VAT should be imposed on food and children's clothes, says IMF

Think this could happen in Ireland?

VAT should be imposed on food
and children's clothes, says IMF

By By Edmund Conway, Economics Editor
Published: 9:30AM BST 15 May 2010
Telegraph.co.uk

David Cameron should use this summer's emergency Budget to raise VAT on a host of excluded products, including food and children's clothes, the International Monetary Fund signalled yesterday.

In an unusual intervention, the IMF said one of the best ways for the coalition Government to raise money and repair the public finances would be to remove the zero-rate that excluded a number of goods from VAT.

The recommendation came amid suspicion that the Government would also have to raise the level of the sales tax from 17.5 per cent to 20 per cent if it was to afford the tax pledges it made in its agreement earlier this week.



Although the IMF's suggestion, published in a comprehensive survey of public finances around the world, was less eye-catching than raising the headline rate, it would potentially have a greater impact on the price of goods, and on families' living standards.

The document, signed by Dominique Strauss-Kahn, the IMF's managing director, said: "There is substantial scope for improving the revenue performance of the VAT in almost all countries, including by eliminating exemptions and reduced rates."

VAT is not charged by HM Revenue and Customs on certain items, including food, children's clothes, domestic passenger transport, books and prescription drugs.

The IMF said Britain could raise 3.3 per cent of its economic output – about £50 billion a year – merely by halving the number of exemptions.

It added that despite having among the highest levels of petrol duty in the Western world, Britain could afford to increase fuel taxes slightly more, raising a further £3 billion.

The suggestions were likely to fuel suspicion that George Osborne, the Chancellor, would raise a series of taxes, including VAT, at the emergency Budget, which is due to take place within 50 days.

City commentators, including Robert Chote, the head of the Institute for Fiscal Studies, and 24 of the 28 economists regularly surveyed by the Treasury, pinpointed the sales tax as the most likely candidate to rise in the Budget.

However, few suggested that the Treasury should lift the exemptions, which also included financial services fees. Some warned that increasing VAT on zero-rated items would affect the finances of lower income families in particular.

The IFS calculated in its Green Budget earlier this year that such a move – even at a more limited level, raising only £24 billion – would account for about 7 per cent of the income among low-paid workers.

The increases may be necessary if Britain was to start reducing its deficit, the IMF said.

It pointed out that, over the next few years, Britain would need to reduce its deficit by 9 per cent of gross domestic product – equivalent to £130 billion.

The Government has yet to specify how fast it intended to cut the deficit, although it pledged to cut spending by more than it raised taxes.

IMF says 'Suck it up, the party's over.'

For those of you who know what this means, read and weep. For those of you who don't, you soon will. It effectively means a democratic loss in creating fiscal policy. The people of the EU PIGS (Portugal, Ireland, Italy, Greece and Spain) countries will understand in short order that all their demonstrations against pay and service cuts, no matter how justified, will be for naught. How EU member states spend their tax money will be overseen by the IMF.

"You will see many headlines complaining and moaning and stirring the pot," Lagarde said, as issues such as pension reform are debated. But ultimately, she said, "there is no way out."

For nations living the good life, the party's over, IMF says

By Howard Schneider
Washington Post Staff Writer
Saturday, April 24, 2010

In the lingo of the International Monetary Fund, the future of the world hinges on "rebalancing and consolidation," antiseptic words that would not seem to raise a fuss.

Who doesn't want more balance in their life?

But the translation is a bit ruder, something on the order of: "Suck it up. The party's over."

To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive.

That's the practical meaning of a series of policy papers and statements issued in recent days by IMF officials, who have a long history of stabilizing economies and solving global financial problems, as they plot a course to keep the world economy growing and reduce the risk of another "great recession."

That message has been delivered subtly, woven into documents with titles such as "Resolving the Crisis Legacy and Meeting New Challenges to Financial Stability," and justified by concepts such as "raising retirement age in line with life expectancy," as IMF economic counselor Olivier Blanchard put it this week.

But fully deciphered, it means a pretty serious reworking of expectations in the developed world: changes in labor rules, product prices, currency values and even the social contract between governments and an aging citizenry.

"It is not that living standards will lower, but they will not increase as fast as they have been," said Domenico Lombardi, a former IMF executive director. The ideas being discussed by world leaders "are coded words," he said. "They don't like words like 'imposing higher taxes' and 'cutting spending.' "

Rebalancing

The IMF has long had a reputation as a bearer of bad news -- it dispatches well-educated and diplomatically deft teams to tell economically troubled countries how many people they have to fire and which programs they have to cut to get financial assistance. But the IMF now finds itself in the odd position of having that conversation not with a single ailing sovereign but with the developed countries at the core of the world system, including the United States.

