[traithJah]

January 13, 2009The Chance for a New World Order

By Henry Kissinger

As the new U.S. administration prepares to take office amid grave financial and international crises, it may seem counterintuitive to argue that the very unsettled nature of the international system generates a unique opportunity for creative diplomacy.

That opportunity involves a seeming contradiction. On one level, the financial collapse represents a major blow to the standing of the United States. While American political judgments have often proved controversial, the American prescription for a world financial order has generally been unchallenged. Now disillusionment with the United States' management of it is widespread.

At the same time, the magnitude of the debacle makes it impossible for the rest of the world to shelter any longer behind American predominance or American failings.

Every country will have to reassess its own contribution to the prevailing crisis. Each will seek to make itself independent, to the greatest possible degree, of the conditions that produced the collapse; at the same time, each will be obliged to face the reality that its dilemmas can be mastered only by common action.

Even the most affluent countries will confront shrinking resources. Each will have to redefine its national priorities. An international order will emerge if a system of compatible priorities comes into being. It will fragment disastrously if the various priorities cannot be reconciled.

The nadir of the existing international financial system coincides with simultaneous political crises around the globe. Never have so many transformations occurred at the same time in so many different parts of the world and been made globally accessible via instantaneous communication. The alternative to a new international order is chaos.

The financial and political crises are, in fact, closely related partly because, during the period of economic exuberance, a gap had opened up between the economic and the political organization of the world.

The economic world has been globalized. Its institutions have a global reach and have operated by maxims that assumed a self-regulating global market.

The financial collapse exposed the mirage. It made evident the absence of global institutions to cushion the shock and to reverse the trend. Inevitably, when the affected publics turned to their national political institutions, these were driven principally by domestic politics, not considerations of world order.

Every major country has attempted to solve its immediate problems essentially on its own and to defer common action to a later, less crisis-driven point. So-called rescue packages have emerged on a piecemeal national basis, generally by substituting seemingly unlimited governmental credit for the domestic credit that produced the debacle in the first place - so far without more than stemming incipient panic.

International order will not come about either in the political or economic field until there emerge general rules toward which countries can orient themselves.

In the end, the political and economic systems can be harmonized in only one of two ways: by creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures, which is likely to lead to a new mercantilism, perhaps of regional units.

A new Bretton Woods-kind of global agreement is by far the preferable outcome. America's role in this enterprise will be decisive. Paradoxically, American influence will be great in proportion to the modesty in our conduct; we need to modify the righteousness that has characterized too many American attitudes, especially since the collapse of the Soviet Union.

That seminal event and the subsequent period of nearly uninterrupted global growth induced too many to equate world order with the acceptance of American designs, including our domestic preferences.

The result was a certain inherent unilateralism - the standard complaint of European critics - or else an insistent kind of consultation by which nations were invited to prove their fitness to enter the international system by conforming to American prescriptions.

Not since the inauguration of President John F. Kennedy half a century ago has a new administration come into office with such a reservoir of expectations. It is unprecedented that all the principal actors on the world stage are avowing their desire to undertake the transformations imposed on them by the world crisis in collaboration with the United States.

The extraordinary impact of the president-elect on the imagination of humanity is an important element in shaping a new world order. But it defines an opportunity, not a policy.

The ultimate challenge is to shape the common concern of most countries and all major ones regarding the economic crisis, together with a common fear of jihadist terrorism, into a common strategy reinforced by the realization that the new issues like proliferation, energy and climate change permit no national or regional solution.

The new administration could make no worse mistake than to rest on its initial popularity. The cooperative mood of the moment needs to be channeled into a grand strategy going beyond the controversies of the recent past.

The charge of American unilateralism has some basis in fact; it also has become an alibi for a key European difference with America: that the United States still conducts itself as a national state capable of asking its people for sacrifices for the sake of the future, while Europe, suspended between abandoning its national framework and a yet-to-be-reached political substitute, finds it much harder to defer present benefits.

Hence its concentration on soft power. Most Atlantic controversies have been substantive and only marginally procedural; there would have been conflict no matter how intense the consultation. The Atlantic partnership will depend much more on common policies than agreed procedures.

The role of China in a new world order is equally crucial. A relationship that started on both sides as essentially a strategic design to constrain a common adversary has evolved over the decades into a pillar of the international system.

China made possible the American consumption splurge by buying American debt; America helped the modernization and reform of the Chinese economy by opening its markets to Chinese goods.

