Can the
World Economy be Saved by a New Global Economic
Order?
by
Bruce Porteous
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CAN THE WORLD’S ECONOMY BE SAVED BY A NEW GLOBAL
ECONOMIC ORDER? Each week the global economic crisis
worsens as trillions of dollars are wiped off the world’s equity markets.
What will the current economic crisis mean for the average person, and how it
will reshape the geo-political landscape of the world? The current financial crisis will
result in the end of the Anglo-American dominance of the world, and a time of
total economic collapse of these nations. The current financial crisis continues
to worsen in spite of desperate efforts of governments around the world to
prop up failing financial institutions. So far, over three trillion dollars
have been spent around the world by governments without any apparent benefit.
Where has this money come from and where has it gone? Much of this new funding has come from
the creation of credit by central banks expanding the money supply, or in the
form of government guarantees. Yet the scale of accumulated debt is such that
this new funding has been like a drop in the bucket, and is having little
effect. The outcome of these efforts will be increased inflation and further
weakening of currencies with large current account deficits. The present free-market capitalistic
system has been built on an ever expanding mountain of debt. President Bush has been attempting to
defend this failed economic system, but this is receiving little support from
other nations which can now clearly see that a debt based economy is one of
the major causes of the current economic crisis. Replacing the free-market economics model
will result the end of America’s dominance of the global economy. One of the reasons why the world faces
its current difficulties is that for years the Governments have issued bonds,
or created credit to finance the wish-list of politicians, thus increasing
the money supply without increasing the productive output of their countries.
The increase in liquidity has allowed currency speculators, futures traders, hedge and mutual fund managers to have access to easy
credit, leveraging their portfolios with debt to finance speculative
investments. Consumers borrow to
finance the purchase of houses and consumer goods. The English-speaking world
has been living on borrowed money and borrowed time for years – now, it’s payback time. Most debt is secured through perceived
assets valued at previous market prices, whether it is shares, corporate
debentures or houses. However, the value of these assets that the markets are
prepared to pay has collapsed. At present, many who have accumulated debt are
being required to repay, but are unable to realize their assets at their
original valuation. In order to pay
off this debt, they are now forced to sell these assets in a market where
there are a few buyers, forcing down the value of the equities used as
collateral for loans. This is driving down the value of assets from
commodities to shares and property worldwide. It is also leaving the lending
institutions with weakened balance sheets as the value of their assets
diminishes and their non-performing loans (defaults) increase. Many Governments around the world have
guaranteed deposits held by bankers to prevent depositors withdrawing their
money. Governments are now prepared to
lend directly to corporations to provide funds so that their stock may
continue trading based on propped up equity. The money supply has been
expanded through the banking system to try and encourage debt-laden consumers
to borrow even more to stimulate domestic demand. Nothing has worked. Governments have taken on these enormous
obligations at considerable risk to the taxpayer. If governments are unable to continue
servicing the liquidity needs of these corporations and default on their loans, we will see a
chain reaction of governments going bankrupt as happened to Argentina between
1999 and 2002. There will also be a
chain reaction of bankruptcies dragging the entire global economy into
insolvency. Already we have countries such as
Iceland, Hungary, Ukraine, Pakistan and others facing insolvency. A chain reaction of national bankruptcies
will spread throughout the world creating economic chaos. Many nations have borrowed in yen, Euros or
dollars and are now experiencing difficulties repaying their debts in these
currencies now that their own currencies have fallen in arbitrage against the
global system of inter-currency flotation.
Institutions such as the IMF and World Bank and the Bank of
International Settlements (BIS) are not equipped to bail out nations on a
scale that will be required should the global economic collapse, and could be
in danger of collapsing themselves. At present Governments around the
world are holding emergency crisis meetings on how to save the global economy
from total collapse. The EU is proposing a new global economic order, where a
new institution will replace the Bretton Woods
model, which has so favoured the Anglo-Saxon
nations. The new global economic order needs to be quickly adopted to replace
the collapsing monetary system that has existed for the last 64 years. While
only the outline of this new economic order has been announced by French
President Nicolas Sarkozy, and will be discussed
further at the global economic summit in Washington in November; it is clear
that the world’s monetary system will need major reform to provide a
structure that will provide the capital to finance the movement of goods and
services. As the French President (the
current EU President) has outlined, the existing institutions (BIS, IMF and
World Bank) are not equipped to handle a situation of the magnitude of the
present crisis. See http://news.bbc.co.uk/1/hi/business/7677486.stm What will emerge from this crisis is a
new, global central bank that will have the authority to issue currency and
regulate international markets. The new EU based institution will coordinate
with Asian countries holding trillions of dollars in reserves to provide the
funding to allow world trade to function.
Many of the so-called freedoms allowed under the U.S. promoted
“free-market capitalism” will be regulated so that no-longer will capital be
used for speculative ventures such as futures, currency and commodity
speculation. The flow of capital will be controlled in a regulated market, to
serve the needs of the State rather than the individual. It appears that the
National Socialism model will be introduced, where the movement of capital
will be directed by the State. These
economic policies proved to be very successful in Germany under Hitler,
allowing Germany to quickly recover from the depression of the thirties. The debt-ridden Anglo-Saxon nations’
economies will collapse with the introduction of this new economic
order. No longer will the USA will be
able to print and borrow money to finance its deficits, domestic consummation
and wars. Wide-spread corporate
failure will occur, along with a chain-reaction of bankruptcies. Unemployment
will sky-rocket. The dollar will no longer be
accepted as the world’s reserve currency, replaced by the Euro and backed by
the new global central bank. The English speaking world will disintegrate
into anarchy, its people into abject poverty where famine, disease and
starvation will prevail. The new EU controlled Central Bank
will have far more authority to regulate the global economy than exists
today. In alliance with the Asian countries, it will rebuild a new economic
order that will bring prosperity to all nations that submit to its authority. Many economists have been surprised by
the recent strength of the US dollar against the Euro. This is only a
temporary phenomenon as US corporate and financial institutions unload
foreign assets to bring back funds to the USA to shore up their balance
sheets. It will not take some major set-back for the USA, such as war with
Iran, for the situation to change and a global sell-off of the USA dollar
will occur. This may not happen till the new Global Central Bank is formed,
but when it does it will be sudden and dramatic. It will result in total
economic collapse for the USA and the English-speaking world. The events now unfolding have been
foretold in the Book of Revelation. In
Chapter 13 it tells of a time when there will emerge a new world leader that
will install a new economic order that will restore the world for a short
time to great prosperity. Unfortunately this will not include the Anglo-Saxon
nations which will come under the control of this new global economic
order. Their economies will collapse –
there people will be subjected to a time of great suffering and poverty, as
they will be enslaved to this new global super-power. The events that will unfold over the
coming months will be some of the most dramatic in the history of mankind. Bruce Porteous 26 October, 2008 bruceport@xtra.co.nz |
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