Gordon Brown's carefully laid plans for a G20 deal on worldwide tax cuts have been scuppered by an eve-of-summit ambush by European leaders. Angela Merkel, the German chancellor, last night led the assault on the British prime minister's "global new deal" for a $2 trillion-plus fiscal stimulus to end the recession. "I will not let anyone tell me that we must spend more money," she said. The Spanish finance minister, Pedro Solbes, also dismissed new cash being pledged at Thursday's London summit. "In these conditions I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans," he said. Nicolas Sarkozy, the French president, has insisted that "radical reform" of capitalism is more important than tax cutting. The attacks on Brown's ambitions for the G20 to inject more money into the world economy come at the end of a week where the prime minister has travelled to three continents to build support for his proposals. The likely deadlock at this week's meeting will kill any remaining hope that Alistair Darling's April 22 budget will offer significant tax cuts. The assault by European Union leaders also represents a defeat for President Barack Obama, who is desperate for other big economies to copy his $800 billion stimulus plan. "There will be a very long communiqué, but there won't be much in it," said a Washington economist. – UK Telegraph
Dominant Social Theme: The New World Order is coming apart.
Free-Market Analysis: Just before the G20 summit comes a spate of articles showing the disarray of Western leaders in dealing with the current crisis. But is this really a fact? What the articles seem to suggest (including the one excerpted above) is that Germany et. al. are not going to go along with British Prime Minister Gordon Brown's prescription for trillions of dollars' worth of stimulus aimed at reviving the world economy. In fact, the stimulus would, like the American stimulus, tend to freeze economic inefficiencies into place and thus prolong the worldwide recession. But is the stimulus at the heart of the world reaction to the current crisis?
Let us examine what we know of the proposals that the G20 group of nations will likely meet to consider in early April. We were not even aware that such a large stimulus was on the table, but we are aware of much of the rest of it and have written about it.
First, the G20 nations will apparently consider an overarching regulatory authority that may apparently be administered by the International Monetary Fund, an agency that functions under the auspices of the United Nations. This new globally oriented regulatory authority would press independent financial entities such as hedge funds to reveal their inner workings in the name of some sort of "universal risk assessment." A variant of this plan has already been proposed by Barack Obama's administration in the United States.
Second, the G20 nations are to consider some sort of global currency such as has been suggested by governmental leaders in Britain, Russia and China recently. While the details are sketchy, the basis for the currency would reside within the IMF itself and be composed of a basket of currencies.
Third, the G20 is to examine with great intensity the value and activities of various tax havens around the world. This subject has already garnered considerable attention and it is obvious that the British especially are keen on shutting down those countries and regions practicing bank secrecy, especially the Swiss.
These are the three areas of endeavor that have – to the best of our knowledge – been carved out for G20 consideration. Each of them carries considerable clout when looked at from a legislative perspective. If indeed the G20 nations can conclude that these three separate items ought to be advanced energetically then the world itself will have traveled a long way toward a new level of cohesiveness. Bank secrecy will have come under attack, private financial entities will have to reveal their books on demand and may be in danger of arbitrary shutdowns and finally, the seeds of a new worldwide currency will have been planted, but one controlled again by a few, mostly central bankers and a handful of world leaders and United Nations technocrats.
The overarching outcome of these three "solutions" when taken together is certainly one of increased control by the few over the many. Again, a small group of people, mostly from the financial and governmental community may succeed in amassing an unprecedented level of authority over the world's larger business structures. The power of the United Nations itself will also be enhanced. In fact, every part of the global architecture now developing will be strengthened.
If one concludes that the upcoming, tripartite formulation for increased global controls is the main aim of the G20 summit, then the controversy over additional funds to combat the current fiscal crisis may be seen as something of a sideshow. The by-now worldwide monetary crisis was triggered in the opinion of many free-market economists by too much money printed by too many central banks. It is this same group of players, with some additions, that has offered up the current crop of solutions. Analyzed this way, it becomes clear that the real agenda by G20 is to amass further control of the world's fiscal and monetary structures. A crisis, obviously, is a terrible thing to waste.