Both sides overestimated the durability of this arrangement. But while it lasted, it sustained unprecedented global growth. It mitigated as well the concerns over China's role once China emerged in full force as a fellow superpower. A consensus had developed according to which adversarial relations between these pillars of the international system would destroy much that had been achieved and benefit no one. That conviction needs to be preserved and reinforced.

Each side of the Pacific needs the cooperation of the other in addressing the consequences of the financial crisis. Now that the global financial collapse has devastated Chinese export markets, China is emphasizing infrastructure development and domestic consumption.

It will not be easy to shift gears rapidly, and the Chinese growth rate may fall temporarily below the 7.5 percent that Chinese experts have always defined as the line that challenges political stability. America needs Chinese cooperation to address its current account imbalance and to prevent its exploding deficits from sparking a devastating inflation.

What kind of global economic order arises will depend importantly on how China and America deal with each other over the next few years. A frustrated China may take another look at an exclusive regional Asian structure, for which the nucleus already exists in the Asean-plus-three concept.

At the same time, if protectionism grows in America or if China comes to be seen as a long-term adversary, a self-fulfilling prophecy may blight the prospects of global order.

Such a return to mercantilism and 19th-century diplomacy would divide the world into competing regional units with dangerous long-term consequences.

The Sino-American relationship needs to be taken to a new level. The current crisis can be overcome only by developing a sense of common purpose. Such issues as proliferation of weapons of mass destruction, energy and the environment demand strengthened political ties between China and the United States.

This generation of leaders has the opportunity to shape trans-Pacific relations into a design for a common destiny, much as was done with trans-Atlantic relations in the immediate postwar period - except that the challenges now are more political and economic than military.

Such a vision must embrace as well such countries as Japan, Korea, India, Indonesia, Australia and New Zealand, whether as part of trans-Pacific structures or, in regional arrangements, dealing with special subjects as energy, proliferation and the environment.

The complexity of the emerging world requires from America a more historical approach than the insistence that every problem has a final solution expressible in programs with specific time limits not infrequently geared to our political process.

We must learn to operate within the attainable and be prepared to pursue ultimate ends by the accumulation of nuance.

An international order can be permanent only if its participants have a share not only in building but also in securing it. In this manner, America and its potential partners have a unique opportunity to transform a moment of crisis into a vision of hope.

Henry A. Kissinger was secretary of State from 1973 to 1977.
Distributed by Tribune Media Services.

*****

Kissinger discusses New World Order with Charlie Rose, Dec. 16, 2008 [video 7:29]

*****

"I think that his task will be to develop an overall strategy for America in this period, when really a "New World Order" can be created. It's a great opportunity. It isn't such a crisis."

Henry Kissinger on CNBC, Jan. 5, 2009 [video 3:12]

[obHQNsY2]

The war criminal and treasonous, Israel-bound, AIPAC shrill offers his opinion once again.

[iodigmaFemZem]

For 40 years Kissinger has promoted the American Way of Business and Politics, the result of which has landed us in the sad situation where we now find ourselves. He now admits the system he sold to the public was a "mirage."

Has this cretin ever offered anything of any value to humankind? He trots out words by the bucketful and drones on and on ...

Given his despicable history why, in this day and age, is he granted such prominence?

[MIBgirlsXXL]

^ Good question.

Every word in your post is equally applicable to Alan Greenspan.



I guess when you're ancient and wrinkled and borderline senile, folks assume you're wise --especially if your spectacle rims are thick.

You do get wiser as you age ... right?

[HenriRow]

Given [Kissinger's] despicable history why, in this day and age, is he granted such prominence?

Because he not only doesn't threaten the hegemony of the status quo, he actively reinforces it.

[paypaltoegold1]

Lew Rockwell muses:
There is no question that we are in uncharted waters. Never in history have all countries had entirely fiat money systems and fractional reserve banking, let alone the biggest artificial boom, driven by central banking. Here is what we know: the criminals at the Fed, its subsidiary central banks, and their pals in banking and finance have wrecked the world--and made us all much poorer. But why are Obama's two early backers, Soros and Volcker, admitting to the size of the crisis?
EU leaders back sweeping financial regulations
By PATRICK McGROARTY, AP*
"A clear message and concrete action are necessary to engender new confidence in the markets and to put the world back on a path toward more growth and employment," Merkel said.
.....

European leaders backed Merkel's call for a "charter of sustainable economic activity" to reduce economic imbalances and stabilize financial markets.

The charter would subject all financial market activities around the globe to regulation, including credit rating agencies. Merkel said the charter would be "based on market forces but prevent excess and ultimately lead to the establishment of a global governance structure."* The linked article has been mysteriously edited to remove the above quoted passage. Here is a posting of the original article. This comes on the heels of a controversial speech by the President of the Czech Republic Václav Klaus to the European Parliament which is well worth reading.