Its prescription is centered on two concepts.

"Rebalancing" is an idea that most everyone endorses -- including the technicians at the fund and President Obama and the leaders of the G-20 group of economically powerful nations. In broad strokes, it means curbing what has been a massive transfer of capital from nations that consume more than they produce, such as the United States, to nations that produce more than they consume, such as China.

The imbalance has been key to China's modernization: The country buys U.S. government bonds by the tens of billions to keep the dollar stronger than it would be and to keep its domestic currency -- and its exports -- cheaper. Looked at one way, the flow of U.S. debt to the People's Bank of China has acted like a giant, collective credit card, underwriting consumers across the United States and driving the business models of major retailers such as Wal-Mart.

The message from the IMF is that the card is about maxed out and that the imbalance in trade flows needs to be corrected.

How to do it? One way is for China -- or Asian exporters, more generally -- to let their currencies rise on world markets. The other way, which IMF economist Blanchard raised this week, would be to devalue the dollar, the euro and other developed-world currencies.

"The advanced economies as a whole may need to depreciate their currencies so as to increase their net exports," Blanchard said.

The less well-advertised side of the equation: If the dollar is worth less, then imports, regardless of their source, will cost more. U.S. exports will be proportionately cheaper -- a good thing for American businesses trying to become more competitive in overseas markets -- but everything from iPods to jeans to the latest Barbie doll would jump in price.

The ideas offered by the IMF "could certainly reorder the balance of the international economy, but not in a way that benefits the average person in the U.S.," said J. Craig Shearman, vice president of government affairs for the National Retail Federation.

He continued: "If a few factories have an increase in exports, that is good for them, but it leaves the vast majority of people paying more for consumer goods. Talking about consuming less and saving more is a nice, ivory tower approach. But it is not real world economics. People have to put clothes on their children's backs and food on the table."

Wal-Mart declined to comment.

Consolidation

"Fiscal consolidation" is another idea promoted by IMF leaders. Again, the aim seems unobjectionable: The United States and other developed-world governments ran record deficits during the crisis, both to pay for stimulus programs and because tax and other receipts cratered. Across the developed world, the IMF says, government debt will rise from about 80 percent of economic output before the crisis to roughly 115 percent of output in 2014.

That's considered a dangerous trajectory, and IMF officials say that by next year, governments need to announce "credible" plans to cut their annual deficits, turn them into surpluses and start paying off what is owed.

The level of the correction needed is large, perhaps 10 percent of gross domestic product. In the United States, that would amount to roughly $1.4 trillion annually, to be cut from government programs or raised through new taxes.

Better-than-expected growth would help, or increases in productivity, or even surprises in the form of new technologies. But what's on the horizon is, more likely, a difficult reckoning -- one that Greece is facing and that other developed nations know is in the offing, French Finance Minister Christine Lagarde said in an interview Thursday.

"We're all in the same boat," Lagarde said as she looked ahead to a tough debate in France over changes in pension rules that will make not just government workers but also many in the private sector add years before their expected retirements.
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The IMF is studying issues such as which taxes should be raised and which programs should be cut to make "consolidation" as painless as possible. But it views a longer working life as an important tool -- one that would save large amounts of money in the future without cutting spending and decreasing economic activity today.

In the United States, a new fiscal commission is beginning to study how to bring U.S. government debt into line.

"You will see many headlines complaining and moaning and stirring the pot," Lagarde said, as issues such as pension reform are debated. But ultimately, she said, "there is no way out."

IMF to create policy for EU coutries

Read and weep all those of you who voted yes to Lisbon. At least those of you who understand the implications of this change.

Greek Plan Extends IMF's Sway

Dollar losing reserve currency status - Engdahl

Anyone with even a watchful (not necessarily expert) eye on the dollar over the past year and a half, could predict its fall as the world reserve currency. At first the idea seemed absurd and impossible: now the prediction is 99% certain.

Update October 8, 2009


I just can't believe that if a lay person like myself can glean this castrophe lying in wait for the US , that experts such as Ben Bernanke, Alan Greenspan, Timothy Geithner and Obama could possibly not have figure it out by now. They MUST know.

And if they do know, they are surely preparing for this bomb to hit.

• At the last G20 conference in Pittsburgh, the US ceded economic control to the IMF.
• Northcom has estabished a disturbing presence acting in the role of the National Guard.
• Swine flu has been declared an epidemic effectively activating Directive 51.

And these are only a few of the indicators inside the US: the international pressures which guarantee thedollar losing reserve currency status in recent months are overwhelming.

