The Final Push for World Government

U.S.-Canada Regional Economic and Energy Integration

September 28, 2009

Borderfire Report - Trilateral initiatives, such as NAFTA and the Security and Prosperity Partnership (SPP) have further advanced North American integration. It is also at a state and provincial level that regional integration is being achieved in areas of trade, the environment and energy.

The 33rd Annual Conference of New England Governors and Eastern Canadian Premiers was held in Saint John, New Brunswick, Canada on September 14-15 and was co-chaired by host Premier Shawn Graham and Maine Governor John Baldacci. Throughout the years, the governors and premiers have forged a partnership and expanded economic ties, including cooperation on energy and environmental issues. At each conference, policy resolutions are enacted which call on actions by the state and provincial governments, as well as by the two national governments. The current global financial crisis has placed more focus on finding collaborative regional approaches to economic and energy issues. The recent conference included resolutions concerning the green economy, renewable energy, climate change, energy efficiency, pandemic preparedness and open and secure trade. Regional leaders endorsed a blueprint for the region’s energy future...

North American integration continues on many different fronts and this includes at a state and provincial level. It appears as if the SPP may be dead in name only. Many of its key priorities were part of the agenda at the recent North American Leaders Summit held in Mexico. The push for a North American Union continues as it is becoming increasingly clear that Obama embraces globalization and has no intention of upholding the Constitution or protecting American sovereignty.

New World Economic Order Takes Shape at G20

September 25, 2009

Reuters - The Group of 20 is set to become the premier coordinating body on global economic issues, reflecting a new world economic order in which emerging market countries like China are much more relevant, according to a draft communique.

Leaders of the G20 developed and developing nations also agreed to make the International Monetary Fund more representative by increasing the voting power of countries that have long been under-represented in the world financial body, said the draft G20 communique obtained by Reuters.

It called for a shift in IMF voting by at least 5 percent, although several G20 representatives said it was a 5 percentage point shift from developed to under-represented countries. Currently, the split in voting power is 57 percent for industrialized countries and 43 percent for developing countries. The shift would make the split nearly 50-50.

The G20 was formed in 1999 for finance ministers and central bank chiefs following the Asian financial crisis. The idea was to help the G7 -- the United States, Germany, Britain, France, Italy, Canada and Japan -- talk with the wider world.

Following are some of the implications of the decisions:

* The shifts reflect a recognition by the United States and Europe of a new global economic reality in which emerging market economies play a bigger role, especially in the aftermath of the global financial crisis that hurt developed economies more than developing ones.

* By making the G20 the new global economic coordinator, countries are committing to maintaining cooperation even after the global financial upheaval and recession recede. The G20 was upgraded from a ministerial to a leaders-level forum only last year as the crisis deepened.

* Adopting the G20 as the new economic steering committee raises questions over the whether or not the Group of Eight, which makes up the world's industrial countries, will eventually be faded out. Diplomats said the G8 would continue to function but would focus on non-economic issues.

* The agreements are big wins for U.S. President Barack Obama, hosting his first international summit. Since his election last year, he has pushed for changes in the global financial architecture to recognize the increasing economic clout of China and other emerging markets.

The agreement to overhaul the IMF's voting structure is especially big for the new Obama administration, given that the United States proposed the 5 percentage point shift. The speed with which the G20 agreed to the change -- if the draft communique is eventually adopted -- is surprising because of the politically sensitive nature of the issue for Europe, which will see the biggest dilution in its voting power.

* Giving developing nations more say at the IMF and a bigger say in global economic affairs could help Obama succeed in his push to get big exporters like China to increase domestic demand, helping slower-growing economies like the United States to find new markets.

* The shift of at least 5 percentage points in voting power is the largest increase ever seen in the IMF's voting structure and is likely to see China overtake old European powers Britain and France which have long resisted the move.

* The G20 decision on IMF voting reform will give momentum to a 2011 deadline for overhauling IMF governance which will then be voted on by the IMF's 186 member countries.

* The G20 also agreed the head of the IMF should be selected based on qualifications and not nationality, according to the draft communique obtained by Reuters. The decision is significant because the head of the IMF has always been a European, while the president of the World Bank has always been an American.