Paul Volcker, Chair of the President's
Economic Recovery Advisory Board,
speaks to colleagues during a lunch
address at the Center on Capitalism
and Society at Columbia University
6th Annual Conference on Emerging
from the Financial Crisis Friday,
Feb. 20, 2009, in New York.

[Paul Volker] said he is concerned about the amount of power central banks, treasuries and regulatory agencies have acquired while trying to contain the meltdown.

"It is evident in the United States, and not just in the United States, the central bank is taking on a role that is way beyond what a central bank should be taking," he said.

Volcker stressed the importance of international cooperation in creating a new regulatory framework, particularly for major banks that operate across national boundaries — the reverse of what's happened in recent years.

"The more international agreement we have on where we want to get to, the better off we'll be," Volcker said. Stay tuned for the false dialectic between the banking interests' central planning bureaucrats and the nation states' central planning bureaucrats over the strings of manipulation for the world's central banks, the world's financial markets, and therefore -- the world's population.

Where does this leave opponents of central planning?

Václav Klaus from the above linked speech (emphasis original)
"...over the twenty years since the fall of communism, I have been repeatedly witnessing that the feelings and fears are stronger among those who spent a great part of the 20th century without freedom and struggled under a dysfunctional centrally planned and state-administered economy. It is no surprise that these people are more sensitive and responsive to any phenomena and tendencies leading in other directions than towards freedom and prosperity.

...the present economic system of the EU is a system of a suppressed market, a system of a permanently strengthening centrally controlled economy. Although history has more than clearly proven that this is a dead end, we find ourselves walking the same path once again. This results in a constant rise in both the extent of government masterminding and constraining of spontaneity of the market processes. In recent months, this trend has been further reinforced by incorrect interpretation of the causes of the present economic and financial crisis, as if it was caused by free market, while in reality it is just the contrary – caused by political manipulation of the market. It is again necessary to point out to the historical experience of our part of Europe and to the lessons we learned from it." Further reading:
From Central Bank to Central Planning?
by J. Bradford DeLong

The Violence of Central Planning
by Llewellyn H. Rockwell, Jr.
Extra credit:
The Use of Knowledge in Society
Friedrich A. Hayek

* The modified article makes more mention of the IMF in the global 'solution'. A review of the work of John Perkins is in order.

[moohassinny]

IMF poised to print billions of dollars in 'global quantitative easing'
The International Monetary Fund is poised to embark on what analysts have described as "global quantitative easing" by printing billions of dollars worth of a global "super-currency" in an unprecedented new effort to address the economic crisis.

By Edmund Conway
Last Updated: 9:07AM GMT 16 Mar 2009

Alistair Darling and senior figures in the US Treasury have been encouraging the Fund to issue hundreds of billions of dollars worth of so-called Special Drawing Rights in the coming months as part of its campaign to prevent the recession from turning into a global depression.

Should the move, which is up for discussion by the summit of G20 finance ministers this weekend, be adopted, it will represent a global equivalent of the Bank of England's plan to pump extra cash into the UK economy.

However, economists warned that the scheme could cause a major swell of inflation around the world as the newly-created money filters through the system. The idea has been suggested by a number of key figures, including billionaire investor George Soros and US Treasury adviser Ted Truman.

Simon Johnson, former chief economist at the IMF, said: "The principle behind it is that everyone would get bonus dollars and instead of the Federal Reserve having to print them, everyone gets them.

"The objective is to create a windfall of cash. However if everybody goes out and spends the money it could be very inflationary."

[klnbgqr]

We don't have to worry about inflation in the present deflationary economy.

The real, saleable value of my house is about a hundred grand less than it was appraised at two years ago; I've cut my fees in half; and construction costs --both labor and materials-- are at a twenty year low.

With vigilance, this is the time to just print money --which is presently overvalued because demand for it way outstrips supply.

A rare opportunity for the government to spend freshly-minted money without sticking it to the taxpayer or paying interest to the Chinese.

[NEWyear]

China calls for new reserve currency

By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.

“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.

China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.

To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s.

Today, the value of SDRs is based on a basket of four currencies – the US dollar, yen, euro and sterling – and they are used largely as a unit of account by the IMF and some other international organisations.

China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.

Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.

Mr Zhou said the proposal would require “extraordinary political vision and courage” and acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s.

Copyright The Financial Times Limited 2009

*****

At G20, Kremlin to Pitch New Currency

17 March 2009
By Ira Iosebashvili / The Moscow Times

The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.

