After the London G20 Summit

Old, new, and quantitatively eased

So the US and the UK wanted the world to replicate their strategy of printing money (called ‘quantitative easing’ when it is not done by Third World countries) at the touch of a computer key and old Europe to push for new standards of global financial regulation.

At world summits, heads of state always win. The strategy is simple: argue loudly that you want to achieve A; have your teams working on the sidelines on plan B; but always the ultimate goal is to get to C.

The US and the UK wanted other central banks to create money out of nothing at all (plan A). The American and British governments are worried that without a global leveling effect their economies might sink deeper. This is because they might have triggered an inflationary bomb by printing money. B teams were busy repackaging yesterday’s policies and reinterpreting the plans of global financial institutions. The overall result of the exercise, the backup plan, was to present what has been done and said anew. Meanwhile, plan C was achieved. The IMF has been charged with the task of printing $250 billions of new money. The ‘whole world’ will ‘benefit’ from it, as the money will be proportionally disbursed according to voting rights at the IMF –Google the IMF voting share.

France and Germany wanted tighter financial regulation in order to prevent any similar financial crisis repeating. Really? Now that the world is being reorganized, plan A has always been to curtail a decade of expansion (and bust) of Anglo-American financial dominance. Plan B, the backup plan, was to agree to nothing and theatrically justify it. Meanwhile, plan C was achieved. By raising the profile of the IMF, traditionally dominated by old Europe, France and Germany are likely to play a leading role forging the new global financial architecture.

In short, the summit was a success and for a couple of weeks financial markets will be happy. Thereafter, we go back to the burning topic G8 heads of state failed to address, the elephant in the G20 summit room: how to deal with the toxic assets hidden in American and European banks’ balance sheets, of which we have only seen the tip of the iceberg. Therefore, a deteriorating world security prognosis remains.

The UK police authorities left certain building, the branch of a financial institution that is the current focus of popular outrage, partially exposed. The crowds smashed windows, destroyed some equipment, and ventilated their frustration. The crowd-control strategy worked for the time being. However, we repeat: available public and private security means are insufficient to deal with a sudden escalation of civil disorder in a global scale. This is the real world; there is no plan B or C here.