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Austerity reigns, we lose: G20 summit roundup

Above is Naomi Klein on Democracy Now on the G20 plan to cut deficits in half by 2013.

“What actually happened at the summit is that the global elites just stuck the bill for their drunken binge with the world’s poor, with the people that are most vulnerable,” Klein says.

As I described (G20 and Deficits) in the week’s leading up to the G20 summit, the push was for austerity and cuts to social spending, regardless of how much it would hurt the poor and could easily, according to some economists lead us to a new depression.  Canada (with France, Britain and Germany, among others) led the charge.  Well, it happened.  Austerity reigns.

Here are a number of excellent articles on the aftermath of the G20 meetings themselves.

Sticking the Public With the Bill for the Bankers’ Crisis How else can we interpret the G20 communiqué that includes not even a measly tax on financial transactions?

As Canada’s Democracy Trembles, a New Global Architecture Emerges

G-20 Nations: Race to the Bottom will Continue
A critical analysis of the G-20’s Toronto Declaration

The G20’s prescriptions for the global crisis will only worsen the situation for Africa

G-20 Nations: Race to the Bottom will Continue

G-20 Nations: Race to the Bottom will Continue

I have been writing about the G20’s austerity plans for the past few weeks (here and here for example.  Well, it has been approved by the G20.

I’ll be writing more about the austerity and other G20 declarations tomorrow.

Here is Dawn Paley’s excellent piece on the Toronto declaration.  Read the original from Vancouver Media Coop here


G-20 Nations: Race to the Bottom will Continue A critical analysis of the G-20’s Toronto Declaration

As the G-20 summit winds down behind the fences surrounding fortress Toronto, there are at least 560 folks in jail, and anyone left out on the streets is facing detentions, beatings, searches and arrests.

This is the context in which the Group of 20 gathered to write the Toronto Summit Declaration, a 27 page document released earlier this evening. An early critical reading of this text makes it evident that those who have taken great risk to mobilize against the G20 have done so on behalf of the health of communities, and the planet.

Because though the Toronto Declaration begins with a populist appeal to sustainability, job creation and financial regulation, it enshrines a commitment to force the poor and working class around the world to tighten their belts yet again as states implement strict new austerity programmes.

The Declaration proposes an ambitious new structural adjustment agenda, designed by the IMF and the World Bank, that aims to halve first world deficits by 2013.

Shoring up financial sector abuse of public funds is likely one of the most pressing concerns of publics, who have been denouncing the bank bail out all around the world. But the language in the Toronto Declaration does little to guarantee meaningful public oversight of the financial sector.

The Declaration welcomes the recently passed US Financial Reform Bill, which according to Newsweek “effectively annoints the existing banking elite,” without putting a cap on executive compensation. Nor does the bill crack down on the banks that are supposedly “too big to fail,” including J.P. Morgan, Goldman Sachs, Citigroup, Bank of America and Morgan Stanley.

Financial oversight will remain with elites, led by the IMF and other Multilatral Development Banks (like the Inter American Development Bank and the African Development Bank), which the declaration proposes should become “even stronger partners” in the future.

The Declaration indicates that G20 countries will pump $350 billion into Multilateral Development Banks, doubling their lending capacity, so that they can “focus on lifting the lives of the poor, underwriting growth, and addressing climate change and food security.”

The move towards putting MDBs on the front lines of global lending could be a response to the growing global rejection of International Financial Institutions like the World Bank and the International Monetary Fund. This shift is reminiscent of a move away from global trade and regional agreements like the Free Trade Area of the Americas and the World Trade Organization, and towards smaller regional deals and bilateral agreements.

The Toronto Declaration makes a point of noting that Haiti’s debt with International Financial Institutions will be cancelled, but avoids mention of the larger debt that the country owes to the Inter American Development Bank (IADB). Haiti owes less than $200 million to the World Bank and the IMF, while their outstanding debt to the IADB is upwards of $441 million. The IADB has also positioned itself to become the lead development bank behind the $10 billion reconstruction of the country.

In addition to an increased role for the IADB and other regional development banks, the Toronto Declaration promises more privatized “development financing” for low income countries. This could mean further subsidies for transnational corporations active in resource extraction and the maquila sector.

