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The G20 meetings are publicly recognized for being the arena of two repeating themes: citizen protest against unfair trade policies that affect communities across the world, and world leaders flexing their muscles to see who walks away as top dog.

The G20 meeting in Seoul, South Korea was burdened with a third theme– that of finding solutions to the ongoing global economic crisis and the fast approaching threat of protectionism. Why is protectionism an issue? In the context of the US economy, it could mean lower foreign investment, which would lower the value of the dollar. In the context of social justice, this could have far-reaching adverse effects on local and international unemployment and worker rights as well as on US government spending on social services.

The US came under pressure for the Quantitative Easing (QE2) decision taken by the Federal Reserve Board. What’s all the noise about, and did the rest of the G20’s argument against the US decision make any sense? Nice analysis of the situation (and some groovy Economics 101!) here.

But really, the only thing we’re asking each other right now is, why should we care about what is discussed or decided on at the G20?

Simple answer? International Aid Reform. The G20 meetings are a significant platform for world leaders to discuss global approaches to the issue of misdirected foreign aid and unmet aid targets.

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By Catherine Bugayong, Global Development Issue Analyst

The United States’ complaints about China have only progressively increased in volume since the economy crashed in 2008. At issue here is the exchange rate, which China holds “fixed” at 6.65 yuan to US$1.

Unlike the Chinese yuan, the US dollar and (other major trading currencies such as the euro and the Japanese yen) are on a “floating exchange rate regime:” the value of the US dollar automatically changes in reaction to demand and supply in markets. For China to place the yuan on a “fixed exchange rate regime,” it must continuously buy and hold in reserve trillions of US dollars.

These actions have the United States grumbling that China is a “currency manipulator” and that the yuan is “undervalued.” The United States argues that keeping the yuan artificially low gives Chinese exports an unfair advantage. Pressured further by the US economy’s slow recovery, the House of Representatives passed a bill that permits the US government to set up tariffs against countries that undervalue their currencies. The bill awaits approval from the Senate and a signature from the President, but what the world is really waiting for is China’s reaction. Read the rest of this entry »

By Marshall Kirby.

Marshall is one of AIDemocracy’s 2010-2011 Issue Analysts. Find out more about Marshall below or take a look at the Student Issue Analysts.

The author with John Perkins

On Thursday October 14th, 2010 I had the honor of attending a speech given by John Perkins in Pittsburgh, Pennsylvania. Perkins is the author of the bestselling books: Confessions of an Economic Hitman, The Secret History of the American Empire, and Hoodwinked. As you might expect, the talk was very interesting and inspiring at the same time.

Perkins’ main points of discussion were about the history of the economic collapse, what brought us there, and where we can go from here to build a more sustainable and just global economic system. All of these I will discuss below.

How did we get here?

Perkins gives us his take on a much longer journey back through history. Prior to the rise of modern states, global power derived out of religious empires. With the rise of modern nation states, the religious structure in which global power was concentrated was displaced. Then, he said, something changed – power started shifting from sovereign states towards global corporations. Through lobbying, the power of money, and corruption, some corporations have been able to thwart democratic practices in certain thriving democracies. This has produced the economic system of today and the current crisis. Perkins’ explains that this was no fluke – it was inevitable.

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By Marshall Kirby.

Marshall is one of AIDemocracy’s 2010-2011 Issue Analysts. Find out more about Marshall below or take a look at the Student Issue Analysts.

There has been much media coverage regarding reform of the financial sector in the US. Regardless of where you may stand on the issue, it is important to note one thing – that while reforms made in each nation can produce results, without global cohesion and cooperation the world’s financial health will remain vulnerable.

Since the global financial crisis, we have witnessed an economic collapse in Iceland and debt crises in both developed and developing economies. Throughout the world specifics are different, but nearly each country faces the same overall picture. The call for financial reform is present in nearly all countries, but what we still lack is global financial reform and cohesion.

The World Bank and International Monetary Fund, two organizations which receive so much criticism, some of which is fair and some unfair, are trying to bring this issue to light. Top IMF officials have gone on the record stating that they believe individual reforms are not going far enough to prevent the root causes of what has caused this global crisis. Echoing this, Charles Dallara, the managing director of the Institute of International Finance has said “Urgent action is needed to arrest the disturbing trend towards unilateral moves.”

The real problem here is that without uniform global financial standards, risky practices will still occur due to loopholes and differing levels of regulation. Read the rest of this entry »

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