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Ideas for the G20′s agenda on the Global Economic Crisis

By Michael Cebon | February 1, 2009

In April, the leaders of the G20 group of countries will meet again in London to discuss responses to the global economic/financial crisis which is still unravelling.  Dani Rodrik’s Blog links to an interesting new initiative: the Global Crisis Debate – a partnership between the VoxEU website and the UK government aimed at generating ideas for the April 2 summit of the G20.

The debate has 5 themes

While much of the commentary the so far is fairly conservative, Rodrik provides the lead commentary for the Development section, and it’s definitely worth a read.  Rodrik uses the opportunity to put forward an ambitious agenda for global economic policy reform, including:

(Let’s hope somebody reads it and takes notice!)

Among other articles on the site that are worth a read is the response to Rodrik from Nancy Birsall from the Centre for Global Development which argues that before any serious economic policy changes (such as those Rodrik suggests) happen at the global level, there first needs to be reform at the IMF and World Bank – giving developing countries a real say for the first time.  Birdsall says that this will only happen if developing countries collectively put their feet down and demand it.

But the big question in response to this is: will the US government – which maintains a veto over the decisions of these institutions and has done so for 60 years since their inception – relax its hold and allow this to happen?  Ultimately, the answer lies in President Obama’s hands….

Topics: G20, Global Economics, IMF & World Bank | 2 Comments »

2 Responses to “Ideas for the G20′s agenda on the Global Economic Crisis”

  1. Cliff Gibson Says:
    February 12th, 2009 at 6:17 am

    Dear Sir,
    I have been putting some thought to the current global financial crisis and would like to put forward to you a hypothesis for consideration, if it is a viable solution to the increasingly catastrophic situation the global financial system is currently experiencing.
    It is about time that someone came up with some constructive thoughts and started to look at the ‘credit crunch / recession /depression) as an entirely global problem that is not going to improve in anything like the near future.

    Global problems require global solutions and the only REAL solution is to tackle the problem on a global scale.

    Consider this hypothesis – the only way to revive the world economy is to instill confidence in the public mind, give investors something to invest in!

    Banks and bankers cannot do this anymore nobody trusts them

    The answer is to respond to the masses in such a way that they have the power to bring the world economy back on track.

    Bring confidence back and it will turn around very quickly, the burning question is HOW?

    A simple solution is available, provided that the world financial systems and all governments work as one entity for one goal.

    THE SOLUTION IS SIMPLE IN CONCEPT BUT DIFFICULT TO RESOLVE WITHOUT 100% GLOBAL COOPERATION AND METICULOUS PLANNING TO IMPLEMENT THE CHANGEOVER TO REVALUED CURRENCIES AND ALL FINANCIAL TRANSACTIONS ADJUSTED TO THE NEW LEVEL.

    Close down all financial dealings for 48 hours

    The concept is to take all global assets, everything but hard cash and reduce the value to one tenth

    Next take all cash assets and multiply value by ten

    (this would require revaluation of every world currency) yes print new money

    This would create wealth for every man and women in the world overnight and create a differential of 100 times between asset values and cash values globally and therefore will not have any inflationary impact whatsoever.

    after 48 hours all transactions would recommence with all assets a tenth of what they were before, but cash assets having being multiplied by ten they would be worth 100 times more. However the status quo of assets, wages, prices, etc., relatively, will remain the same.

    The windfall from the change gives revenue back to the people to spend but have 100 times more spending power. Costs of assets are slashed and the cash assets allow people to buy houses and spend while still maintaining the original differential as the revaluation is totally global therefore there will be no difference in the relative values of assets compared to incomes.

    If such a plan was considered and published globally it would almost certainly create confidence, in fact ity may even improve the world economy before it is applied. Just the knowledge of global improvement may give the kick-start the banking bail-out strategy has not.

    In simple terms this hypothesis can work!

    It solves the credit crunch by giving the general public liquid assets that will pay their debts as the debts would be only one tenth of those before and the cash they have would be 100 times more.

    It solves unemployment by giving the consumer cash to buy products and thereby creating jobs for the manufacturers.

    We learn to save and live within our means.

    The banks are recapitalised.

    The only real cost is to print the new money replacing the old currencies.

    World poverty would be eradicated in one fell swoop.

    But we need to think of global finance in a totally different way.

    It wont happen overnight as there will be extensive planning required to achieve a smooth transition.

    The percentage reduction / increase of fixed assets and liquid assets can be altered to suit the severity of the problem.

    I am an engineer, not an economist, I look for solutions to problems every day.

    Regards,

    CG London

  2. Cliff Gibson Says:
    February 12th, 2009 at 6:27 am

    CG London

    To clarify one point and remove any misunderstanding. The new value currency, ie 100 times the new asset values would only apply to the cash before the change. After the change all prices and earnings would be one tenth following the change. Therefore the windfall of cash would be limited to that held before the change.