Dollar Under Scrutiny at G20 Summit

September 24, 2009

AFP - The embattled US dollar is expected to come under scrutiny at a summit of developing and industrialized nations following China-led calls to review its role as a reserve currency.

The dollar issue is bound to surface at the two-day meeting in Pittsburgh as US President Barack Obama and other leaders of the Group of 20 economies debate a new framework for tackling the so called global "economic imbalances" blamed for fuelling the latest financial crisis.

"Though not clear how the plan would be enforced, it would involve measures such as the US cutting its deficits and saving more, China reducing its reliance on exports and Europe making structural changes to boost business investment," analysts at French bank Societe Generale said in a report.

Some argue that the financial crisis resulted from imbalances between savings and investment in major economies, which have led to large current deficits, as evident in the United States, and surpluses, as enjoyed by China.

Beijing was the first to call for a new global currency as an alternative to the US dollar as the US deficit rocketed -- the White House estimates it could reach nine trillion dollars over a decade.

Chinese Premier Wen Jiabao expressed concern as early as March over the safety of his country's huge US bond holdings now worth more than 800 billion dollars, making it the largest creditor to the United States.

Then, Chinese central bank governor Zhou Xiaochuan, who supervises more than two trillion dollars worth of dollar reserves, the world's largest, raised the stakes by calling for a new reserve currency in place of the dollar.

He wanted the new reserve unit to be based on the SDR, a "special drawing right" created by the International Monetary Fund, drawing immediate support from Russia, Brazil and several other nations.

"These countries realize that they would suffer losses if inflation eroded the value of the dollar securities they own," said Richard Cooper, a professor of international economics at Harvard University.

But he said there were no feasible alternatives to the US dollar as a widely used international currency, discounting even IMF's synthetic SDR currency, comprising a basket of the dollar, euro, yen and the pound.

"The dollar will remain the dominant world currency, thanks to the stability of our political system and the rule of law that isn't a feature of many other economies," said Irwin Stelzer, director of economic-policy studies at the Washington-based Hudson Institute.

Some groups, he said, were buying euros and other currencies from time to time, "but not in amounts that threaten the dollar's primacy."

Even the Chinese are stuck with nearly a trillion dollars worth of US bonds and are not likely to drive down the value of that hoard by selling large amounts of dollar-denominated assets, Stelzer said.

But what is baffling analysts is that a key UN agency -- the United Nations Conference on Trade and Development, or UNCTAD -- has joined the chorus of calls for a new reserve currency.
An UNCTAD report this month endorsed a proposal that IMF-issued SDRs "could be used to settle international payments."

Until the current global economic crisis, SDRs issued by the IMF have been used by IMF member nation states "primarily as a reserve account to support international trade transactions, not as an alternative international currency available to settle international debt transactions in danger of default," said political scientist Jerome Corsi in "Red Alert," a global financial newsletter...

HSBC Bids Farewell to Dollar Supremacy

The sun is setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC.

September 20, 2009

Telegraph - ...What is occurring is an epochal loss in the relative wealth and economic power of the old G10 bloc of rich countries compared to rising regions of the world. The euro, yen, sterling, Swiss franc and other mature currencies will be relegated along with the dollar in this great process of rebalancing, but the Greenback will bear the brunt.

The Fed's super-loose policy is turning the dollar into the key funding currency for the next phase of the global "carry trade", taking over the role of Japan during its period of emergency stimulus.

Mr Bloom said regional currencies would emerge as the anchor for their smaller trading partners, with China, Brazil, or South Africa substituting the role of the US. Australia is already linking its fortunes to China through commodity ties.

U.S. to Push for New Economic World Order at G20

September 22, 2009

Reuters - The United States will urge world leaders this week to launch a new push in November to rebalance the world economy, but there are doubts national governments will bow to external advice.

A document outlining the U.S. position ahead of the September 24-25 Group of 20 summit in Pittsburgh said exporters, which include China, Germany and Japan, should consume more, while debtors like the United States ought to boost savings.

