ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist®.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style3 { height: 68px; } .MsoNormal {} h1 {margin-bottom:.0001pt; page-break-after:avoid; font-size:12.0pt; font-family:"Times New Roman"; font-weight:normal; text-decoration:underline; text-underline:single; margin-left: 0in; margin-right: 0in; margin-top: 0in; } .style4 { font-size: large; font-weight: bold; font-family: Arial; } .style6 { height: 69px; } h2 {margin-bottom:.0001pt; text-align:center; page-break-after:avoid; font-size:12.0pt; font-family:Arial; margin-left: 0in; margin-right: 0in; margin-top: 0in; } .style7 { font-size: x-large; font-weight: bold; } </style> </head> <body bgcolor="white" vlink="black"> <center> &nbsp;<table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr> <td width="133" height="118" rowspan="2" valign="top" align="left" xpos="0"> <a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" colspan="2" valign="top" align="left" xpos="140" class="style6"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" class="style6"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr> <td width="624" colspan="6" valign="top" align="left" xpos="0" class="style3"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#8226; <a href="articlesindex.html">ARTICLES</a> &#8226; <a href="books.html">BOOKS</a> &#8226; <a href="teflon.html"> THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#8226; <a href="mailto:letters@onlinecolumnist.com"> REACTIONS</a> &#8226; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td width="133" height="2"></td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style4">Toronto&#39;s G20 Tale of Two Cities</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curt</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b>is<a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright June 25, 2010<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<span class="style7">S</span>taking out diametrically opposed positions, the world s leading economic powers have very different theories of how fix their own economies, let alone change the glacial pace of worldwide recovery.<span style="mso-spacerun: yes">&nbsp; </span>New World views as expressed by U.S. President Barack Obama and his Treasury Secretary Tim Geithner mirror the theory John Maynard Keynes, the 20th Century British economist who believed that government intervention, in both monetary and fiscal policy, was needed for economic recovery.<span style="mso-spacerun: yes">&nbsp; </span>When the U.S. real estate bubble burst in Dec. 2007 triggering the latest global meltdown, former president George W. Bush and Obama countered with massive government stimulus.<span style="mso-spacerun: yes">&nbsp; </span>Both concluded that free market capitalism couldn t solve the economic mess without plunging the nation into another Great Depression.<span style="mso-spacerun: yes">&nbsp; </span>Critics of economic stimulus have few options in mind.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Had Bush or Obama opted for  austerity instead of stimulus, more U.S. businesses would have shuttered and millions more would lose their jobs.<span style="mso-spacerun: yes">&nbsp; </span>With the unemployment rate nearing double-digits, Depression era expert Federal Reserve Board Chairman Ben. S. Bernanke kept interest rates to a minimum, hoping to provide more stimulus through monetary policy.<span style="mso-spacerun: yes">&nbsp; </span>Working with the U.S. Treasury, the Fed provided capital to insolvent U.S. banks, fearing more bank failures would lead to another Great Depression.<span style="mso-spacerun: yes">&nbsp; </span>Free market advocates, and those European austerity zealots across the Atlantic, primarily Germany and France, don t appreciate differences in the U.S. While economic socialism comes naturally to the U.K. and the Continent, the U.S. has placed its faith in free markets.<span style="mso-spacerun: yes">&nbsp;&nbsp; </span>Conservatives have doubts about Keynesian economics, while Europeans take it for granted.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Economic contraction has reduced demand for private sector goods and services, adding to the current high unemployment rate.<span style="mso-spacerun: yes">&nbsp; </span>If Bush or Obama didn t intervene at the expense of more government debt with economic stimulus, the U.S. economy would be far worse off.<span style="mso-spacerun: yes">&nbsp; </span>European finance ministers oppose more debt-financed stimulus because their system already provides lavish welfare benefits to its citizens.