Global Economic News

Turkish GDP Collapse

July 1 (EIRNS)—The Gross Domestic Product of Turkey collapsed by 13.8% for the first quarter over that of last year. This is the steepest decline since 1945, according to today's Zaman. The drop included 24.4% in wholesale and retail trade; 18.9% in the construction sector and 18.5% in manufacturing. This can be attributed to the nearly 40% collapse of Turkey's exports.

Zaman comments that these figures will renew pressure on the government to sign a new agreement with the International Monetary Fund, which has been under negotiation for months: The Turkish government is resisting a new agreement, because of the conditionalities the IMF is demanding, including major budget cuts and cuts in government investment in infrastructure.

China Attacks Carbon Imperialism of Cap-and-Trade

July 3 (EIRNS)—One of the many undiscussed provisions of the Carbon Cap-and-Trade bill recently rammed through the U.S. House of Representatives, is the imposion of a tax, or tariff, on imports from countries that don't meet the mandated carbon standards.

China criticizes the carbon tariff proposals as inconsistent with World Trade Organization rules, claiming it is de facto protectionism in the name of environmental protection, according to today's People's Daily.

Yao Jian, spokesman for the Ministry of Commerce, said in a statement today that China strongly opposes the proposal, which he warned could trigger trade war.

People's Daily writes: "The carbon tariff proposal is not in compliance with the principle of 'common but differentiated responsibilities' between developed countries and developing countries defined by the Kyoto Protocol. Thus the tariff will 'severely impair the interest of developing countries,' said Yao."

IMF for First Time Issues SDR Bonds

July 3 (EIRNS)—The International Monetary Fund issued bonds for the first time in history today, uttering currency outside government control, as decided at the G20 meeting in London in April. The IMF issued Special Drawing Rights-denominated bonds which were purchased by China, Russia, India, and Brazil. China requested $50 billion, and the others, $10 billion each. SDRs are a form of international currency de facto replacing the dollar. Once a country applies for SDRs, the loan will be denominated in a national currency. For instance, if the country wants U.S. dollars, its SDR account is debited, and America's SDR account is credited. The same goes for other national or regional currencies, such as the euro. So, the day when China or any other BRIC (Brazil, Russia, India, China) country wants to cash its bonds, it can do so in currencies other than the dollar.

At the same time, the bonds are generating a new market, i.e., they are traded at no less and no more than sovereign state bonds. This means they have a price tag, and they are subject to derivatives trading. This gives the British the ability to manipulate the price of the SDR as against the dollar and other national currencies.

We now have the beginning of a shift from a dollar-based system to an entirely supranational system—a system which will never work, said Lyndon LaRouche in his June 27 webcast.