The G20 Feigned Optimism: Is it Justified?
We don’t think so. Most of the pledges are verbal, and the extra $500bn given to the IMF, in addition of reviving a hated institution worldwide, are peanuts compared with the trillions needed to keep the world economy afloat. As Keith Hart says, this is a crisis where both capitalists and governments are losing big. Governments are pouring money in banks’ vaults instead of people’s pockets. Also, the much-touted Financial Stability Forum, created in the wake of the Asian crisis, has failed in forecasting this one, or couldn’t make itself heard, so those who hope for much tighter regulation of financial markets stand to be disappointed. The contrived optimism put up by Gordon at the ExCel Center (his was the last chance not be defeated by Cameron in the next elections) and imitated by star-charisma Obama risked ending up in a wreck in the face of Franco-German opposition to fiscal profligacy. Sarkozy and Merkel are wrong-headed prisoners of failed budgetary orthodoxy, and their conservatism could sink the EU, as well as the eurozone, if they don’t watch out. Certainly the huge urban rebellions currently simmering all over Western Europe should give pause for thought to the two rightist (and pro-NATO) leaders. They might soon be dislodged from power if they don’t open up the purse for social spending.
Less politically and more economically, optimists pin their philocapitalist hopes on China’s keynesian demand boost (which is working but is not enough to reverse the negative macroeconomic trends worldwide) and on the fact that prices of raw materials are rising again (this could spell doom for hundreds of millions, as food prices are set to rise). We anticapitalists turning postcapitalists look at unemployment and housing data and conclude that the opposite is still true: they are just trying to provide self-fulfilling prophecies of financial optimism on friendly media, so that reform of capitalism doesn’t have to go too deep. But the Atlantic regime of financial speculation is dead for good and can’t be resurrected, not even at huge cost for government finances. Economic redistribution and geopolitical rebalancing are the two major things that can solve the crisis. Put people first: sack the bankers, milk the capitalists, invest in society and the environment.