investment Authority (UAE) is the largest sovereign fund of the Middle East (second only to China globally: 1200 to SWFs). The "Kuwait Investment Authority (Kuwait) with $ 300 billion Us capital, followed by Qatar Investment Authority (60 billion) sovereign wealth funds are the most coveted in the region, not forgetting the $ 400 billion of foreign exchange reserves managed by the Central Bank of Saudi Arabia.
Until recently the stimulus of about 783 billion U.S. dollars of U.S. government (with Obama), one of about 700 billion U.S. dollars (Paulson under Bush) by November 2008, the agreed plan or individual (by country) at European shows how the financial clout of the IMF is only a tiny fraction compared to the financial challenges of the world in rich countries.
The IMF will never then be able to face any major financial crisis in the future. Its effectiveness, power and above all its resources are far below the politico-economic issues and financial world today.
It is then up to the G20 leaders to seek solutions elsewhere. One thing is for sure, regulation and research of the international financial system regulation (IFC) will never be easy. But defending the interests of everyone, and the search for compromise (considered optimal) will guide the summit of 02 essential reforms that avril.Ici s'inscrvent in the remainder of regulation on banks (Basel II device on bank capital, etc.) or related measures can be considered. But these kinds of reforms are only part of imergée "iceberg. It is imperative then to reach agreement can regulate the operation of the SMI in IFC e lensemble, which smble difficult.
In my opinion, it is hardly conceivable that these leaders will find the solution best suited to regulate global finance. In the absence of a multinational institution with a supranational authority, the summit is already doomed to failure. The multinational institution (IMF BIS ) is to regulate the operation mode SFI. There arises a major problem, how will it intervene and on what basis since each country has their own laws and regulations that govern the functioning of financial systems.
Formulate appropriate reforms seems feasible to me mail the hardest part is to move from words to action.
Meanwhile, I think (even if its feasibility is still unrealistic) that the establishment of a Clearing System of Central Banks in accordance with the plan of 1944 Keynes is among the main alternatives to the tracks dysfunction IFC actuel.Ce plan aim the creation of an international currency (Keynes called it the BANCOR ).
Implementation of this plan is difficult to implement because it (the plan) calls into question the benefits of the main rich countries (USA, Europe) in the operation of the business world today. In Since the dollar United States provide 65% of international transactions and approximately 68% of foreign exchange reserves of central banks (respectively 28% and 32% for Europe (figure IMF 2007), it is unthinkable to imagine that these two economic centers will accept the plan Keynes. In the near future, one thing is sure, the monetary and financial, these two poles (the U.S. and Europe) will always be the hearts of the world economy. But the place and the American hegemony still put the U.S. far ahead of Europe. In a world increasingly financialised today, the dollar and the euro play a role. monetary sovereignty of developing countries (emerging or poor countries) across different monetary regimes that dollarization (or partial), the franc zone, the currency board, etc. is still the domain of the invisible and uncertain future. Pending the solution Miracle of the leaders of rich countries (themselves in an awkward passenger), developing countries are (will) still have to live in a kind of "submission money ". In recent years, despite the criticisms and threats of increasingly harsh U.S. and Europe in respect of the Chinese authorities accused of having applied a policy of" monetary dumping "sub -evaluating the yuan, China stands up to rich countries face highlighting its monetary sovereignty. This is a good example that is still rare among developing countries in terms of monetary sovereignty.
G20 members (especially the G7) through the vitality of their financial system and the credibility of their central banks have still not inconsiderable force strikes to mitigate the disastrous effects of the current crisis and future ones (political stimulus, injection of liquidity into banks, purchasing toxic assets from banks, social shock absorbers as the assistance of the AFC in France). On the other side of the pendulum many DCs misconduct sufficient ammunition are forced to wait for the fallout from these crises on their economies, added the guidelines increasingly hard BWI in the conduct of economic policy. Recently, the IMF Managing Director Mr. DSK recognized issue ("you be the judge" France 2): "Now the fiscal discipline is not the solution best suited for developing countries to cope crises. "The time of the market economy while going to and the neoliberal model imposed on the rigor seems so revolutionary side of BWI. But we must not forget that in reality the practice of the precepts of the Washington Consensus still prevail, especially in poor countries.
In a world increasingly financialised nowadays, it is unrealistic to consider that we can avoid future crises. How is it possible to avoid a crisis in a world where financial assets (200000 Billions of U.S. dollars) represent four times the global GDP (50,000 billion U.S. dollars). crises are inevitable, but it is for political leaders and economic policymakers seek the most viable solution to mitigate the impact. For a total budget of around 3.5 trillion dollars, the U.S. government expects a record deficit of 1700 billion U.S. dollars year 2009 (or 12% of GDP). France, for its part expects a deficit of 103 billion Euros for a budget of around 350 billion euros. The numbers say even speak two, you can see how the worlds of the rich countries who already live in a rhythm of chronic budget deficit (chronic twin deficits for the USA) funded by the surplus of the developing countries (sovereign wealth funds of oil-producing countries surplus and the large emerging countries) and "an economy short" clean account of global finance.
At this summit of the G20, the die is still piped (rigged games) but the balance is already beginning to move. A question remains, the balance will turn far and to what degree?
Like the freeze rounds of the WTO (Cancun, Doha, etc.), the outcome of this summit is almost doomed to failure. Obviously, there will be statements that are dreaming but their feasibility and performance are still the domain of uncertainty.
Thursday, April 2 A WHILE AND WE WILL SEE IF THE WORLD FINANCE WHICH WILL TAKE SPONGE
