by Bruce Campbell
National Office | Commentary and Fact Sheets
Issue(s): Government finance, Public services and privatization
July 14, 2010

Canadians trying to recover from the post-G20 blur have yet another worry on the horizon: the aftershock of the G20 leaders’ austerity plan.

Two years ago this fall, the G20 nations responded to the global financial meltdown with aggressive monetary stimulus and massive bank bailouts to quarantine the contagion; and a $5 trillion fiscal stimulus program to stem the economic free fall. Without this unprecedented collective action, the world would have plunged into a 1930s-style depression.

Even as the European debt crisis — the latest fault line in the financial crisis — continues to send shock waves through the global markets, powerful forces are aligning to flick the world back into its previous ideological default position.

Now that the depression bullet has supposedly been dodged, the G20 political leaders, despite paying lip service to the still fragile and uneven state of global economic recovery, are planning to rapidly eliminate their deficits — the very mistake governments made during the 1930s.

Contagion (a medical term referring to a highly transmittable disease) has become the metaphor for a world of highly interconnected and deregulated financial markets; where a financial crisis in one country quickly spreads to others infecting their real economies as well.

Collateral damage is what happens when contagion hits people who live and work in the real economy, and who pay the price of the financial market excess that caused the contagion.

Global unemployment has already risen by 34 million since the crisis began, with millions more workers unable to find regular employment.

Prodded by the financial markets’ whipping up of deficit hysteria, a new government consensus in favour of fiscal austerity is emerging. It is led in Europe by Germany and the U.K., and in North America by the Harper government. It contends that only swift and deep spending cuts will restore confidence among the bond market vigilantes.

This, its proponents argue, is necessary to prompt the private sector to spring into action, invest and spur the recovery. Although there is not a shred of evidence that this tough love approach will work, one thing is certain: It will deepen the suffering of the unemployed.

Draconian austerity measures are now being imposed in Europe and elsewhere: pension rollbacks and wage cuts for public servants, savage spending cuts. Millions are losing their jobs, their homes and their businesses.

These measures are guaranteed to deepen and prolong recession and, paradoxically, weaken governments’ ability to manage their debt.

The wealthy will suffer no similar fate. On the contrary, the latest Merrill Lynch world wealth report found that ranks of millionaires climbed 17 per cent in 2009 while their collective wealth surged 19 per cent to $39 trillion.

Stephen Harper boasted about getting G20 countries to agree to cut their deficits by one-half by 2013. If they follow through, the risk of backslide into global recession will grow. (Nothing about job creation targets in the summit communique.)

Harper also lobbied hard to kill an international bank tax that would help rein in the speculators that put the global economy in crisis in the first place, and provide a major new source of revenue for governments.

At home, egged on by business economists and its own ideological instincts, the Harper government is preparing to shrink its own moderate deficit and debt via major public services cuts, layoffs and asset sell-offs, even as more than 2 million Canadian workers (11.5 per cent) remain unemployed or underemployed.

The news of recent days makes the G20 decision all the more troubling. The U.S. economy is faltering, unable to create enough jobs as record numbers drop out of the workforce. Europe is struggling. The Japanese economy is anemic. Even China’s economy is showing signs of slowing. There is growing talk a double dip global recession.

In Canada, the economy stalled in April and today Statistics Canada will tell us how this has affected unemployment.

So, here and abroad the poor and the middle class pay the price of deficit reduction via social program cuts and continued high unemployment. They are collateral damage while the perpetrators get back to business as usual.

The destructive free market mindset — the real source of the contagion here — was not (as it should have been) extinguished months ago; and proponents such as Harper and other G20 leaders have worked hard to put it back on the front burner.

Clearly, they have not yet learned the lesson of the 2008 collapse. Until they do, the cycle of contagion and crisis will recur. And people — the collateral damage in this dangerous high stakes game — will continue to pay a heavy price.

Bruce Campbell is Executive Director of the Canadian Centre for Policy Alternatives.

This morning, 10 February, 2010, the FaceBook group, “Canadians Against Proroguing Parliament” passed the quarter million mark.  Canadians from all political parties, and those with no political affiliation, are showing their commitment to Canada and democracy.

The issue is NOT about using the parliamentary tool to prorogue, but rather how and why it has been used by the Federal Government twice in the past 13 months.

Take a look at the conversation, click here

BTW, do you know where your MP is today?

