The world changed last week, unreported and unseen

The world changed last week, unreported by the media and hence unseen by most Americans.   Our locked orientation – seeing ourselves as the hegemonic or imperial power — blinds us to the almost inevitable evolution of the world to a multi-polar order.  In the 21st century the center of economic power moves from West to East.

This blindness afflicts even experts, as seen in this article:  “The Last European: Why the G-20 Was a Success“, Simon Johnson, blog of the New York Times, 3 April 2009.  The World Bank and International Monetary Fund are central organizations in the global geopolitical system.  The first always has an American boss, the second European boss.  Johnson explains that both might soon have leaders from the emerging nations, a signal of their emergence onto the world stage as a major power group.

This shows how the current downturn is accelerating the shift of economic power, as the developed nations are most afflicted by it.  The WB and IMF need money, and the West is tapped out.  We are forced to turn to the emerging nations, and so must surrender influence.  It’s important for our egos to hide this.  Note how cleverly Johnson does so, ignoring the structural aspects of this — instead painting it as brilliant political footwork by Team Obama.

Some have said structurally this is a typical “emerging nation crisis” — but taking place in the developed nations.  Perhaps we are in some ways trading places.  The developed nations entering a period of structural decay.  The emerging nations enter their period of almost inevitable growth, catching up to us.


In this difficult context, the Obama administration produced a rabbit out of the hat {at the G-20 meeting}.

The managing director of the I.M.F. is very powerful, with a great deal of authority and discretion, and has always been a European – in effect, appointed by European governments to represent their interests. The G-20 made it clear that this will stop – the communiqué says the selection process will be open, transparent and competitive. But really this is code for saying they will pick someone from an emerging-market country, such as India or Brazil (and there are some excellent candidates). The right person in this job could have a huge positive effect on the I.M.F.’s legitimacy.

To make things matters more interesting, the I.M.F.’s managing director is expected by insiders to resign within a year, to resume his (promising) pursuit of the French presidency. The leadership race for the next managing director effectively starts today; the stakes are high, and competition will be intense.

How did the Obama administration pull this off? In a brilliant move, they took the lead by volunteering to open up the selection process for the World Bank, the I.M.F.’s sister organization, which has always been run by an American. The next president of the World Bank is very likely to be Chinese.

Originally published at Fabius Maximus and reproduced here with the author’s permission.

8 Responses to "The world changed last week, unreported and unseen"

  1. devils advocate   April 6, 2009 at 9:58 am

    the US/ECU consumer is not spendingtherefore, China and emerging nations, including Eastern Europe, need to replace an enormous loss of tradeby increasing trade amongst themselvesand this requires $$$$$ from the world IMF etc. + higher oil prices to put $$$$ for the OilEmerging Countries to spend

  2. wakeupamerica   April 6, 2009 at 12:52 pm

    When the Chinese decide to finally play by the rules of the game i.e., fair trade, religious freedom, human rights, pollution controls, and quality control on products we will be happy to share the table with them. China steals our intellectual property everyday. Computer technology, car technology, bootlegged CD’s, high end clothing apparel, as well as military defense technology. Not to mention that dissidents somehow “disappear” in China and Russia everyday. These are the people we want to trust with running the world? That’s insanity at its best. If they truly are outperforming us in math and science why don’t they invent their own products and stop infringing on every patent and copyright law there is? Where does China intend to sell their junk now that the American consumer is finally tapped out! American’s are told that they should be happy about buying Chinese products (JUNK!) because they are cheap and allows for more discretionary spending. We all now know how all that worked out. Junk is junk no matter how you spin it. The only happy people are Wal-Mart executives! We would have been much better off keeping US job here in this country and having consumers pay more for quality. That didn’t happen because US corporations have bought and paid for the US government. This is why they are all stumbling over one another with all these bailouts. So many “favors” (money to political parties) have been doled out nobody knows what to do. Term limits must be put in place to regain control of this corrupt system. All incumbents must be voted out!!! This is not the greatest collapse of the American financial system it is the greatest failure of the US government ever!!

    • Anonymous   April 14, 2009 at 9:52 pm

      America will decline faster because of conceited, narrow-minded and stupid people like you.

    • Guest   May 17, 2009 at 10:23 am

      Well put. I agree

  3. Guest   April 6, 2009 at 1:05 pm

    The bankers who oversaw this mess should be removed and should be prosecuted. The greatest looting in the history of the world The Federal Reserve in cohoots with the banks and Wall St. robbing and looting.The U.S. currency will be destroyed by this debauch government of hoodlums professing to be honourable persons and upstanding citizens.

  4. Guest: The mayor rest of the world   April 7, 2009 at 9:22 am

    It is time to seriously consider moving from the monetary system to a new one.The eternal growing debt is to be considered. You should be working in the bases for a new world trading system, instead of putting so much effort on the already proved uneven and far from reality system. Please stop justifying this “flat earth” system and face the roundness of the real world, made of real people with real needs.It is time to build a real economic system, far from the “air money” that sustains the present one. Please.

    • Guest   May 17, 2009 at 10:32 am

      We had one (gold standard) but it was voted out.

  5. Anonymous   April 7, 2009 at 10:22 pm

    the solution for the us/eu bankers created weapon of mass destruction out of chinese saving and arab money and other world savers.Is not goverment intervention or more regulation or better economic system.These recurring economical crisis have their origin not in systems or organisation nor are they physical even.THEY ARE PSYCOLOGICAL IN NATURE.They are bigger then greed.Until and unless everyhuman being is seen as equal to one another will this recurring madness stop.MY GUESS IS IT WOULD NOT BE ACHEIVED SO WE JUST HAVE TO GET USED TO THIS RECURRING DESTRUCTION OF WEALTH EVERY 20 OR 30 YEARS.EVERYTHING REVERT TO THEIR TRUE SELF ONE WAY OR ANOTHER .HOW CAN ANY SYSTEM THAT IS NOT EQUITABLE EVER CREATE COMMON HUMAN WEALTH?JUST BEFORE INDIAN INDEPENDENCE FROM BRITAIN MR.GHANDI WAS HAVING A MEETING WITH MR.NEHRU THE HINDU LEADER AND THE MUSLIM LEADER MR.JINNAH ,WHEN THE TEA MEN CAME IN CARRYING THE TRAY HE CAME IN FOR SOME ROUGH REMARK FROM NEHRU AND JINNAH TO WHICH GANDI SAID QUOTE ‘ IF WE CANT RESPECT OURSELVES HOW CAN WE RULE OURSELVES ‘ UNQUOTE . NOW THE TRUTH IS EVIDENT IN THE VIOLENCE BETWEEN INDIA AND PAKISTAN.ANY ECONIMC SYSTEM THAT IS NOT EQUITABLE WILL ULTIMATELY ALLWAYS BRAKE DOWN AND CAUSE HUMAN MISERY. Unfortunately for us economist do not accord any intrinsic value to human being in thier bottom line.