FROM THE DAILY RECKONING 4/3/09

The New World Order by Bill Bonner London, England In London, last night: "You weren't here today," began the cab driver. "You missed the excitement. You know, the G20 meeting. They held it here in London... "Some lads got out of control. They smashed a window over at the Royal Bank of Scotland, and then broke up the computers and so forth... "Nothing very important, but the media makes a big thing of it. They kept talking about that G20 meeting - as if they were going to change the whole world - New World Order and all that...but what could they change? These hotshots at the banks took some bad bets. Now they've got to pay for them. What's all the fuss about?" Clearly, our cab driver should go back to school. He could study macroeconomics and learn about counter-cyclical fiscal stimulus...and the multiplier effect...and the need to restore liquidity to the financial sector. Then, he could be spouting the same claptrap as other commentators. He could get on board with the plans to save capitalism from...well, from capitalism! It's all very well for the capitalists to make money, he will discover, but when they begin to lose it, well government has to step in and bail them out. The "creative" part of capitalism is fine...but spare us the destruction, okay. Yesterday, the heads of state of the world's 20 leading countries decided to put more muscle into their efforts to stop capitalism's downswing. Notably, they decided to treble the budget of the IMF. In all, today's International Herald Tribune tells us it's a "One Trillion Dollar Deal." Gordon Brown pronounced it a "New World Order," which sounds a lot like what George Bush I was aiming for 15 years ago. One world government. One multi-national police force. Harmonized tax collection. (No more tax havens...nowhere to run...nowhere to hide...) Keep the masses happy with bread and circuses...and "wars" against imaginary and unnecessary enemies. (The War on Terror and now - the War on Depression.) Hey, maybe we'll all have to speak Esperanto, too... But at least now the IMF will be about to bailout more bankrupt governments before it goes broke itself. Most of the money is coming from a country that doesn't have any: the U.S.A. Look up. What do you see? Why, it's our Dollar Crash Flag. The dollar's days are numbered. What's the number? We don't know. But whatever it was a week ago, it is a smaller number now. Yesterday, the dollar gave up a little ground. The euro rose to $1.24. Oil went up to $52. Gold, however, fell hard - down to $904. Gold stocks, on the other hand, did rather well. Hugo Chavez was in the Mideast this week at a meeting of oil producers. He called for a new petro-currency...which, we suppose, is a currency backed by oil. The Associated Press: "Venezuelan President Hugo Chavez sought Arab support Tuesday for a proposed oil-backed currency to challenge the U.S. dollar in his latest swipe at Washington's dominance in global financial affairs." He probably won't get very far with that. But he's not the only one looking for a solution to a crisis that hasn't happened yet. The dollar's been king of the monetary mountain for a long time. But it had better be careful...watch it's back ...give a little of the food to a dog before eating it itself. Rivals are plotting against it. Much of the world wants to dethrone "King Dollar," says the French financial journal, La Tribune. China has already called for a new reserve currency based on IMF Special Drawing Rights. What's more, it's worked out bilateral agreements with many of its neighbors to swap goods, rather than use the dollar as a common unit of exchange. This week, it went further afield, making a deal with Argentina. This is the first deal of its kind in the Latin American world. But it's probably not the last. People see trouble coming with the greenback. They don't want it to hurt their sales of raw materials to China. The Russians, too, have called for a new reserve currency. They, like the Arabs and Chavez, are sellers of raw materials. They don't want to get stuck with dollars that are losing their value. That's the real New World Order...the United States will find it harder to stay in the driver's seat of this bus...and the U.S. currency will no longer give Americans an automatic ticket to the first class section...