At the IMF, Japan, Korea, Brazil, Thailand, Rebel Against Globalized Hot Money Speculation Stoked by

At the IMF, Japan, Korea, Brazil, Thailand, Rebel Against Globalized Hot Money Speculation Stoked by Bernanke's QE2; Capital Controls for Self-Defense Gain Ground



By Webster Tarpley



October 13, 2010

The just concluded fall session of the International Monetary Fund and World Bank may in retrospect mark the beginning of the end of the post-1990 world system based on financial globalization and the unbridled supremacy of speculative hot money flows. Meeting in Washington, the representatives of 187 countries utterly failed to reach any agreement reaffirming the discredited “Washington consensus,” which has functioned as the charter of the world looting and exploitation under the banner of globalization for the last two decades. They punted, and passed the buck to the IMF, which is almost certain to get nowhere. The death-knell of globalization may already have sounded.

The immediate perspective is that more and more countries will now manage their currencies and institute capital controls as a means for defending themselves against massive speculative influxes of hot cash, in particular from the notorious Federal Reserve 0% dollar carry trade. Capital controls allowed Malaysia to fare better than any other country caught up in the “Asian contagion” crisis of slightly more than a decade ago, so there is reason to believe that the current popularity of capital controls will be a modest step in the right direction. However, the beginnings of a real and permanent solution to the current world economic and financial depression require a restoration of the fixed currency parities and narrow bands of oscillation which characterized the Bretton Woods system of 1944 to 1971. A restoration of the positive features of Bretton Woods is now the concrete goal towards which international negotiations should now be directed, starting at the G20 meeting soon to be held in South Korea. National Tobin taxes to discourage speculation and aid distressed budgets should also be enacted.

The stage for this current crisis was set last May when the Anglo-American attack on the euro, designed to provoke a panic crash of that currency, broke down — partly due to German self-defense, partly because of Chinese intervention, and partly because a high-frequency attack on the euro boomeranged against the Dow in the infamous “flash crash” of May 6. Since then, the euro has been steadily gaining ground, while the US dollar has lost about 13% of its value since mid-June. The forces of depression, represented by $1.5 quadrillion of kited, toxic, and bankrupt derivatives centered on New York, have been re-asserting themselves against the battered US greenback.

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Here's another interesting article about the ongoing currency war and everything going on over at the IMF.

China not willing to devalue its currency and wants the US dollar to remain high. As a result, US exports are pressurized and unemployment figures are not improving. All countries now playing tug war but US is still on losing end.

Simply, the only solutions on the table are for US to resort to deflation (US products be attractive) or go to war to secure another oil-rich resource.