Language in the document around increasing global output, create tens of millions of jobs, and reduce global imbalances flies in the face of recommendations for countries with higher debt loads to continue a regulatory race to the bottom by “maintaining open markets and enhancing export competativeness.”

The Toronto Declaration also welcomed the launch of the Global Agriculture and Food Security Program, which proposes to create food soverignty between public and private partnerships. This flies in the face of demands from peasent groups, including Via Campesina, who stated at the end of 2009 that “The absence of the heads of state of the G8 countries has been one of the key causes of the dismal failure of [the November 2009 Food and Agriculture Summit]. Concrete measures were not taken to eradicate hunger, to stop the speculation on food or to hold back the expansion of agrofuels””

The Declaration asks that the OECD, the ILO, World Bank, and the WTO facilitate their version of events by having them “report on the benefits of trade liberalization for employment and growth” at their next meeting. States are cautioned to stick with World Trade Organization measures and avoid new “barriers to investment or trade in goods and services.” Items that potentially included among these barriers are new environmental legislation and new forms of taxation on corporate activity.

On the topic of climate change, G-20 countries that support Cophenhagen issued a weak call for other nations to “associate with it.”

Cut, cut, cut – then tell the market, says G20

Cut, cut, cut – then tell the market, says G20

Organization for Economic Cooperation and Development says money is ‘gone’

It is becoming more and more clear what G20 financial reform looks like – punishing cuts to the poor and middle class and obedience to the banks.

As I wrote on a few days ago, the G20 has decided to focus its energy at the Toronto summit on pressuring member nations to implement deficit cutting and fiscal austerity through deep and painful budget cuts.

This move to austerity is about maintaining investor/market confidence at all costs.  The head of the Organization for Economic Cooperation and Development, Angel Gurria, warned the world’s economies to “make sure that you give signals to the markets about fiscal consolidation.”

Translation: countries need to start slashing spending and then pronounce it publicly and immediately to ensure investors hear it.  This is expected to calm markets and boost growth, despite much evidence to the contrary (for example here, here, and here)

Canada, of course, was right in on the action: “We’ve pushed hard for those countries that need to fiscally consolidate in Europe to get on with it and to demonstrate their resolve” said Canadian Finance Minister Jim Flaherty.  The Bank of Canada is on-board as well.

Gurria further claimed that all the (public) money is gone. Thus, all we can really do is start cutting and becoming more ‘flexible’ (ie: crushing unions, increasing temp and precarious work to fix market needs), and making the world ripe for the markets:

“Countries need flexibility in labor markets, exchange rates; they need structural adjustment policies like competition, education, innovation,” said Gurria. “These are the things that are going to make the recovery hold, because you can’t hold it up with public money any more. It’s gone.”

And where did the public money go? To bank bailouts, to housing bubbles, to tax cuts for the rich, to corporate subsidies, etc… and now we get to pay for all that.

G20 & deficits: Banks Cause The Crash, The World’s Poor Pay

G20 & deficits: Banks Cause The Crash, The World’s Poor Pay

G20 deficit cutting wrong approach to fix crisis

A major turn took place at the G20 finance ministers meeting in Busan, South Korea over the weekend, as the G20 reasserted deficit and spending reduction its top priority, marking the final step in the (re)triumph of neoliberalism as global economy’s modus operandi. Britain and Canada were the major proponents at the meeting of this deficit warrior approach to recovery while China has cautioned against too rapid an end to stimulus efforts.

This deficit reduction approach is extremely significant given that, following the economic crisis, the neoliberal model itself underwent an identity crisis, as many began to openly question the orthodoxy of deregulation, cutting spending and deficits at all costs, etc…   Even the most conservative governments, as a means to help build an economic recovery, advocated for fiscal stimulus (lower interest rates, increases in government spending to help bolster demand and reduce unemployment, etc…), and the G20s stimulus approach continued right up to April of this year, where  called for continued stimulus until the recovery becomes “more entrenched”.  With the G20 announcement, that approach appears to be over.

What is wrong with this switch to austerity?

