The European crisis that you’ve been reading about in the paper is worth watching carefully. In fact, it has now morphed into something much bigger than a European crisis – it could batter the entire global economy, which is pretty fragile anyway.
You’ve read a lot about Greece, but the problem in Europe is Italy. Greece is a nano-state; it makes up about 2% of the European Union’s gross domestic product. Italy, on the other hand, is one of the seven largest economies in the world. Its debts are greater than those of Spain, Portugal, Ireland and Greece combined. It has long been governed in an almost cartoonishly bad manner. Italy is too big to fail but might also be too big to bail. Even Germany might not be able to credibly bail it out along with all the other troubled countries. So what can be done?
I don’t think the leading proposals will work – creating Eurobonds or giving Brussels broader power to tax. They’re simply not going to happen. Governments oppose it and people oppose it. And anyway, creating a tighter European Union will take ten years. Markets needs reassurance now.
So I have a proposal: We need a big bazooka. Facing a similar crisis in 2008, then-Treasury Secretary Henry Paulson talked about the need for a sum of money large enough to scare markets into submission. A bazooka. But the problem is this: All of the EU combined doesn’t have one big enough. So who has the kind of money Italy needs?
Take a guess? They have $3 trillion in foreign exchange reserves. Yup, China. In fact, today, 10 trillion dollars of foreign exchange reserves are sitting around across the globe. That is the only pile of money large enough from which a bazooka could be fashioned.
The International Monetary Fund could go to the leading holders of such reserves – China, but also Japan, Brazil and Saudi Arabia – and ask for a $750 billion line of credit. The IMF would then extend that credit to the troubled EU economies, but insist on closely monitoring economic reforms, granting funds only as restructuring occurs. That credit line would more than cover the borrowing costs of both Italy and Spain for two years. The IMF terms would ensure that the two nations remained under pressure to reform and set up conditions for growth.
Now, the Chinese would have to devote at least half the funds. What’s in it for them? A new global role. This could be the spur to giving China a much larger say at the IMF. In fact, it might be necessary to make clear that Christine Lagarde would be the last non-Chinese head of the organization.
In a world awash in debt, power shifts to creditors. After World War I, European nations were battered by debts, and Germany was battered by reparation payments. The only country that could provide credit was the United States. For America, providing desperately needed cash to Europe was its entry into the councils of power, a process that ultimately brought a powerful new player inside the global tent. Today’s crisis is China’s opportunity to become a “responsible stakeholder” in the global system. If this doesn’t happen, hold on to your seat because we’re in for a rough ride.
Babylon “queendom” is falling! Those who divided the world among themselves and exploited its resources for centuries are now collapsing under their own greed and injustice. Their racism prevented them from realizing that development of their “dependent” colonies would have been to their advantage. They extracted all the natural resources from Africa, South East Asia, Latin America and the Caribbean and they left us poor.
The liberation of the colonized people have dealt a serious blow to the colonialists. They continue to hinder our progress with their unjust financial and trade institutions. The day is quickly approaching when we will stand up and demand a New International Economic Order. China should not lead their IMF but to partner with developing countries to set up their own institutions and let capitalism go to the dogs.
In simple terms governments, specifically in previous years have squandered money. Today, they are trying to save money by spending thriftily.
It is strange that China has more money than those countries and is able to assist other countries. It appears that in time China will take over the world.
Food for thought: Consider that nearly every item is now made in China and is sold less expensive than what is made in those other countries – locally. Why should this be?
Wake up western world!
IMF SEEMED TO HAVE BEEN CREATED TO SAFEGUARD THEIR POWER ON THE GLOBAL STAGE AND FACILITATE THEIR COLLECTIVE INTEREST…
Little do they realise that “righteousness” crushed to earth will rise again.
The reparation paid by Germany after ww11 was given to the wrong hands. They deliberately bypassed the 500 years of free labour and created their “holocaste” to divert as usual
Their world wars came out of the (gold/resources)rush for Africa. The intrigue here is that China was not on the scene THEN.
With the eminent fall of EU/USA,the greatest smoke screen is another world war with China as probably their raison d’etre…
…with the same drive; Africa still remains the bone of contention and greed the motivation.
WHAT A HOLLOW CASTE OF HUMAN BEINGS WHO ARE INDEED MANIFESTING THE SYNAGOGUES OF SATAN
ETHIOPIA HAS STRETCHED HER HANDS TO THE ALMIGHTY ALL TO HIS GLORY.
Holocaust
The financial crisis is fueled by greed and a currency system based on smoking mirrors. A degree of greed that has put 90% of the worlds wealth in the hands of 10% of the worlds population. That 10%, controls more wealth than entire nations along with their respective governments. Which put the wealth holders in control of gov and legislation around the world. Golden Rule; “He who owns the gold makes the rules”
When money was taken off the gold standard and currency was introduced (i.o.u), financial destruction was sure to follow.
For all those who dont know, all the countries owing china who cant pay in currency will have to give up their gold reserves. Alternative to that will be war, because when people cant or refuse to pay it always ends bad for the weaker side (usually the debtors)…
Anyone see another world war on the horizon??????
This prescription sounds so familiar,for all those who are bent on being critical of the Dominica government’s economic plan,take look at this.
Guess the messenger isn’t one those in Skerrit’s back pocket,but surely this latest piece makes Skerrit look like an economic WIZARD.Its like this man is reading out of Dominica’s economic manual.Or maybe he is,just maybe he is saying to the Europeans why don’t you guys follow the foots step of Dominica and use the same approach to economic recovery as they did.
Interestingly though would that make Europe a begger?or would it make them lose their independence?
I really wish that my people would grow up and realize that grant funding is a part economic development programmes and that every country would love to have enough grant funding to sustain their economies,it has also been known to provide a solid backbone to economic growth.
So Dominican,this writer is saying to us that we should be very proud to be a world economic leader in term of showing even Europe the pathway to economic development.
BIG UP DOMINICA.WE LEAD AND EUROPE MUST NOW FOLLOW.
Why is it we should take Mr Fareed Zakaria seriously,when he writes a commentary like this. Mr Fareed Zakaria is a member of the elite Think Tank, Council on Foreign Relations CFR and also a spooks man for this very powerful influential group who work behind the scenes manipulating world affairs, these are the same people who by the way are behind the events orchestrating the financial problems taking place in Greece, other parts of Europe and the United States.
Hmmm.Interesting plan. Obviously, the US cannot bail out Europe this time, so China, Japan and Saudi Arabia are the logical scapegoats this time. But I have a concern: what happens if the Europeans default? What if they cannot make a reasonable recovery? Who repays the IMF and the Chinese?
World war 3 that’s who’ll repay China, and the Elites shall benefit yet again thus leaving the majority of us(the sheeple) to rot in prison camps…
I’d rather plant my dasheen so I have it to eat when the “ish” hits the fan than listen to these “leaders” in their democrazy…….
Italy:a so called chtristiae nation!you right ,with all their papal crap.Skerro,hold on to china all of them turning to now.
The IMF organization is one that has been unpopular in many developing nation. Many believe they favor large develop nations. So in this light it would be very interesting to see the leadership of this financial organization be passed on to someone of a third world country.
i guess we can’t dodge the red dragon….
only china can save the cbean…….
How fitting…. A so called Christian nation to be bailed out by Atheists.
Bombed any innocent oil rich nations in the name of “freedumb” lately EU?
IMF = biggest scam the world has ever not-known!