Peak Oil is You
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Page added on May 4, 2015
Those with money will continue to make the rules
THE tectonic shifts in the distribution of global economic activity and the consequential reallocation of geo-political power require either technical, managerial and political change in traditional development banks, starting with the World Bank, or the emergence of new development banks.
If these changes are not forthcoming, the traditional development banks will be marginalised and their role diminished. The BRICS (Brazil, Russia, India, China and South Africa) have led initiatives to form new development banks as a reaction to the lack of change in economic governance arrangement in the existing development banks.
In addition to the proposal to establish the BRICS Development Bank, China is leading the creation of an Asian Infrastructure Investment Bank (AIIB), although there is an Asian Development Bank (ADB). Japan has declined to join the new bank, but 46 other countries have signed up, including Taiwan. Britain, Germany and France have agreed to be founding members.
The United States has decided not to join the AIIB, but claims that it welcomes the concept, and has denied that it sought to persuade its allies not to join the new institution while simultaneously urging it to meet international standards of governance and transparency. There does not seem to be any prima facie reason to assume a lack of prudence.
The political control of decision-making in the World Bank and a US monopoly on the presidency of the World Bank since 1944 is no longer merely irksome, it is not reflective of the state of the world. The World Bank board has been dominated by the US, and the European countries are over-represented in the share of voting power.
The unwillingness of the existing powers to reallocate voting rights in a more balanced and representative way has continued to stoke the discontentment of developing countries, especially China, Brazil and India. Between 1980 and 2015, the G7’s share of world GDP declined from roughly 55 per cent to 35 per cent, while the BRICS’s share increased from approximately 10 per cent to 30 per cent.
More than five years ago, the Group of 20 agreed on new allocation of quotas and voting rights that would reduce US and European dominance. However, nothing has been implemented because the US Congress has not passed legislation ratifying the proposed changes.
This situation is politically untenable and some modification cannot be postponed much longer because the BRICS account for 40 per cent of the world’s population, two are permanent members of the UN Security Council and three of them have nuclear weapons.
It could be argued that the best people to run a “development bank” would be people from developing countries and, in particular, China — although not a typical developing country — can argue that it has the best economic growth record in history. Both the BRICS and the AIIB have designed governance structures in which voting rights are more equitably distributed and the top positions are shared and rotated.
For example, for the BRICS Development Bank the president will be an Indian for the first six years; a Russian will be chair of the board of governors; a Brazilian will be chair of the board of directors; and the headquarters will be in Shanghai. No member country will have a veto.
What will continue to be clear, though, is that those with money make the rules and those with no money obey the rules.
12 Comments on "Those with money will continue to make the rules"
penury on Mon, 4th May 2015 5:08 pm
The saying that those with the money make the rules\, needs to be updated. The U.S. currently makes the rules, we also have no money, but, what we do have is the largest military the world has ever seen. Remember “Might makes right”? So the saying should be:” Those who have the most army makes the rules and they steal your money,
MSN Fanboy on Mon, 4th May 2015 5:24 pm
penury, have you never read a game of thrones?
Littlefinger’s character portrays the rich well. They do not make the rules, but make sure they win either way.
JuanP on Mon, 4th May 2015 6:36 pm
“but 46 other countries have signed up, including Taiwan. Britain, Germany and France have agreed to be founding members.”
While I haven’t checked to make sure, I am quite certain that China would not allow Taiwan to sign up as a country since that would necessarily imply recognizing Taiwan as an independent nation, something that China would not do. I think this statement is inaccurate. Taiwan may be allowed in as part of China, but I doubt Taiwan would accept it for obvious reasons.
Apneaman on Mon, 4th May 2015 6:36 pm
We need more development. Just in case we have not already guaranteed human extinction with what is already baked into the cake.
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Limiting global warming to 2 degrees ‘inadequate’, scientists say
http://www.reuters.com/article/2015/05/01/us-climatechange-temperature-idUSKBN0NM40820150501
yoananda on Tue, 5th May 2015 3:45 am
“Dedollarization” is on the run, which means that the tax US impose to the rest of the world through dollar will fade and disapear (that means this that they won’t be able to afford this gread army anymore).
But wait … peak US army have already been reach. US have the greatest army of all time, but… does crap with it.
Davy on Tue, 5th May 2015 5:17 am
YO, it is more than a American issues this is a BAU issue and a global issue. The effects of dedolarization will be profound and far reaching. The FX market dwarfs all other markets. The shorting of the dollar by dollar debt financing in local currency of the last many years is imploding with harsh consequences for developing economies. China is facing a predicament of an appreciating yuan and falling exports. Its currency pegged to the dollar:
http://www.zerohedge.com/news/2015-05-04/gates-says-bet-yuan-imf-calls-currency-fairly-valued
There is also the games the rich Chinese are playing with the dollar that will blow up in their faces soon:
http://www.zerohedge.com/news/2015-05-04/how-chinese-oligarchs-used-fake-trade-invoices-launder-almost-1-trillion-globally
Global finance is a zero sum game long term. There are no free lunches at this level. You can’t have your cake and eat it long term. The criminality, corruption, manipulation, and societal theft work in the beginning but not long term. In the beginning it feels and looks like a free lunch but extending and pretending poor choices away only works until it don’t. This is true at all levels. This Buck stopping here situation is getting ever closer and it is a global reckoning.
