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G-20 Needs To “Man Up” Or Risk Sparking Market Chaos, Citi Warns
G-20 Needs To “Man Up” Or Risk Sparking Market Chaos, Citi Warns
Over the past month or so, anticipation has built among market participants for some manner of coordinated policy response at this weekend’s G20 summit in Shanghai. The hoped for agreement would ideally be something akin to the 1985 Plaza Accord between the United States, France, West Germany, Japan, and the United Kingdom, which agreed to weaken the USD to shore up America’s trade deficit and boost economic growth.
Calls for coordinated action come on the heels of a turbulent January in which collapsing crude, RMB jitters, and worries that central banks are out of bullets have sowed fear in the minds of investors. “We remain sellers into strength in coming weeks/months of risk assets at least until a coordinated and aggressive global policy response (e.g. Shanghai Accord) begins to reverse the deterioration in global profit expectations and credit conditions,” BofA said last week, ahead of the summit.
“Don’t expect a crisis response in a non-crisis environment,” Lew said in an interview broadcast Wednesday with David Westin of Bloomberg Television. “This is a moment where you’ve got real economies doing better than markets think in some cases.”
Whether or not you agree with Lew’s assessment of “real economies” or not, the message was clear. The US isn’t set to support some kind of joint statement on fiscal stimulus and may not even be willing to be part of a consensus on the need to implement emergency measures to juice global growth and trade.
On Friday, the soundbites are rolling in as the world’s financial heavyweights opine on the state of the decelerating global economy and the turmoil that likely lies ahead for markets.
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Trapped Inside The Zero-Bound: Crossing The Economic “Event Horizon”
Trapped Inside The Zero-Bound: Crossing The Economic “Event Horizon”
The professor, gazing over his glasses and down his nose at what obviously had to be an imbecile in his lecture hall calmly set aside a second of his podium time to shoot the idea down: “No.”, he said quite simply, as if he couldn’t believe he had to be explaining this to university level students, “it has to be a positive number….”.
My colleague believed him. After all, being in technology he was familiar with the computer code analogy of a negative interest rate, that being the dreaded divide by zero error. Coders take great pains to avoid these because if it actually happens, the currently running program basically “shits the bed” and all bets are off.
If the currently running program was generating a balance sheet, it may set the line printer on fire instead. If it’s deploying an airplane’s landing gear it may jettison everything in the cargo bay. It’s impossible to guess what will happen. So when people who viscerally understand the kind of consequences the ERR:DIV0 can cause extrapolate it out to an entire economy, they’re the ones that end up “shitting the bed”. It’s really bad.
I always knew that ZIRP was bad, but I just thought it would be normal, run-of-the-mill bad. You know, where most normal people get screwed for a long time, and then “suddenly” everything comes unglued and the financial system implodes, followed by a government intervention while the usual suspects (free markets and capitalism) get hung from telephone poles.
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Steps Towards a New World
Steps Towards a New World
Nowadays the exit from the so-called economic crisis in Europe has become the main topic of conversation. Various politicians, “experts” and technocrats speak of possible exits from the critical situation in which our societies have been trapped. But their proposals rarely go beyond unlimited economic growth and neoliberal austerity politics, which are being imposed in increasingly authoritarian ways [1], the consequences of which are increasingly difficult to hide. The other alternative which is being presented to us by the mass media is the one of the radical left parties (such as the Greek SYRIZA and the Spanish Podemos).
But in the midst of the heated debates and worsening living standards, on the horizon has emerged a third alternative – one coming from the grassroots. Seeing high unemployment [2], activists from various social movements have decided that since the contemporary system cannot provide them with jobs, they’ll create them outside of it. Workers from the occupied factory Vio.Me. in Thessaloniki raised the slogan: “The bosses can’t? We can!” The populations of the impoverished European societies have gotten tired of waiting for the support of their governments and have decided to take things into their own hands. Seeing that the state is not planning on helping them, that it collaborates with the corporate sector who was partly responsible for the crisis [3] – and not its alternative – the people realized that they can count only on their own powers and the solidarity in their communities.
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How ‘The Power to Convene’ can transform Transition
How ‘The Power to Convene’ can transform Transition
I had seen it in lots of different places. I’d seen it in the 30 people who turned out to plant nut trees on a grey Sunday morning in Totnes. I’d seen it in Liege in Belgium, where representatives of many local organisations had come to an event to discuss creating a ‘Food Belt’ around the city. I’d seen it at the launch of the Brixton Pound, in a hall packed with local traders. What I didn’t have was a name for it.
It was in a small sideroom at the Resilience Hub in Portland, Maine, that I first heard the term ‘The Power to Convene’. It fascinated me, and finally gave me a name for this thing I’d been seeing for years. I was doing an interview with Chuck Collins of the fantastic Jamaica Plain New Economy Transition (JPNET) group. “One thing we have”, he told me, “is the ‘Power to Convene’”. He continued:
“Somebody comes and has a great idea, such as “I really want to start a bicycle taxi business”, and young people who are graduates of a local bike mechanic programme say “we know how to take care of bikes, we’d like to start a business.
So we pulled together a community event, and got 70 people there who were interested, and we got a whole bunch of new stakeholders and allies, and now they have a working group and are working on setting up that business. I think we just keep doing that in every area where there is both a problem and people who want to do something about it. We can get a crowd together, help identify resources and spark them”.
‘The Power to Convene’ put a beautiful, succinct term to something you will no doubt recognise. We’ve noticed more and more groups working in this way and exploring the potential of their own, place-based, ‘Power to Convene’. We see it in different forms:
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