<span style="mso-spacerun: yes">&nbsp; </span>When the government already covers health care, pensions, vacations, etc., it s easy to talk of more austerity.<span style="mso-spacerun: yes">&nbsp; </span>In The States, however, austerity drives citizens from unemployment into homelessness, a growing problem across the U.S.<span style="mso-spacerun: yes">&nbsp; </span> Our annual summit takes place as the world begins a fragile recovery from the greatest economic crisis in generations, read the G8 statement.<span style="mso-spacerun: yes">&nbsp; </span>If that s true, how can major eurozone powers advocate  austerity to dig themselves out?</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>European policy makers need to figure out they re priorities:<span style="mso-spacerun: yes">&nbsp; </span>Saving the euro or Promoting economic prosperity.<span style="mso-spacerun: yes">&nbsp; </span>The two don t necessarily go hand-in-hand.<span style="mso-spacerun: yes">&nbsp; </span> Heavy-handed  austerity imposed on by the Frankfurt-based European Central Bank on countries like Greece can only boomerang, eventually forcing Greece to abandon the euro.<span style="mso-spacerun: yes">&nbsp; </span>Europe s struggling economies including the U.K can t afford more Frankfurt<span style="mso-spacerun: yes">&nbsp; </span>punishment for not competing well enough with Europe s most powerful economies.<span style="mso-spacerun: yes">&nbsp; </span>If the ECB couldn t handle the disparity in economies across Europe, they should have never gone to a common currency.<span style="mso-spacerun: yes">&nbsp; </span>Imposing  austerity and punishing less industrialized countries may help the euro s value but decimates hard-working Europeans struggling to make ends meet.<span style="mso-spacerun: yes">&nbsp; </span> </p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>President Obama stands in stark contrast of German Chancellor Angela Merkel, still mindful of Germany s Weimer Republics, where inflation cannibalized the Deutsche mark setting the stage for WW I and the rise of Adolf Hitler.<span style="mso-spacerun: yes">&nbsp; </span>She s more cognizant than most of how runaway inflation and currency devaluations can destabilize an entire society.<span style="mso-spacerun: yes">&nbsp; </span>Despite Merkel s anxieties, she must, now that she s part of the European Union, not think only of herself or Germany but of the consequences of beating up on less industrialized eurozone countries.<span style="mso-spacerun: yes">&nbsp; </span>  Quite honestly, I think the world economy is faced with a number of uncertainties, India s Prime Minister Manmohan Singh told the Tornoto Star, not certain whether the U.S. or Europe is poised for recovery.<span style="mso-spacerun: yes">&nbsp; </span>With Merkel and France s President Nicholas Sarkozy urging  austerity, it s possible that the recession could drag on.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Germany s cure for the global economic crisis is more  austerity for less industrialized eurozone countries.<span style="mso-spacerun: yes">&nbsp; </span>Germany can t have it both ways:<span style="mso-spacerun: yes">&nbsp; </span>Promoting growth while preserving the euro s inflated value.<span style="mso-spacerun: yes">&nbsp; </span>While it s come down around 25% against the dollar and yet, the euro must fall to parity with the dollar to make the currency more workable in less industrialized countries like Greece.<span style="mso-spacerun: yes">&nbsp; </span>In devaluing the euro, Germany stands to lose sovereign wealth but stands to energize the eurozone.<span style="mso-spacerun: yes">&nbsp; </span>No one in the G20 or G8 expects China to inflate the yuan to make the U.S. and eurozone competitive manufacturing powers.<span style="mso-spacerun: yes">&nbsp; </span>Both Europe and the U.S. expect a large trade imbalance with China for the foreseeable future.<span style="mso-spacerun: yes">&nbsp; </span>Before Merkel and Sarkozy plunge Europe into a Great Depression, they should follow Obama s lead financing more debt to stimulate the economy and keep people employed. </p> <p class="MsoNormal"> <b>John M. Curtis </b>writes politically neutral commentary analyzing spin in national and global news. He&#x2019;s editor of OnlineColumnist.com and author of <a href="books.html">Dodging The Bullet</a> and <a href="books.html">Operation Charisma</a>.</p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Homecobolos> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>