Wednesday, June 01, 2016

The Dinner Guest Who Refuses To Leave

Last week's G7 Conference did nothing to stimulate the world's economy -- even though the IMF says that economic stimulus is what the world needs badly. Tom Walkom writes:

The International Monetary Fund, which exists to backstop nations in financial trouble and which has never been a hotbed of radicalism, headlined its April update of the world economy: “Too slow for too long.”

The IMF has been urging world leaders to do exactly the kind of things that Trudeau and Abe called for last week in Japan.

Justin Trudeau and Japan's Shinzo Abe tried to get consensus on the need for stimulus:

Italy’s Matteo Renzi was on side with Canada and Japan, as were France’s François Hollande and U.S. President Barack Obama.

But Germany’s Angela Merkel and Britain’s David Cameron insisted that debt and deficit control were more important than fiscal stimulus.

The final communiqué from the two-day session said essentially that each nation would continue to do what it thought best. 

The international cooperation which helped guide the world  through the 2008 meltdown is disappearing -- for a number of reasons: 

So what do we make of the G7? In some ways, its time has passed. It no longer represents the world’s major economies. China is conspicuously absent. Russia, briefly a member of what was then called the G8, was summarily expelled in 2014 for the sin of annexing Crimea.

For a while, the hope was that the G20 (which does include China and Russia) would handle economic matters, leaving the G7 to ponder weightier questions, such as international security.

But the G20 seems increasingly bogged down. Its bright lights — the so-called emerging economies, such as Brazil, Russia, India and China — have dimmed.

Brazil is in political chaos. Russia has been hammered by falling oil prices. Even the Chinese economy is not as stellar as it was.

Meanwhile, the G7’s attempt to focus on security has been hamstrung by the gradual re-emergence of Cold War politics. Beijing is at daggers drawn with the U.S. and Japan over who controls the South China Sea. Russia and NATO are remilitarizing the border between Eastern and Western Europe.

Austerity is the dinner guest who refuses to leave.



The Mound of Sound said...

It's worrisome to see this fundamental division among the early North Atlantic Alliance states. One commenter at my blog recently questioned whether we're embarking on some giant Weimar era. To see this lack of economic consensus; coupled with the rise of fascism in Eastern Europe, the ascendancy of some form of authoritarianism bordering on fascism in the United States; the grinding tensions between the rising Chinese state and the stagnating if not slowly declining US hegemony; plus the early onset of environmental burdens, it's obvious we're in challenging times that may be more volatile than any we've seen since the end of WWII. I suppose these are times when great statesmen may emerge, real leaders the like of which we've not seen in a long while. We must live in hope, Owen.

Owen Gray said...

This is a time that requires statesmen, Mound -- not mere politicians. Let's hope there are one or two of them around.

Steve said...

Fight Club, the only solution is zero out

Owen Gray said...

Then we have a deficit of hope, Steve.

Steve said...

Best course I took at the University of Western Ontario was historical ecomomics. Japan A bomed down, Korea flattented, Germany et al. Its all an lillusion we can start from zero and accommplish umber all

Owen Gray said...

Quite true, Steve. But that assumes there is the wisdom and the will to do so.

Pamela Mac Neil said...

I see no great statesmen on the horizon Owen.With the US violating every country whose wealth it wishes to control and no one stopping them, to the ridiculous propaganda and lies about American exceptionism that it's citizens swallow whole. Africa is their next target. NATO of course contributes in all this US hegemony. Millions are dying, millions are starving and millions are working for a few cents an hour, so that we can buy overpriced products. Global entrenched Power, immovable, controlling coming to a country near you and then to your own country. Can you see Trudeau changing course and fighting against this? No? Me either. A gang of thugs Has taken over the world and they will do anything it takes to hold onto that power,kill,maim,plunder, enslave,lie,steal, cheat and they will call it bringing democracy to the world. Anti-intellectualism, the rise of dogma,tribalism, racism,the promoting of myths,wealth for the few, by plundering the many, continuous wars, politics by force, the abandonment of reason are all a prelude to another dark age.

Owen Gray said...

It seems we live in an age, Pam, where -- as Yeats wrote -- "The worst are full of passionate intensity and the best lack all conviction."

Hugh said...

Now that we have reached the end of easy, plentiful oil, has the age of economic growth come to an end?

Owen Gray said...

Not necessarily, Hugh. All economies require energy. But the source of energy changes over time. We've gone from steam, to coal, to oil. We're now on the cusp of green energy -- if we use it wisely.