Dear Dinosaurs
By Chan Akya
atimes.com
At this weekend's G8 meetings, discussions between finance ministers of industrialized or developed nations will likely ignore the actual issues confronting these countries over the next few years. The following is a letter to the collective group of G8 finance ministers, which we hope does not prove too taxing for their intellects. The grouping includes Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States.
Dear Dinosaurs,
It is not often that your good selves manage to meet in a nice waterhole like Washington, so allow me to congratulate you on your choice of venue for this year's conclave. You have made the correct environmental choice by going to Washington, for where else in the world can such a large and important meeting benefit from the ready availability of hot air from a proximate source (Capitol Hill, just behind on your left). Indeed, a friend of mine tells me that hot air emissions from Donald Rumsfeld and Dick Cheney would have been sufficient to heat all your hotel rooms, but for the unfortunate departure of the former prematurely which has left you all overly reliant on the latter both for heat and comic relief. Still, it could have been worse - for example. Hillary Clinton as President would have likely melted many a libido before it lands in the United States.
Before we delve into the topics likely to confront you, may I ask each of you to look to your left and right, and ask whether the countries at your table actually mean anything for the global economy any more? Besides the obvious point that three countries that actually make up a bulk of global economic growth - China, Brazil and India if you were not paying attention when your economic consultant was talking - are conspicuously absent at the table, the countries around you by and large represent the most significant economic drag the world has seen in the last few decades. If indeed your idea was to cobble together a group of the world's largest losers, then please discard the previous comment and congratulate yourselves on the stupendous success of the initiative.
If not though, perhaps you have ask yourselves why someone makes it a point to invite France and Italy to this grouping, when neither of them has benefited from a functioning economy in the last five years. The Italian economy shrivels faster than the polar ice caps, and very soon will be reduced to a rump of old factories outside Turin and a couple of tailors in Milan. Then again, you do still have Japan in the mix, so perhaps it would be cruel to eject any of the Europeans who at least show the good grace to allow a reproduction-led takeover of their states by Muslims, a little demographic nicety that the Japanese could easily cobble together by just opening their borders to Filipino maids and nurses. Even if I bring myself to understand all three of these countries, can someone explain what Canada is doing in this grouping? They don't even have the declining factories of Italy or the jaded tourism of France, and as of this summer nor do they have a functioning financial system. Do you really need a member whose raison d etre is this meeting?
Financial wobbles
Now that I have cruelly broached the "F" word, ie, financial system, perhaps it is time to look around the table once again. Massive losses have gripped banks in Canada, France, Germany and the United States, while the UK has actually witnessed a bank run (1). As for Japan, improvements to their financial system are slow enough to make snails complain. All that means of course that you will find that the standard-bearers for financial system stability in your grouping are Italy and Russia. Now, think about that for a moment - do you know of any other business in the world where Italy and Russia set the benchmark, other than organized crime?
The crisis is of course entirely of your own making. For years now, you have focused unnecessary energy on getting Asian countries to float their currencies, whilst ignoring your own responsibilities to balance your budgets and reduce dependence on their savings. The arbiters of quality in your bond markets, the rating agencies, were allowed to flourish as corrupt business entities without any oversight whatsoever. Meanwhile, as your citizens splurged on a borrowing binge all of you looked on like proud hippie parents witnessing their kids absorbing their first bong hits (2). Some of you are less culpable than others, to be sure - Russia, for example. Then again, none of you can imagine Russia as an example of anything, so let us move on.
Your central banks have fallen into the trap of unleashing liquidity on an unsuspecting population, who gobble up cheap financing without realizing the inflation sting that lies ahead. Citizens in other countries have smartened to the moral bankruptcy of your central bankers, and taken to purchasing billions of dollars worth of gold, oil and other real assets (3). Indeed my read of The Mogambo Guru tells me that even your own citizens are catching on to your schemes so perhaps there is a much closer day of reckoning than you all imagine (dinosaurs - reckoning - meteorite: get it?). Europeans have not smartened up on the investment side of things, but they have at least taken to their old habits of going on strikes as shown by transport workers across Germany, France and the United Kingdom this week. (Perhaps the Italians don't bother turning up for work anymore and so missed the opportunity to go on strike.)
A number of you around the table may think that TIC (Treasury International Capital) is a horrible louse that infests dogs. It is actually an important statistic that shows how much of American assets are being purchased by non-Americans. For the first time in a long while, this figure was actually negative in August this year - foreigners sold more than they bought in the United States. Others around the table don't necessarily publish these figures, but don't make any mistake, much the same may be happening in places like Italy and the United Kingdom already.
Then there is the ham-handed attempt by the three largest US banks to put together a rescue fund for the SIV (structured investment vehicles) sector. Among all the ideas that involved good money chasing bad, this one takes the cake. To think that none other than the US Treasury Secretary Hank Paulson chaired this effort leaves the rest of us with an astoundingly bad taste in the mouth - forgive me for being impertinent, but aren't you guys supposed to be the policemen rather than the thieves?
Xenophobes anonymous
All this talk of money and banking must be making you tired, so perhaps it is time to find an appropriate target for you to lecture and hector in your meetings. Yes, it is understandable that you need to make terrifying sermons from the pew, but this time around you may find the going a bit tougher than usual.
You see, by pulling in the sovereign wealth funds of various countries (China, Korea, Kuwait, Norway, Russia, Saudi Arabia and Singapore) for a quiet chat, you intend to signal the need for higher standards of disclosure and prevent backdoor takeovers of your largest companies. Truth is, if only you were so lucky. As I hinted in one of the preceding paragraphs, your economies are in a state of permanent decline, thus making your stock markets prone for long-term downward adjustments. In plain English, that means sell while you still can.
Then again, the presumption of relevance has long been a characteristic of your conclave, so why change it now? You happily lectured the Latin Americans and Asians in the 1990s (4) about the need for structural reforms, open markets et al, and yet when it is your turn to benefit from these innovations, actions no longer reflect the spoken word. You want foreigners to buy your worthless debt but not your brands or your technology? Well, why don't you look around for another group of suckers instead?
Making a symbolic gesture against China has of course always been a standard feature of these meetings, and this time your hosts invited the Dalai Lama for an otherwise-unknown honor just in time for this weekend's meetings. If symbolism was your goal though, perhaps you should have gone for Lee Hun-jai, the courageous head of the Korean restructuring effort post-1998 who actually achieved more in five years than the likes of Japan, Italy, Germany and Russia among you managed in your entire history.
Instead, you will probably choose to listen to the musings of former Fed chairman Alan Greenspan who has completed his "See No Evil, Hear No Evil, Speak No Evil, but Please Buy My Book" tour of world capitals. The gentleman announced that the credit crisis was over a few days back, so I guess all of us can rest easy now. Except of course that banks continue to fail their funding tests, and credit markets still operate within a logjam.
Perhaps I shouldn't be so critical after all. From the vantage point of the countries that will run the world soon enough, such as China, Brazil, India among a host of others, it is good news that your group will choose to ignore the most pressing problems and instead devote all your energies to mundane and useless agenda items. This gives us all the time we need to push you off the economic cliff once and for all. Oops, maybe I shouldn't have just written that. |
