The G-20 Toronto party is over. The leaders have gone home. The world has now to pick up the broom and sweep the floor. Perhaps learn to live amidst the economic dirt they have left behind.
Screams a newspaper intro: "With the global economy on its way to recovery amid debt crisis in some European countries, the G-20 on Monday called a striking balance between stimulus measures to sustain economic expansion and reducing fiscal deficit to tackle the mess of government finance." If you try to read the G-20 declaration, although it reads like a page from any text book that the economics and management students are forced to read nowadays, the leaders conclude that they can do much better.
"The IMF and World Bank estimate that if we choose a more ambitious path of reforms, over the medium term, we could:
• raise global output by up to $4 trillion;
• create an estimated 52 million jobs;
• lift up to 90 million people out of poverty; and
• significantly reduce global current account balances.
If we act in a coordinated manner, all regions are better off, now and in the future. Moreover, increasing global growth on a sustainable basis is the most important step we can take in improving the lives of all, including those in the poorest countries."
Now we know. Why these leaders have made a mess of the global economy. They continue to follow the economic prescription being doled out by the IMF and the World Bank, who were primarily responsible for putting the world into an unforeseen crisis in the first hand. I have always been saying, more so in the Indian context and which holds true globally, how can you ask those who are responsible for the crisis to suggest solutions?
Only an idiot can seek advise from IMF and World Bank to put back the global economy on the path to recovery.
Let us not go into the outlandish figures of creating jobs and reducing hunger, but let us look at the IMF and World Bank estimates of raising global output. The G-20 expects that speeding the reforms (and cutting on fiscal deficit) will raise global output by $ 4 trillion. Ha ! Isn't it amusing? The world has pumped in more than $ 20 trillion to bail out banks and the financial systems in 2008-09 alone, and you expect a recovery in terms of global output by a mere $ 4 trillion!
In other words, the tax payers globally have already provided an economic stimulus of $ 20 trillion and that without battling an eyelid. Which means they have shelled out what the world expects by way of output for the next five years !!
If only this stimulus had gone to provide the real stimulus to the economy (rather than writing off the losses of the banks, and providing bonuses to corrupt bankers), the $ 20 trillion would have wiped out poverty and hunger from the face of the Earth (not only pull out 90 million from hunger, as the G-20 projects) and also provided for jobs to all and sundry.
The problem is that the G-20 does not represent the people. The G-20 represents the corporations. They will therefore continue to make fool of us by throwing these magical figures. This is the only way they can fill the pockets of business and trade.
"The truth is that the entire world economic system is broken. It is built on a fraudulent pyramid of debt, derivatives, central banking and paper money that is doomed to fail. But world leaders will continue to keep it alive for as long as they can." (Budget Cuts? in The Economic Collapse). I agree with this analysis. In fact, as a commentator wrote: "the fact remains that GDP is a false metric for the health of an economy; GDP includes government spending. Measured without federal government spending, the economy has been contracting at some -2.5% per quarter for the last six quarters. All that government spending has done is to mask the true state of the economy, provided congress with slush funds, and push the social(ist) agenda of those in power. It has temporarily delayed (and made worse by an order of magnitude) the inevitable crash that is coming, and lengthened the recovery time to decades instead of 2-3 years, if any recovery is indeed possible.
Benron, Federal government, and the Big Six on Wall Street have learned nothing from their ’study’ of the Great Depression – they’re using the same playbook consisting of a single maneuver. And we can count on Obama to do exactly the opposite of what he says he’ll do, as he has proven every time he opens his mouth. Get ready for QEII, more of the Extend and Pretend economy, and more fed.gov statistics that are totally divorced from reality."
The path to 'economic recovery' that is being suggested is through increasing FDI in agriculture. The G-20 declaration talks about it very clearly, and also promises to update the leaders with the progress in the forthcoming Seoul Summit in November. I will analyse it later as to what it means for the future of farming and the farming communities.
Meanwhile, read this excellent analysis Budget Cuts? on The Economic Collapse site. http://theeconomiccollapseblog.com/archives/budget-cuts