Larry Summers: The Past Month May Go Down as a Turning Point for U.S. Economic Power

Greetings,

The warnings from those in the bowels of American power continue rolling in. They know that America is going down. They see it and are forewarning their elite klans, but are not really focusing on the poor ,because they are trying to take down the foolish.

Collapse is not inevitable. It is going on as we speak. This is the end of America as an economic power. The signs continue to mount.

The empire is in trouble and in retreat. No matter how much of a brave face her politicians and leaders are putting on. It’s just about at an end.

Larry Summers: The Past Month May Go Down as a Turning Point for U.S. Economic Power

Brutal

In a new column, former Treasury Secretary Larry Summers delivers a scathing message (emphasis ours):
“This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. True, there have been any number of periods of frustration for the US before, and times when American behaviour was hardly multilateralist, such as the 1971 Nixon shock, ending the convertibility of the dollar into gold.

But I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the US to persuade dozens of its traditional allies, starting with Britain, to stay out of it.”
Summers is referencing the new Asian Infrastructure Investment Bank, China’s 18-month-old plan to start the first new multilateral development lender in decades. More than 40 countries applied to be founding members including China, Australia, Egypt, Ukraine, the U.K., France, Switzerland, India, and South Korea.
Mohamed El-Erian voiced similar concerns in a Bloomberg View column late last month.
Through the combination of the proposed AIIB, a new development bank and mushrooming bilateral arrangements, China is slowly building small pathways to bypassing the longstanding institutional arrangement. No wonder the U.S. is again worried about the erosion of the existing Western-dominated multilateral system (in this particular case, the World Bank) where its influence is still considerable, if not determinant.

There are still some unknowns in how the bank will operate, but we should learn more when after the final round of talks among founding members, which is scheduled for May. The AIIB is expected to be fully established by the end of the year.
Summers puts much of the blame on the current U.S. political environment:
This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the US approach to global economics…Political pressures from all sides in the US have rendered it increasingly dysfunctional.

Largely because of resistance from the right, the US stands alone in the world in failing to approve the International Monetary Fund governance reforms that Washington itself pushed for in 2009…Meanwhile, pressures from the left have led to pervasive restrictions on infrastructure projects financed through existing development banks, which consequently have receded as funders, even as many developing countries now see infrastructure finance as their principle external funding need…..More Here

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