Sure the US is going to be slap screwed the worst but those who think the rest of the world will decouple for this and prosper are poorly informed or Anti-American agendist. The global 1%ers benefited from this. These above the law criminals have effected a BAU that has gone global and delocalized the global locals.
We are all dependent on a dangerous global for all manner of support locally. This is not only an American issue this is global. There is no transition to a Brics global economy. What there is will be consequences to poor global societal choices that will shake society to its core with a rebalance of consumption and population.
This dedollarization is the first step in a vicious cycle down of consumption. Population will follow because of the systematic effects to our foundational commodity oil called demand/supply destruction. That foundational commodity oil will affect food and so on. This is the end game and BAUtopians are crowing our exceptionalism will overcome these problems and continued progress will be assured despite a few ups and downs.
Do you think the global 1%rs care about the dollar? No. They care about their fortune. Many barely 1%ers are very nervous:
http://www.zerohedge.com/news/2015-05-04/two-thirds-us-millionaires-fear-they-will-lose-it-all-if-market-crashes
When these folks panic then global confidence is surely destroyed and along with that global liquidity. There numbers are too large globally. There are no central bank tools left to save the system. It will not matter what stupid friggen currency or SDR horse shit it is. Gold will not even matter at this level.
Everything is contingent on human nature Everything! Liquidity of this global system must be maintained to support global delocalized locals Period. No substitution and no BAUtopian innovation is going to substitute and innovate that predicament away.
J-Gav on Tue, 5th May 2015 9:48 am
Davy – A lot to agree with in your post but …
The last paragraph: “Everything is contingent on human nature.”
Maybe so but now try to define that sucker! Ask 100 people you’ll get 99 different answers, scientists included. Some will say: “Survival of the fittest” – so competition wins out over nicy-nice. (Even though Darwin didn’t say that – what he said was: ‘survival of the most adaptable.’)
Others will show plenty of evidence tending to support the notion that empathy and cooperation have always been key in humanity’s ability to keep on going as a species.
Those might be termed the two extremes on the “What is human nature?” spectrum.
Then there are the nuances and plenty of intermediate pôsitions … see what I mean?
Davy on Tue, 5th May 2015 10:04 am
Gav, I was referring to the financial system ultimately. I feel confidence and liquidity and the global system are the ultimate factor in BAU’s existence. Once a global people no longer trust each other we will be unable to support each other.
I should have been more descriptive. Yet, the Dave doom salad morning rants are already pushing acceptable forum behavior with the longish-ness.
You are very correct in your response thanks for the clarification.
yoananda on Tue, 5th May 2015 11:38 am
Davy, dedollarization is indeed part of a deeper process.
Everybody (but the 1% maybe) will suffer, BUT, it’s also an opportunity to the rest of the world to emacipate from the (US) “empire”, or maybe to collapse with it. Time will tell.
Europe surely will collapse with US.
But BRICS ? who knows…
Davy on Tue, 5th May 2015 11:58 am
Yo, it is sad but everyone including innocent Americans too dumbed down to know better are going to collapse into a post BAU hell.
The Brics are already full steam ahead into collapse. Everyone of them is a full blown basket case. The reason vary but population, social decline, poor governance, and global dependence are part of it.
The U.S. Is done for sure no doubt. The 1%ers have some time but not much. They still need food, fuel, and slaves to do their bidding. This is a global phenomenon with the 1%ers.
Dredd on Tue, 5th May 2015 12:01 pm
It is called Plutocracy (Feudalism Is The Mother Of Plutocracy).
Apneaman on Tue, 5th May 2015 10:57 pm
The Myth of ‘Value-Free’ Social Science Or The Value of Political Commitments to Social Science
“An army of scholars and researchers invented euphemistic language to disguise imperialism. For example, leading social scientists spoke and wrote of ‘world leadership’, a concept implying consensual acceptance based on persuasion, instead of describing the reality of ‘imperial dominance’, which more accurately defines the universal use of force, violence and exploitation of national wealth. The term, ‘free markets’, served to mask the historical tendency toward the concentration and monopolization of financial power. The ‘free world” obfuscated the aggressive and oppressive authoritarian regimes allied with Euro-US powers. Numerous other euphemistic concepts, designed to justify imperial expansion, were elevated to scientific status and considered ‘value free’.”
http://petras.lahaine.org/?p=2031