Monday, June 9, 2014

BRIC bank on track to startup in July

It appears the new BRIC bank will start up in July as previously reported. In this article, the author provides a list of reasons why he thinks the BRIC bank is a good idea that can do harm.

I have pasted a few quotes below. It is interesting to see this article basically attacking the BRIC bank as it gets closer to reality. Everything in this article supports the idea we have  been reporting here that the world is moving further apart rather than coming closer together. 

It seems like the tendency to form blocs and protect national and regional interests is trumping forming globally based organizations for now. Below are some quotes that support this.

"While the proposed BRICS Bank could help ease the $1.4 trillion-a-year infrastructure financing gap in developing nations, the new institution's backers might be tempted to use it to further their own economic and foreign policy objectives."

"China Development Bank and China Exim Bank have stepped into the breach - sometimes offering 20-year-plus infrastructure loans at heavily subsidised 2 percent annual interest rates. But their funding to sub-Saharan Africa and Latin America is largely aimed at securing China's energy supplies and winning more business for Chinese vendors."

"The BRICS Bank will face an even knottier challenge. Its emerging market sponsors have little in common apart from a shared distrust of Washington-based institutions. To define a vision, the new bank will need a strong board, which is able to resist political jostling by its sponsor nations when making staffing and lending decisions."

All the above comments are sometimes made now about the IMF and the World Bank with the US and EU seen as the ones who use the system to their advantage by many nations.

This is good to keep in mind when you hear talk of "global solutions" or the world "coming together to solve problems"  While these phrases sound appealing, the reality is that more often than not competing interests jockey to gain advantage in one way or another. And money rarely comes with no strings attached from any institution. 

This is why we think only a major global crisis would change the dynamic and possibly start a move towards some kind of global monetary system change. It's human nature to look after one's self interest first and for nations to do the same. Crisis is what changes that dynamic.

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