From the Facebook page: Canadians Against Proroguing Parliament

Amazing what one can find out just looking around the Internet.  That mortgage you have?  The bank created the money for it out of thin air!  Then they charge you interest on the use of it…
…

Quote
In Canada, the reserve ratio was phased out in the Bank of Canada Act in 1992. Today, if you look at the Act, you will see the following stanza:

457. [Repealed, 1999, c. 31, s. 14]

It took some digging to find out what was contained in that section, but here it is: …End Quote

click here to read the full article with the relevant history and Bills from parliment that made it possible.

While the Climategate leak and the conversation points it raised are still intertwined with Copenhagen’s proceedings, a new leak has suggested that a secret “alternative treaty” at the COP15 summit may take center stage for the remainder of the talks. The leaked document, called the “alternative treaty” and the “Danish text,” was obtained by reporters of The Guardian leading some to theorize that a shadowy coalition of political and business leaders might have been working to undermine Copenhagen, and possibly even the UN.

Given brief mention by The New York Times on Monday morning prior to the leak, the authors of the so-called “alternative treaty” are not publicly known. The Guardian alleges to have inside information linking the treaty to the United Kingdom, the United States, and Denmark. The alternative treaty is said to vary greatly from the current climate protocol, specifically by dividing developing countries politically, providing marginal aid to victims of climate change, assigning disproportionate emissions targets, and removing the UN from future climate negotiation. These are the key points that have been gleaned from the document thus far:

1. Developing countries will be responsible for double the emission cuts (per capita) of industrial nations, not the other way around.
2. Force developing countries to adopt broad per-capita emission cuts.
3. Weaken the UN’s ability to administer climate change programs, including finance, measurement, and reporting.
4. Developing countries will be split into two groups: “the most vulnerable” and those who can afford some or all of their disaster management needs. This would separate the lobbying efforts of emerging powers like China from the interests of poorer nations like South Africa.
5. All climate financing is to be administered by the World Bank, but only if the nation requiring the funds takes specific actions prescribed by the World Bank — not the UN.

The Guardian quoted an unnamed diplomat from a developing country that read the leaked text who called it “the end of the UN process.” The diplomat was critical of the Danish text’s authors, though it is not clear who they are. “It is being done in secret. Clearly the intention is to get Obama and the leaders of other rich countries to muscle it through when they arrive next week.”

How was the COP15 Danish Text Conspiracy Supposed to Work?

Mentioned in passing in the New York Times yesterday as the “alternative treaty”, the rumor maintained that a secret document would be developed behind closed doors by the host nation, Denmark, rich countries like the US and UK, and international business leaders.

Some theories suggest the conspiracy was supposed to unfold next week when Copenhagen presumably would falter from deadlock. Accordingly, the same theory might suggest that world leaders meeting on the final day would be desperate to sign any treaty in order to avoid complete failure.

According to this theory, that is when the alternative treaty would be introduced. Some might ponder that this alternative treaty might have been misunderstood as a stepping stone toward a more favorable treaty, or in the worst case, a meaningless photo opportunity.

What’s Being Said About the Alternative Treaty?

China, India, South Africa, Brazil, and Sudan vowed to walk out of the COP15 summit if industrial nations continue to put their support behind the Danish text. “Like ants in a room full of elephants, poor countries are at risk of been squeezed out of the climate talks in Copenhagen,” said Oxfam International’s climate adviser, Antonio Hill. “As the talks ramp up and the big players put forward their proposals for the deal, it is vitally important that vulnerable countries are part of the debate.”

UN Climate chief Yvo De Boer said that he did not expect the two groups would be able to come to an agreement, and that it is likely that the Kyoto protocol would be extended.

Rob Bradley of the World Resources Institute said that the sharp criticism of developing countries should be taken with a grain of salt. “It is important to remember that this kind of drama — the ‘leaking’ of furtive texts, the knee-jerk outrage – are part of the routine of climate negotiations,” said Bradley. “What happened yesterday will not derail the high-level talks in which so many countries have invested so much.”

Nick Mabey of the E3G consulting firm had similar remarks, saying that the Danish text contains well-rounded policy and is being scandalized. “We all have a responsibility to focus on the issues that really count for people and the planet. Exaggerating differences between countries only benefits those who don’t want an ambitious agreement to be reached at Copenhagen.”

Link to the article

Go to the video page for 2 videos where Alex Jones presents his take on the COP15 event, the UN’s role, and implications for the world.