Western media coverage of these developments has been mostly dismissive, but that primarily reflects the concerns of Washington and its allies. They have had unchallenged sway over the decision-making institutions of global financial governance for 70 years, and the last thing they want to see is competition. But competition is exactly what the world needs here.…
The BRICS’ new CRA has the potential to break the pattern not only of U.S.-EU global dominance but also of the harmful conditions typically attached to balance of payments support. It could prove very important in the next few years: A lot of money has poured into emerging market government bonds since the Fed set short-term interest rates at zero more than five years ago. A lot of it could up and leave when the Fed decides to raise interest rates here. Such rate hikes were a major cause of the Mexican peso crisis in 1995 and hit other countries such as Brazil and Argentina a few years later. The BRICS countries have indicated that they are open to having other countries join. China has about $4 trillion in reserves, so it has the potential to contribute vastly more and probably still come out ahead, as most of its reserves will likely be losing money in U.S. Treasury bonds. There’s no telling how soon this new fund will be up and running or how big or inclusive it will grow to be. But the upside potential for the world economy is very big.Power belongs to those who can organize. It's no accident that empires form around superior organizational ability and management skill that characterizes the power elites of history. The question now is whether the BRICS and Global South can compete organizationally with the US and Global North. This will determine whether the bulk of the 21st century is dominated by neoliberalism, neo-imperialism and neocolonialism.
This in an encouraging first step, but it is only a first step.
Al Jazeera
BRICS’ new financial institutions could undermine US-EU global dominance
Mark Weisbrot | Co-director of the Center for Economic and Policy Research in Washington, D.C., and President of Just Foreign Policy.
BRICS’ new financial institutions could undermine US-EU global dominance
Mark Weisbrot | Co-director of the Center for Economic and Policy Research in Washington, D.C., and President of Just Foreign Policy.
Tom,
ReplyDeleteYou cant even safely fly over their airspace or safely attend a world cup soccer match there...
Meanwhile people are still illegally breaking into the west every day...
Wake me up when this changes...
rsp,
" lot of money has poured into emerging market government bonds since the Fed set short-term interest rates at zero more than five years ago. A lot of it could up and leave when the Fed decides to raise interest rates here. "
ReplyDelete????????????????????
Yeah .... "money" was "poured in" and could "get up and leave" nice metaphors .... when ALL they have is metaphor that is a tip off that they are FOS...
There was no Asian currency crisis in 1997 as a result of which the Global South built up dollar reserves to prevent a recurrence of after being stiffed by the IMF?
ReplyDeleteWhen dollars are invested in other countries the dollars are used to buy other currencies, driving up demand for them and making them stronger relative to the USD. When dollars leave, foreign currencies are sold, driving down demand and making them weaker relative to the USD. The difference in exchange rates has an impact on the economy losing investment.
The US hawks are crowing about the Russian stock market tanking and the ruble falling due to sanctions.
So while it is true that a currency never leaves its currency zone (other than through cash in suitcases), there are financial and economic effects of investment withdrawal, especially when it is sudden and results in a shock.
This is the point of US sanctions on Russia, which are designed as financial warfare against the ruble, the financial system and the domestic economy.