"The world will face anaemic growth if adjustments in one part of the global economy are not matched by offsetting adjustments in other parts," said the document, which was obtained by Reuters on Monday.

The framework drafted by U.S. policy makers foresaw analysis of G20 members' economic policies by the International Monetary Fund to figure out if they were consistent with better balanced growth.

"We call on our finance ministers to launch the new framework by November," the document said, signalling a determined effort to maintain momentum for change created by last year's global financial crisis.

The United States envisages the IMF playing a central role in a process of "mutual assessment" by making policy recommendations to the G20 every six months.
Finance ministers and central bankers from the G20 countries are due to meet November 7-8 in Scotland.

European Central Bank President Jean-Claude Trichet said persuading Europe, the United States and China to accept IMF advice on economic policy may be difficult. In the past, many countries have ignored suggestions the IMF dished out in regular reviews.

Trichet told French newspaper Le Monde the G20 had made progress on reforms to make the financial system more stable after the crisis.

"The most difficult question is still open: Europe, America, China, are they ready to modify their macroeconomic policies in the future -- by following the advice of the IMF and under pressure from their peers, for the common good, and world economic stability?" he said in the piece on Monday.

G7 sources told Reuters there was a renewed determination to cooperate because the crisis had driven home the interconnected nature of the global system. That said, governments would not allow themselves to be told what to do.

"We can't get to a situation where any country is giving up its own decision-making," said one source, who spoke on the condition of anonymity.

Germany, a major exporter to the United States, was singled out on Sunday by U.S. President Barack Obama as a country that, like China, exports a lot but does not buy much back.

But a top European Union official said that the euro zone, where 16 countries share a common currency, had to act as a collective.

"It is difficult to think about one country without taking into consideration what is the impact in the euro area," European Commission President Jose Manuel Barroso told reporters in New York.

Taxpayer money to the tune of $5 trillion (3.08 trillion pounds) has been pumped into the world economy to keep it from seizing up since the beginning of the crisis last September.

G20 leaders will maintain that pace of stimulus while acknowledging that at some point it will have to be wound down, the document said.

But, mindful of how a disorderly rush to raise interest rates could roil world markets again, they will also ask finance ministers to thrash out a "transparent and credible" exit strategy.
There were no details of how to achieve this in practice, but the document echoed the caution of G20 finance ministers at their meeting in London earlier this month acknowledging the pace of change would vary by country...

Putin: New Global Reserve Currencies Wouldn’t Harm U.S.

September 18, 2009

Wall Street Journal – Russian Prime Minister Vladimir Putin has said agreement is needed on several global reserve currencies, and said such a move wouldn’t damage the U.S., RIA Novosti reports Friday.

Speaking at an investment forum in the Russian Black Sea resort of Sochi, Putin said the imbalance of money supply in the U.S. compared with the rest of the world was one reason for the current financial crisis, Novosti reports.

“There is only one solution, a long-term agreement on common rules of conduct or on several global reserve currencies,” Putin said. “To my mind this poses no threat to the U.S. economy, which would only benefit from it in the future”...

UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’

September 8, 2009

Bloomberg - The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.

UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.

“There’s a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management,” Heiner Flassbeck, co-author of the report and a UNCTAD director, said in an interview from Geneva. “An initiative equivalent to Bretton Woods or the European Monetary System is needed”...

The Dollar Collapses

September 8, 2009

Forbes - The U.S. dollar reached its lowest point against the euro this year due to myriad forces, including rising global stocks and commodities prices, low interest rates; and investors diversifying out of Treasury debt and into other assets, including U.S. stocks, with the Dow Jones industrial average approaching 9500 in late afternoon trading.

Stocks in Asia and Europe saw big gains, and gold topped $1,000 an ounce. Oil also gained 4.9%, or $3.31, to $71.33, on the New York Mercantile Exchange, due in part to Goldman Sachs affirming its year-long outlook. By midday trading one euro traded for $1.45, meanwhile the Dollar Index, which tracks the greenback against a basket of currencies, fell to its lowest level since September of 2008...

