IMF, G20 fail

Westpac’s Russell Jones is the best strategic analyst in the country (not blogging at MB!). His skepticism is a welcome draught of realism amidst the wasteland of optimistic fantasy that passes for analysis in Australian finance. Here’s his take on the failure of the G20 and IMF over weekend. I couldn’t agree more.

Strategic Insights_Busted Flush – The World After the G-20 Meeting

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  1. Diogenes the CynicMEMBER

    +1 on this article. Aussie/OZ economy to be hit hard. 2012 will be the start of a harsh recession.

    Will our political leaders lift their debate in 2012? Real problems like a massive structural deficit are about to hit the windshield.

  2. There is a reason the EU, IMF and the G’s keep on failing – and that is their preferred solutions are not solutions. They are attempts to deny reality. The only thing that will work is to dismantle the Euro mechanism.

    This carries great political and financial costs, which is why they will not implement it. And yet, it will happen eventually because nothing else will allow the restoration of full employment and balanced economic growth.

  3. “……nothing else will allow the restoration of full employment and balanced economic growth….”

    This was the principal lesson of the 1930’s. Only when economies abandoned the Gold Standard did recovery occur. The Euro-Standard, from the standpoint of the income-deficit economies, is a synthetic Gold Standard. They have to abandon this in order to achieve a return to full employment as well as economic stability.

  4. There is one alternative to the scenario you envisage, briefly. I suspect it is the one the Eurocrats cling to in desperate hope.

    That scenario is that Europe becomes a more fully fledged federation. The European Parliament would have to be ceded taxation powers and a much greater say in fiscal strategy, as well as foreign relations and defence. There would have to be significant harmonisation of social security provisions, labour market regulation and other areas such as energy policy, possibly also health and education, for it to work.

    This will not happen in my lifetime, if ever.