Apart from this, in choosing the ECB, protesters are also lashing out at the wrong target. They believe the ECB is responsible for austerity measures and "pauperization" in some parts of Europe at a time when it is doing the opposite: it floods the markets with cheap money, it keeps interest rates low, it supports debt-ridden nations instead of pushing them into poverty. In doing so, it reaches the limit - according to many critics, it even goes past that limit - of its core mandate, which is to maintain price stability.The institution he is describing is largely responsible for towering unemployment throughout the EU. The middle classes of Europe are being decimated with former homeowners being evicted in droves. The young have no future. And this is acceptable to DW's Christoph Hasselbach because "price stability" has been maintained.
In USA, thanks to a law called Humphrey-Hawkins, the Fed is suppose to ALSO enact policies to ensure full-employment—a provision that has been totally ignored but at least the law got passed. The ECB doesn't even have that requirement. So while a monetary policy that ONLY targets price stability will ALWAYS lead to catastrophic results, ethical monsters like Hasselbach can console himself that at least he is defending established law.
Here at real economics, we tend to rely on the historical record and the one associated with fiat currencies and an expansionary monetary policy in USA is quite extensive and involved. We even have, in Marriner Eccles, an example of an enlightened monetary theorist who ran the Fed during its glory days. The drop from Eccles to a fool like Greenspan is akin to the drop from Lincoln to "Shrub" Bush. And as a result, no one really wants to be associated with USA economic policies anymore. And who can blame them?
The big fat target, of course, is the unique privilege accorded the US dollar. I would imagine it doesn't take a whole lot to get folks in the rest of the world to sign up for almost any plan that would reverse this obvious economic injustice. One of these days—and probably sooner than later—one of these de-dollarization schemes will work and the fallout from will be ugly indeed. And this all could have been avoided if we had only learned the valid lessons from our own monetary history.
If USA cannot convince folks to stay with the "home team's" version of the economic consensus with promises of prosperity, they can always resort to lying and bullying.De-dollarization fever hits Europe. France, Germany and Italy join the China-led international development bank
Its not a matter of if, but when the US dollar’s reign as the sole reserve currency comes to and end. US vassal states, Australia and UK are breaking ranks and joining the China led AIIB… Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of […]
By Alexrpt@redpilltimes Mar 17, 2015
Its not a matter of if, but when the US dollar’s reign as the sole reserve currency comes to and end.
US vassal states, Australia and UK are breaking ranks and joining the China led AIIB…
Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.When Britain announced its decision to join the AIIB last week, the Obama administration told the Financial Times that it was part of a broader trend of “constant accommodation” by London of China. British officials were relatively restrained in their criticism of China over its handling of pro-democracy protests in Hong Kong last year.Not ready to fall behind the world’s pivot East…France, Germany, and Italy jump on board the China-led international development bank as well.
Britain tried to gain “first mover advantage” last week by signing up to the fledgling Chinese-led bank before other G7 members.
Britain hopes to establish itself as the number one destination for Chinese investment and UK officials were unrepentant.
As The FT reports,
France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.Zerohedge reports…
The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.
The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.
The AIIB, which was formally launched by Chinese President Xi Jinping last year, is one element of a broader Chinese push to create new financial and economic institutions that will increase its international influence. It has become a central issue in the growing contest between China and the US over who will define the economic and trade rules in Asia over the coming decades.
It appears the sea of de-dollarization has reached the shores of Europe. With Australia and UK having already moved in the direction of joining the China-led AIIB, The FT reports that France, Germany, and Italy have now all agreed to join the development bank as ‘pivot to Asia’ appears to be Plan B for Europe. As Greg Sheridan previously noted, “the saga of the China Bank is almost a textbook case of the failure of Obama’s foreign policy,” but as The FT concludes, the European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside. As Forbes notes, this leaves Obama with 3 uncomfortable options…
Bottom line: this isn’t theory or conjecture anymore. Every shred of objective evidence suggests that the dollar’s dominance is coming to an end. more
- Continue to press its allies not to join the AIIB until governance procedures for the bank are assured;
- Join the AIIB itself; or
- Drop the issue.
US urges allies to think twice before joining China-led bank
REUTERS MAR. 17, 2015
EU parliament president Martin Schulz after a news conference in Beijing on Tuesday. Schulz said he welcomed the four European nations joining the Asian Infrastructure Investment Bank (AIIB), but he added that the bank must conform to internationally accepted standards.