There is an argument that this austerity is just bitter medicine that must be taken to cure the economy of its ills.   However, even if you are one to accept the idea that austerity is necessary at times to right the ship, Nobel economist Paul Krugman points out that this is clearly not one of those times.  The economy, though there are signs of recovery, is still depressed – bogged down by high unemployment in most of the largest economies, including the EU and the US.  And when the economy is depressed, slashing spending to reduce debt is both “an extremely costly and quite ineffective way to reduce future debt” because it depresses the economy even further and it reduces the tax dollars received (which could be used to pay down the debt in the future).

Krugman is not saying deficits should be ignored, just that it is wrong and counterproductive for deficits to be the sole focus.

Also, the austerity simply hurts poor (working or unwaged) and middle class people, and we can not lose sight of that. Having started with Greece, it seems that the plan is to go country by country, one-by-one, and force these measures which will diminish social programs, decimate the public sector and dramatically increase poverty and unemployment.

In fact, the G20 pointedly told indebted nations that they must ‘speed up’ their austerity drives.  And, just today, British PM David Cameron brought the point home, announcing his drive to cut the deficit in the UK through massive cuts.  He warned that Britain’s ‘whole way of life’ will change due to the most drastic public spending cuts in 20 years.

It is worth reflecting on the value an economic system that can continuously and callously demand more from its population, undermining their futures in the process, to pay for the sins of financiers whose risky speculation made them billions of dollars before the bubble burst.

Now it is on the people’s backs to clean up the mess.  It is post-crisis shock doctrine for all of us. A clear reason to challenge the G20 agenda.

Pray for the G20 with Karl Rove!

Pray for the G20 with Karl Rove!

Karl Rove is coming to the G20!  That’s right, ‘Bush’s brain’ who was Dubya’s chief advisor, a key architect of the Iraq war, and a prolific liar who arguably should be in jail right now, will be speaking at an evangelical event at Canada Christian College sponsored by Canada Family Action, the Institute for Canadian values, Conservative Values of Canada and B’Nai Brith of Canada. It is being coordinated by Charles McVety, head of Canada Christian College, who is one of Canada’s most active campaigners against same sex marriage through his Defense of Marriage Coalition. It will all take place in Toronto while the G20 is meeting – June 25-27.

The wide array of speakers are all white men, who, of course, are best able to understand Canadian values, the importance of defend marriage, etc… and how that all wraps up into wholesome, family values G20 policy.

And this isn’t some side show – they have clout.  Former Conservative MP Garth Turner once said McVety has unrivaled access to the Prime Minister, with McVety having told him:”I can pick up the phone and call Harper and I can get him in two minutes.”  Wonder where Harper’s anti-abortion ‘women’s health’ plan comes from?

McVety’s Wikipedia page (yes, I took the shortcut on this paragraph, though I fact-checked!) states that he is anti-Darwin, anti-environmentalism (leads to worship of earth), and was one of the leading proponents of Bill C-10 changing policy on tax credits for films the Conservatives didn’t like.  McVety claimed credit for the Bill (Globe and Mail -2008-02-29) stating “films promoting homosexuality, graphic sex or violence should not receive tax dollars.”

Workshops include such important events as ‘pray for the G20’ and dealing with ‘one world government’ (hmm, is it a stretch to say that we have that now, and people like Rove get to lead it?).  Right in line with the Conservative government itself,  the event’s main focus is to push the G8 to stop nuclear Iran (though Iran currently has no nuclear weapons), while viewing the regions other potentially apocalyptic threat, Israel’s nuclear weapons, as outside scrutiny, despite the fact that Israel has an already existing nuclear stockpile.

But I guess in a world where the Israeli Defense Forces can storm a relief supply flotilla at gunpoint in international waters and still be seen by much of the media and establishment as the victims, I shouldn’t be at all surprised by this little contradiction.  I digress.

They will even be having a rally up on Gervais Ave (Eglington and Don Mills).  I will look into where the police will be putting the security fence up there.  Or whether they will arrest Rove.

Maybe some of the protest will shift there?

This is all up at, a website which, strangely enough, the $1billion G20 cost was unable to cover.   Or when , McVety called, did Harper just say, ‘hey, is yours, go crazy old buddy’

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