The International Monetary Fund should investigate the possible creation of a new reserve currency, widening the list of reserve currencies or using its already existing Special Drawing Rights, or SDRs, as a "superreserve currency accepted by the whole of the international community," the Kremlin said in a statement issued on its web site.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries.

The Kremlin has persistently criticized the dollar's status as the dominant global reserve currency and has lowered its own dollar holdings in the last few years. Both President Dmitry Medvedev and Prime Minister Vladimir Putin have repeatedly called for the ruble to be used as a regional reserve currency, although the idea has received little support outside of Russia.

Analysts said the new Kremlin proposal would elicit little excitement among the G20 members.

"This is all in the realm of fantasy," said Sergei Perminov, chief strategist at Rye, Man and Gore. "There was a situation that resembled what they are talking about. It was called the gold standard, and it ended very badly.

"Alternatives to the dollar are still hard to find," he said.

The Kremlin's call for a common currency is not the first in recent days. Speaking at an economic conference in Astana, Kazakhstan, last week, Kazakh President Nursultan Nazarbayev proposed a global currency called the "acmetal" -- a conflation of the words "acme" and "capital."

He also suggested that the Eurasian Economic Community, a loose group of five former Soviet republics including Kazakhstan and Russia, adopt a single noncash currency -- the yevraz -- to insulate itself from the global economic crisis.

The suggestions received a lukewarm response from Foreign Minister Sergei Lavrov on Saturday.

Nazarbayev's proposal did, however, garner support from at least one prominent source -- Columbia University professor Robert Mundell, who was awarded the Nobel Prize in 1999 for his role in creating the euro.

Speaking at the same conference with Nazarbayev, he said the idea had "great promise."

The Kremlin document also called for national banks and international financial institutions to diversify their foreign currency reserves. It said the global financial system should be restructured to prevent future crises and proposed holding an international conference after the G20 summit to adopt conventions on a new global financial structure.

The Group of 20 industrialized and developing countries will meet in London on April 2.

[FrassyLap]

I knew I'd find some here.

[oplapofffe]

I saw a documentary last night about the Fed. What a CRAZY set up. It should be abolished. For me, it didn't exactly inspire confidence in Obama when he apointed Geithner, former President of the NY Fed. Talk about the fox watching the hen house...and Larry Summers is another piece of work- he worships the "free" market and just wants more tax cuts. Why is Obama keeping these people around? Is he really just a Bilderberg stooge like all the conspiracy sites say? I'm really beginning to wonder.

[eFDMBwKH]

A Bilderberg stooge and the Antichrist. I don't know how he handles it all.

[PersonalLoansBank]

And a talk-show celebrity.

Is there anything left?

[polleroy]

I don't think anyone gets to be president without being a cohort. It's all a part of the plan.

[HassFks]

http://www.globalresearch.ca/index.p...xt=va&aid=9270
"Picking the President"

[bonyclayd]

http://www.globalresearch.ca/index.p...xt=va&aid=9270
"Picking the President"

^ well that was informative.

[Jifyicyfuhpop]

yup, the "conspiracy" sites usually are. Now if you'll excuse me, I have some reading to do about alien lizard people

[cQT6nmEc]

The theories Ive heard is that the US government plans to collapse the dollar in order to create a new currency with Canada and Mexico. Also Obama is in on it and is just here to distract the masses.

[Trientoriciom]

So are you guys saying that the President should only appoint advisors/staff that agree with him?

[Pszinygv]

Russia backs return to Gold Standard to solve financial crisis
Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.

By Ambrose Evans-Pritchard
Last Updated: 10:33AM BST 31 Mar 2009
(video @ link)

Arkady Dvorkevich, the Kremlin's chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.

Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.

Mr Dvorkevich said it was "logical" that the new currency should include the rouble and the yuan, adding that "we could also think about more effective use of gold in this system".

The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.

It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and "Great Society" social spending forced President Richard Nixon to close the gold window in 1971.

The world's fiat paper currencies have lacked any external anchor ever since. It is widely argued that the financial excesses and extreme debt leverage of the last quarter century would have been impossible - or less likely - under the discipline of gold.

Russia is a major gold producer with large untapped reserves of ore so it has a clear interest in promoting the idea. The Kremlin has already instructed the central bank of gradually raise the gold share of foreign reserves to 10pc.

China's government has floated a variant of this idea, suggesting a currency based on 30 commodities along the lines of the "Bancor" proposed by John Maynard Keynes in 1944.

*****

Will this lead to a US gold embargo of Russia à la South Africa?

Commodity money means accepting and embracing deflation.