The United States urged countries on Tuesday to think twice about signing up to a new China-led Asian development bank that Washington sees as a rival to the World Bank after Germany, France and Italy followed Britain in saying they would join.
The concerted move by U.S. allies to participate in Beijing's flagship economic outreach project is a diplomatic blow to the United States and its efforts to counter the fast-growing economic and diplomatic influence of China.
Europe's participation reflects the eagerness to partner with China's fast-growing economy, the world's second largest, and comes amid prickly trade negotiations between Brussels and Washington.
European Union and Asian governments are frustrated that the U.S. Congress has held up a reform of voting rights in the International Monetary Fund that would give China and other emerging powers more say in global economic governance.
Washington has questioned whether the new bank, the Asian Infrastructure Investment Bank (AIIB), will have high standards of governance and environmental and social safeguards.
"I hope before the final commitments are made anyone who lends their name to this organization will make sure that the governance is appropriate," U.S. Treasury Secretary Jack Lew told U.S. lawmakers.
Lew warned the Republican-dominated Congress that China and other rising powers were challenging American leadership in global financial institutions, and he urged lawmakers to swiftly ratify stalled reform of the IMF.
German Finance Minister Wolfgang Schaeuble announced at a joint news conference with visiting Chinese Vice Premier Ma Kai that Germany, Europe's biggest economy and a major trade partner of Beijing, would be a founding member of the AIIB.
In a joint statement, the foreign and finance ministers of Germany, France and Italy said they would work to ensure the new institution "follows the best standards and practices in terms of governance, safeguards, debt and procurement policies."
Luxembourg’s Finance Ministry confirmed the country, a big financial center, has also applied to be a founding member of the $50 billion AIIB.
The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure. It was seen as a rival to the Western-dominated World Bank and the Asian Development Bank. China has said it will use the best practices of those institutions.
A spokeswoman for the European Commission, the EU's executive arm, endorsed member states' participation in the AIIB as a way of tackling global investment needs and as an opportunity for EU companies.
The bank is seen as a means to spread Chinese "soft power" in the region, possibly at the expense of the United States, which is pursuing its own Asian strategy to strengthen its military and economic presence there.
The World Bank is traditionally run by a U.S. nominee and Washington also has the most influence at the IMF.
The adjustment of shares and voting rights in the IMF was brokered by Britain at a Group of 20 summit in 2010, and European countries ratified it long ago.
Lew told lawmakers that the U.S. delay was undermining its credibility and influence as countries question the United States' commitment to international institutions.
“It's not an accident that emerging economies are looking at other places because they are frustrated that, frankly, the United States has stalled a very mild and reasonable set of reforms in the IMF,” Lew said.
"HIGH WATERMARK"
China said earlier this year a total of 26 countries had been included as AIIB founder members, mostly from Asia and the Middle East. It plans to finalize the articles of agreement by the end of the year.
China's state-owned Xinhua news agency said South Korea and Switzerland were also considering joining.
Chinese Foreign Ministry spokesman Hong Lei would not comment on which countries had applied, and repeated that the bank would be "open, inclusive, transparent and responsible."
Scott Morris, a former U.S. Treasury official who led U.S. engagement with the multilateral development banks during the first Obama administration, said Washington was paying the price for delay on IMF reform and for focusing on criticizing the AIIB instead of working harder to improve existing institutions.
"It's a clear sentiment among a pretty diverse group of countries: We would like to mobilize more capital for infrastructure through MDBs (multilateral development banks)," said Morris, now with the Washington-based Center for Global Development.
"And the U.S. stands in the way of that and now finds itself increasingly isolated as a result.”
A government official in India, which also has joined, said the members of the AIIB would meet in Almaty, Kazakhstan, on March 29-31 to discuss the articles of agreement.
China has said March 31 is the deadline for accepting founder-members into the organization.
Japan, Australia and South Korea remain notable regional absentees from the AIIB. Australian Prime Minister Tony Abbott said at the weekend he would make a final decision on membership soon.
South Korea has said it is still in discussions with China and other countries about possible participation.
Japan, China's main regional rival, has the biggest shareholding in the Asian Development Bank along with the United States. By convention, the Manila-based bank is headed by a Japanese.
Japan is unlikely to join the AIIB, but ADB head Takehiko Nakao told the Nikkei Asian Review that the two institutions were in discussions and could work together.
"We've begun sharing our experience and know-how," Nakao was quoted as saying. "Once the AIIB has actually been established, it's conceivable that we would cooperate." more
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