The Group of Eight Summit Adjourns Without Results:
The Inflationary Crisis Continues Without End
United Daily News editorial (Taipei, Taiwan, ROC)
July 11, 2008
Summary: The Group of Eight (G8) Summit has adjourned. Leaders of the member nations warned of inflation-related price rises for both oil and grain. They asked oil producers to increase production. In response to global warming, they offered only empty promises, setting pro forma goals without means of fulfillment. The summit adjourned without results. The most memorable aspect of the summit was the irony of high officials pontificating about food shortages while scarfing down caviar. The Group of Eight Summit adjourned without results. Neither inflation nor the global warming problem received any attention. They continue to make matters worse. This tells us that inflation today's conceals a bigger structural problem, that it is a manifestation of the US dollar crisis. Therefore this crisis will not end any time soon.
Full Text below:
The Group of Eight (G8) Summit has adjourned. Leaders of the member nations warned of inflation-related price rises for both oil and grain. They asked oil producers to increase production. In response to global warming, they offered only empty promises, setting pro forma goals without means of fulfillment. The summit adjourned without results. The most memorable aspect of the summit was the irony of high officials pontificating about food shortages while scarfing down caviar.
The summit did nothing to address the urgent problems of the world.
It made one think of last August, when Germany hosted the summit.
German Chancellor Angela Merkel played host, and French President Nicholas Sarkozy played co-host.
They genuinely hoped the G8 would play an important role in dealing with the turmoil facing the world.
For example, the US subprime mortage crisis was already making financial waves. Sarkozy proposed a thorough investigation of the culprits, the three major U.S. credit rating companies, for suspicion of international fraud. He warned of the hazard posed by the proliferation of hot money, and demanded international standards for dealing with hot money. But his comments threatened the interests of the United States, Britain, and Japan, therefore were totally ignored. An opportunity to deal decisively with the matter was lost. Over the past year, the subprime mortgage crisis has raged on. The US Dollar has been rapidly devalued. Inflation has worsened. Hot money has proliferated. Global economic instability has increased. Only recently has the US Securities and Exchange Commission acknowledged that the culprits in the subprime mortgage crisis are the three major credit rating companies. But little good that does the already deteriorating situation.
At the last summit Chancellor Merkel, aware that the Kyoto Protocol would expire in 2012, hoped that between 2007 and 2012 the United States would assume greater responsibility for greenhouse gas emissions. The United States reportedly still believes emissions reductions will affect its growth rate, and give emerging great powers such as China and India the opportunity to catch up. As a result, it has rejected pressure from Germany and the EU and refused to make any commitments. Instead it has demanded that large emerging nations such as China and India be included in the emissions reduction targets. The United States hopes this delaying tactic will give it a five year reprieve. But it merely led to last year's Bali meeting adjourning without results. This year's G8 Summit continues the trend. Because the United States refuses to take the initiative to reduce emissions, the G8 Summit can only set empty emissions reduction targets without any means of implementation.
For two consecutive years the G8 Summit has adjourned without results. This is regrettable, but not surprising. In recent months, a World Food Summit, an oil-producing and consuming countries summit, and a global climate summit have been held to address problems of inflation and global warming. But many summits have yielded few results. The reason is the larger countries have no intention of using the meetings to solve problems. They merely want to use the meetings to align themselves with allies, oppose dissenters, and look after their own interests. Such meetings could be held 365 times a year. But what would be the point?
Take global inflation. The key lies with the US's long-term balance of payments deficit, caused by an excess supply of dollars, the expansion of US dollar assets, and the loan-to-dollar credit turmoil that follows bankruptcies. The result is an accelerated depreciation of US dollars, and the proliferation of speculative hot money. During the G8 Summit Bush paid empty lip service to "support for a strong dollar." The dollar is depreciating. Speculative hot money is proliferating. Yet the United States continues to increase its international balance of payments deficit and makes no mention of military spending. Evading these problems ensures that they will never be solved. In short, this is essentially an inflationary crisis caused by a "dollar bubble." The situation will only get worse before it gets better. By now the only solution is to allow the situation to sort itself out. Denmark and a number of other European countries are now officially in recession. If the United States' strategy to dominate the world's oil supply remains unchanged, it will invade Iran or used Israel to fight Iran in a proxy war after this year's presidential election. Oil prices will skyrocket, and the world may well face a Great Depression.
The Group of Eight Summit adjourned without results. Neither inflation nor the global warming problem received any attention. They continue to make matters worse. This tells us that inflation today's conceals a bigger structural problem, that it is a manifestation of the US dollar crisis. Therefore this crisis will not end any time soon.
2008.07.11 03:06 am