Currency investors have been obsessed with the prospect of central banks diversifying out of the dollar. The fixation has been fueled by meetings under the G20/G8 framework, as well as candid comments from some of the largest reserve managers, namely Russia and China. The prospects of a massive diversification are low though, at least in the short-term, because most of the alternatives, including using SDRs as a global reverse currency are unrealistic.

Expanding the Pathways to Prosperity in the Americas

September 7, 2009

Borderfire Report - The Pathways to Prosperity in the Americas, which some have dubbed PPA, was first launched by the Bush administration in September of 2008 in an effort to further deepen existing economic partnerships in the region. Many speculated that it was a last ditch effort by Bush to resurrect a revised version of the failed Free Trade Area of the Americas (FTAA). The Obama administration has continued with the PPA and is set to re-launch and expand the initiative which would lead to greater integration in the Americas.

Some aspects of the PPA are similar to the defunct Security and Prosperity Partnership (SPP) and could spread SPP objectives to other parts of the Western Hemisphere.

At the Pathways to Prosperity Ministerial held in El Salvador on May 31, 2009, Secretary of State Hillary Clinton pledged support for the PPA. She stated:

“President Obama has emphasized that it’s not important whether ideas come from one party or another, so long as they move us in the right direction. This meeting builds on the work of the previous U.S. administration, but the President and I are also committed to re-launching Pathways to Prosperity, and expanding its work to spread the benefits of economic recovery, growth, and open markets to the most vulnerable and marginalized citizens of our region.”

It appears as if the Obama administration wishes to put their own stamp of approval on the PPA and further expand it.
The PPA now includes 14 partner countries: Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, the U.S. and Uruguay.

Besides NAFTA and CAFTA, there are other Free Trade Agreements amongst partner nations that are already active, with some being negotiated or pending legislative approval.

At the meeting, Clinton also stressed that:

“Pathways should be open to working with new partners including other nations and sub-regional banks that share our commitment to open markets and greater social inclusion. I want to note the presence of the observer countries – Brazil and Trinidad and Tobago – that are here today. Going forward, I hope you and other countries from our hemisphere will join us in this initiative as full members.”

If you combine all the bilateral and regional trade deals in the Americas, it could facilitate a larger multilateral agreement. Expanding the PPA could be a backdoor to achieving something similar to the FTAA.

A Joint Statement By North American Leaders from the recent Summit held in Guadalajara, Mexico on Aug 9-10 stated:

“Our three governments recognize that we cannot limit our efforts to North America alone, and we have agreed to instruct our respective Ministers to strive for greater cooperation and coordination as we work to promote security and institutional development with our neighbors in Central America and the Caribbean.”

Could they be referring to the PPA?

The Leaders also promised to hold public consultations on the North American agenda as it appears that they have learned from mistakes made with the SPP. At least in rhetoric, the PPA attempts to balance economic progress and trade initiatives with social justice. They can talk all they want about fair trade, social development priorities, and how they are going to listen to our concerns. Until something is done with the flawed NAFTA model, which has benefited multinational corporations at the expense of labor, health, safety and environmental rights, it will not mean a damn thing.

An article from April of this year entitled Obama’s Agenda for Change and the 2009 Summit of the Americas called on the new administration to announce the cancellation of the SPP, along with its hemispheric extension, the PPA. It pointed out that:

“The PPA bears many of the hallmarks of the SPP.” It goes on to say, “The PPA, like the SPP, is little more than an attempt to justify economic deregulation and to promote an escalation of militarism in the region.”

The SPP website now says that it will serve as an archive for documents and will not be updated and announced that, “Going forward, we want to build on the accomplishments achieved by the SPP and further improve our cooperation.” Stuart Trew of the Council of Canadians reported that as a venue for North American integration, the SPP is dead.

Trade, social development and foreign aid, along with other endeavors, have been used to further promote U.S. interest around the globe. In some cases, this has resulted in shared security goals and closer military cooperation which has led to U.S. involvement in the region.

In the aftermath of the SPP’s demise, beware of other initiatives that could take its place and advance economic, political, social, security and military integration, not only in North America, but the rest of the Western Hemisphere.