The IMF To The Rescue… Really?


That is, if DKS (who’s just been cleared of abuse of power) can keep it zipped (what is it with the leaders of multilateral institutions, first Wolfowitz at the World Bank, now DSK at the IMF? Sheesh) and if he still has some credibility. Anyhoo, what’s the plan, then? First, the UN Secretary General called for special help for poor countries. After all, rich countries are forking over $4 trillion for their banks, what’s in it for the poor who had nothing to do with the crisis but will suffer from it anyway:

Oh, good, because peripheral countries need more borrowing. After all, there is no debt crisis in the developing world thanks to the brilliant policies of the IMF. So, it’s all good.

And now, watch the not-so-subtle power shift in who leads / will lead the global governance system:

There is no doubt that China and the European Union are getting closer, while no one really pays attention to what Bush says anymore. If China and the EU push for stricter global financial regulation, there is little that the US can do to stop them. And Bush’s claims that "Free markets are TEH AWESUM" ring hollow to everyone else.

It also means that whoever becomes president in 2009 will not make much of a difference since the US is financially considerably weakened and Obama has not shown any real global economic leadership here either. So, the stage is set for China and the EU to take a more prominent role. In addition, if peripheral countries manage to increase their voting shares at multilateral institutions (as with the IMF, for instance), then the Us might find itself quite isolated.

Again, using Michael Mann’s typology regarding the US:

  • Political power: isolated
  • Economic power: ruined
  • Ideological power: tortured to extinction
  • Military power: stuck in the sands of Iraq and the mountains of Afghanistan

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