The three visions at the G20

[xi]

While the former meeting in Washington seemed pretty peaceful, this
one seems harder. The reason might be that, globally, we can see a
relief in 2010 and maybe we, the global economy, might reach its
bottom within 2009 or early 2010 in terms of growth or recession. Now,
most governments are thinking on 1) the next phase of this crisis and
2) on rules to prevent new ones like this.

There one point of agreement: financial system requires more
regulation, transparency, etc.. Both standardisation of good practices
and rules seems to be a point of agreement. First disagreements come
when we talk about international monitoring on how such practices are
and will be into place in each practice. Is it just a gentlemen
agreement? If not, which institution will monitor them? Has the
current IMF authority to supervise them in all countries? And could it
get a way to force them somehow? Most of those questions require a
complete change of international institutions. If we trust on each
other we have to trust on every feature. If we do not trust, if
someone wants to keep control of those institutions that is fine but
then they are not "our institutions" they are "their institutions".

But even more important is disagreement on "what next?". And here we
have the three visions. We are realinsing the three visions on the
global eonomy, global trade, etc.

On the one hand we have the vision from US authorities. We just
require regulation, everything else is going fine. We, US authorities,
can handle our economy including the US dollar.

On the other hand, we have the Russian-Chinese vision. As the US
dollar is a common currency, we, the world, either own a global
currency or US monetary policy (and any other monetary policy) must be
strictly enforced by a multilateral instititution that prevents, or at
least softens, the collapse of the US dollar and an apocaliptic
hyperinflation worldwide as result of current financial policies.

A third pole is Europe-Japan. They share fears, but they both are
cushioned by savings, wealth and robust social networks. They intend
to allow slow decline until we all see and accept the unavoidable
changes.

My opinion is that unfortunately this thrid vision will prevail
disregarding what final comuniques tells (if anything at all) about
this issue. But, in fact, more and more the world will have two
financial systems. One based on the IMF, the US dollar, etc. as it is
today. While changing step by step. That system will apply to Europe
and USA and a few strongly dependent economies.Secondly, we will have
another system mostly for emerging and developing economies that
formally will use one-to-one agreements such as swap mechanisms, bi-
lateral or regional free trade zones, regional banks, etc.

Peace and best wishes.

Xi

[xi]

Despite what final press conferences and joint comuniques could tell,
unfortunately neither the most basic point, regulation of financial
markets, will reach consensus.

US, Europe, Japan, China, etc. will praise unity and blah blah blah.
But monitoring will be domestic. It means that Wall Street boys will
rule US financial markets supervised by the Fed and the US secretary
of state. What really matters to the rest of the world, the greedy Fed
and the thirsty US Secretary of state will supervise the greenback
printing machine. An alcoholic will supervise that the distillery does
not exceed limits.

We can expect limits in bonusses, even some financial derivative
products could be banned, a few tax heavens pointed out as guilty,
etc. But we cannot expect a relief for the greenback printing
machine.

When I studied, it was difficult for me to believe that all empires
and all great nations died due to hyperinflation. Why they did not
learn? I asked to myself. Even now while I am watching it, is
difficult for me to believe it. Central banks were created exactly to
avoid that risk, dark desires from governments to print fiat money to
show their people believe in a temporary rossy world while hiding its
final collapse. Now, an "independent" Central bank is just another
greedy player in that game. Capital is fleeing the U.S. In January,
foreign investors sold 43 billion U.S. dollars of long-term U.S.
bonds, compared with an inflow of 34.7 billion U.S. dollars into the
country.

I guess that situation in USA must be more hopeless to make them
understand. That must be politics.

Greedy executives fighting for a share of a cake that is putrid
inside, I guess they must say to themselves "better that cake than
none". "The immense 'U.S. treasury bonds bubble' has not only badly
weakened new demand among investors, but also put foreign investors in
danger of seeing their dollar-denominated assets shrink in value" said
Yu Zuyao, an honorary economist with the Chinese Academy of Social
Sciences (CASS).

Unfortunately, the world cannot be more divided than now. Probably one
day it will be united. Too late, of course.

At least I want to trust on president Lula from Brazil, he told few
days ago “This was a crisis that was fostered and boosted by the
irrational behaviour of people who were white and blue-eyed, who
before the crisis they looked like they knew everything about
economics, but now have demonstrated they know nothing about
economics,” he said. (1) And he added "I can only say that this part
of humanity that is the major victim of the world crisis, these people
should pay for the crisis? I cannot accept that." (2)

Peace and best wishes.

Xi

(1) President Lula of Brazil blames crisis on 'white and blue-eyed'
http://www.timesonline.co.uk/tol/news/politics/article5983430.ece

(2) Financial crisis 'caused by white men with blue eyes'
http://www.independent.co.uk/news/world/politics/financial-crisis-caused-by-white-men-with-blue-eyes-1655354.html

[Justice]

I agree with all except the bandit is the Sec Treas.

> (2) Financial crisis 'caused by white men with blue eyes'http://www.independent.co.uk/news/world/politics/financial-crisis-cau...

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[xi]

No offense, please. Probably my language was not accurate. Most
governments around the world like to depict a rossy picture to its
citizens and use money printing machine for it. USA is just the root
cause and the more serious patient of that sickness, and, despite what
pres. Lula told, USA is where consequences are and will be harder.
That is why I address it. China is an exception just because now it is
rossy enough at least compared to the rest. We will learn in the
future when hard times come and our grandparents will not be around to
teach us how bad is poverty. Future will tell us, because
unfortunately we, the world, did not get a tested solution yet to
limit "exhuberance" to the boundaries of real potential of each
particular economy in one particular time. International control
sounds good enough, and probably it will be the future mechanism, at
least to check iwhether that works. We have to wait some years and
see.

If you stimulate it from below (as your administration is doing
creating infraestructures) it creates wealth and that is possitive for
Americans, if you simply inject money into the financial system (as
your administration is doing too through treasuries) it means just to
blow a bubble that sooner or later explodes, but until it explodes it
looks cute. US treasuries built a bubble up, an inmense bubble that
will explode, unfortunately soon because nobody seems to want to
alleviate its air. The more we blow it the harder it will be.

I think that the last two years have proven that any financial measure
to stimulate the economy is useless and conterproductive. Lower
interest rates, fund injection, bail-outs, treasuries, etc. no
financial action worked and no financial action will work, because
this is not a financial crisis, it is an economic crisis which
symptoms were financial. Of course, now, symptoms are everywhere.

Of course, I apologize if my words sounds offensive to anyone
(including Mr. Geithner, of course). That was absolutely not my
intention.

Peace and best wishes.

Xi

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