All that Kevin 747 stuff seems to have been forgotten for the moment as the Prime Minister heads off to meet Barack Obama and attend the G20 meetings. “It’s good that he’s going there to see President Obama and of course he’s going to the G20 meeting, as he has to do that,” said Malcolm Turnbull yesterday. Only Piers Akerman could summon the bile — and Akerman’s bile is the concentrate they make concentrates from — to condemn the PM. “Kevin Rudd will be in his favourite place this week,” he said in Saturday’s Telegraph, “that is, a long way from Australia.”
Boom boom. Unfortunately, he’s here all week and longer.
Rudd leaves with the impression he’s not just going for the networking opportunities but because he’s a Man With A Plan. Specifically, he’s keen to restructure the International Monetary Fund in favour of the emerging giants China and India, establish an internationally-agreed framework for restoring confidence to the global financial system, coordinate further fiscal stimulus by governments and further push Australia’s involvement in the development of better financial regulation — including his pet project of guidelines that address the link between executive remuneration and risk.
It’s likely Rudd doesn’t see that agenda as particularly ambitious, but in fact essential for his own domestic political purposes. The Government can’t go on propping up domestic demand. The world economy has to be got back on a growth path — which can’t happen until its financial system recovers, and then growth kickstarted with further government stimulus. Rudd’s nightmare must be of sluggish growth for years to come, the sort that barely touches unemployment and keeps even disciplined budgets in deficit.
The flaw in the logic, however, is that there is no actual framework for pursuing this agenda. The G20 has no institutional structure. It’s a meeting, not a process. There are working groups, and agenda papers, and the trappings of a process, but it’s all temporary and voluntary. It’s also not clear that the Europeans see things in quite the same way as ourselves and the Americans. France, for example, seems to regard high unemployment — particularly among its young — as pretty much normal. Years of deficits mean already high levels of public debt across Europe. There is little apparent enthusiasm for further efforts to temper the impact of the global recession, possibly on the basis that over-generous welfare systems can be relied on take care of the unemployed.
Nor are the Europeans likely to be keen on reallocating voting power within the IMF. Any move away from WWII-era international structures rings alarm bells. For all their social democratic rhetoric, the Europeans prefer their international institutions to reflect the time when white people ruled the world and everyone else participated with their grace and favour. That’s why we still have a UN Security Council with the UK and France on it.
International action to purge the financial system of bad loans is also unlikely to be coordinated. There’s been minimal coordination so far — indeed, the rapid series of deposit guarantees last year was because the Irish panicked and instituted their own, causing a domino effect. Timothy Geithner, who with Nelsonesque rapidity has taken barely two months to become “embattled”, is to shortly unveil the Obama Administration’s package to address toxic assets, which will centre on a Federal Government bad bank, and direct intervention to get mortgage and small business credit flowing again. The plan is already drawing fire from economists like Paul Krugman who argue that the problem is structural in the financial system and the US Government needs to seize defaulting banks.
Worse yet — and this is the most disturbing part for Australia — the protectionist instinct is still rising. The World Bank identified 17 of the G20 as having resorted to protectionist measures since the economic crisis began — including the Rudd Government’s automotive industry package. Russia, China, India, the US — pretty much everyone is guilty. And now carbon emissions-based protectionism — the sort that levies a carbon impost on imports, not the traditional sort that subsidises climate change impacts from big polluters — is on the agenda. As one of the world’s most carbon-reliant economies without any systematic measures to reduce our carbon emissions, Australia could be target number one for climate change tariffs.
That will make all those carbon leakage arguments rather tricky, won’t it?
With our heavy reliance on imported capital and trade, Australia goes to the G20 as a supplicant, hopeful that the rest of the world can gets its act together sufficiently to at least arrest the downward economic spiral. Don’t count on anything much emerging from the meeting, despite the Prime Minister’s enthusiastic efforts.
Call me cynical but I cannot see this G20 exercise being much more than a rub and tug. The IMF and the World Bank would need to cease being a policy arm of the Anglo-American Empire if there is to be a change for the better in the world financial system. The best way to achieve that would be to abolish both of them along with all central banks and the BIS, and to introduce a value-based currency basket as the basis for deriving a meaningful global cours des changes. The Russians have suggested that this might be based on a basket of commodities including gold and possibly iron ore, oil, uranium and even food. I see such a “value-based currency equivalents system” of great advantage to Australia given its position as a fundamental supplier of many if not most of the proposed items in the basket.
Somehow I can’t see the Anglo American Empire acceding willingly to this and for the life of me cannot divine what they stand to gain from China and India having increased economic power. At the moment, the Americans have managed to bluff the world into hanging onto US dollars because it would too expensive not to in much the same way that they have done over the last 36 years. You know the “too big to fail” argument. But eventually this “funny money” system will come to an end and the US dollar will go into free fall. If it is replaced by a commodity-backed basket of currencies, the Aussie is likely to undergo a sharp positive correction.
From best I can gather, none of these issues is being discussed by Mr Rudd or his acolytes and so I don’t expect much out of G20 other than more massive quantitative easing from the US and UK and further downward pressure on those currencies to the incredible annoyance of both the BRICS (who have US dollar based reserves) and the Europeans who will find it even harder to sell their imports into the Anglosphere.
That slab of lard Akerman produces the same line of garbage week after week, attacking the PM regardless of the facts, regardless of any useful debate, merely t o satisfy his personal hatred of Rudd and the Labor movement. Any attempt to correct his fanciful ramblings and the comment is either never printed (it shows him to be loose with the facts)or the fat fool replies with a barrage of abuse, which appeals to the rabble who live on a diet of his every word. That he is still employed as a writer on a metro daily beggers belief, given the trash he dishes up. it was heartening to see him get his just desserts with the result of the Q’Land election last Saturday. His prediction of the voters of that fair state throwing Labor out and bringing on an enquiry to satisfy the fairy tale of the coverup of the Heiner thing must have brought on a severe attack of depression. Once again sane Australians saw through that pathetic ongoing attack on Kevin Rudd. What Akermans contribution to quality jounalism is must be a closely gaurded secret, there is no obvious evidence of it in his blog.
Piers is such a joke. If Rudd didn’t go, he would be the first to line up with headlines such as “Rudd snubs G20!”
I wouldn’t mind his constant travels, if only he was using them to study ways to solve the wretched sand-heap that is Australia: If he WAS ACTUALLY TRYING TO BUILD A BETTER COUNTRY, but all he ever does is to give lashings of Aid to countries that are beyond help; or to organizations which have a squalid history of existing to glorify and sustain the well-suited, but morally-bankrupt non-gov orgs. Such as the Untied Nations. World health, which, under the Bush regime, refused all financial aid to countries who were using birth control. Words fail me.