I wonder what the economic catastrophe will look like in human cost to Americans? It won't be pretty and may very well resemble the economic collapse in Russia in the early 1990's.

If the Big Dogs do know what is coming, it means they are lying like the devil now in redirecting the focus of media attention to 'heathcare' and 'birthers'. I hear alot of clamour about such things; but no on is discussing the consequences of this monumentous change just around the Main Street corner.

Of course, for many other countries this change will mean increased prosperity and economic growth.

The article below by F. William Engdahl neatly explains why the dollar will fall. Americans truly have no hand in their own destiny now - the are up the creek without a paddle - they just don't know it yet. (Could be all the hyper-control freak-indoctrination that passes as education now in the US.)

The next decade will bring changes to civilisation which we could hardly have imagined. What the human cost will be is a question I am almost afraid to ask.

Will the Dollar get an “Arab oil shock”?

by F. William Engdahl
October 7, 2009
Source
Arab oil producing nations and the some world’s largest oil consumers including China and Japan are reliably reported to be secretly planning a long-term exit from pricing their oil trade in dollars. If true, it would spell the death knell for the dollar as world reserve currency, and for the USA as “the” global economic power.

Ever since Washington tore up the Bretton Woods treaty in August 1971 and went onto a “dollar paper reserve system” instead of a dollar backed by gold, the United States, as the world’s most powerful military power, has been able to dictate financial terms to the world. Nations like Japan and later China, dependent on US export markets, would dutifully invest their trade surplus dollars into US Government debt, in effect financing wars such as Iraq or Afghanistan they opposed. They saw no choice. Arab oil producing countries, under US military pressure, were forced to sell oil only in dollars, a direct prop to the dollar when the US economy was in terminal decline. That may be rapidly about to come to an end.

According to a leaked report from Arab Gulf oil producers, there have been a series of secret meetings in recent months between the major Arab oil producers, including Saudi Arabia, and reportedly also Russia, together with the leading oil consumer countries including two of the three largest oil import countries—China and Japan.

Their project is to quietly create the basis to end a 65-year long “iron rule” of selling oil only in US dollars. Following the 400% oil price shock of 1973, which was deliberately blamed by US media on “greedy Arab Shiekhs,” a senior US Treasury official made a secret trip to Riyadh to tell the Saudis in blunt terms that if they wanted US military defense against potential Israeli attack, that OPEC must privately agree never to sell oil in currencies other than the US dollar. That “petrodollar” system allowed the US to run staggering trade deficits and remain the world reserve currency, the heart of its ability to dominate and control world financial markets, until the crisis of the sub-prime real estate securitization in August 2007.

The participants in the oil pricing project reportedly envision using a basket of currencies reflecting producer-consumer trade relations, one backed by gold as a solid backbone. It would not initially be a new currency as some have surmised, but rather an arrangement that would eliminate the risks of pricing oil sales in fluctuating and likely depreciating dollars.

Iran announced recently that in the future it would sell its oil for euros not dollars. According to these reports, the basket of currencies would include a mix of yen, euros, Chinese yuan, gold. Brazil would reportedly join as both a producer and consumer country.

The secret plan was first reported by Middle East correspondent, Robert Fisk, in the UK Independent.

I have confirmed from very senior and well-informed Gulf sources that the talks are in fact real. The oil producing countries have been fed up for years about having to price their oil in dollars or face US reprisals. They are steadily losing as the dollar depreciates against other currencies and against gold. As most Gulf Arab oil countries depend on imports for much of their economy, dollar pricing de facto introduces serious inflation into their economies as well. Most of their trade is with the EU or other countries outside the US, but now that trade must be mediated through a sinking currency, the dollar.

Following the US declaration of the War on Terror by the Bush Administration after September 11, 2001 most leading Arab oil producing countries privately saw US policy as being aggressively aimed at them. The un-justifiable US invasion and occupation of Iraq in 2003 merely confirmed that as well as subsequent US threats against Iran.

Initially various governments involved in the leaked plan have publicly denied vehemently such a plan. That in no way invalidates that such moves are afoot. The participating countries are well aware that the United States as a wounded tiger can be far more dangerous. The leak of the plans in the world media, whether every detail reported by Fisk is true or not, feeds what is an inevitable decline in the dollar as a reliable reserve currency for world commerce.

What is not clear is what the potential response of Germany and France, the two pivot powers within the EU will be. If they decide to cast their lot with oil producing and consuming countries, they open their doors to vast new trade and investment potentials from the countries of Eurasia. If they cringe from that and decide to remain with the British Pound and US dollar, they will inevitably sink along as the dollar Titanic sinks.

With that decline of the US dollar goes the lessening of the political power of the United States as sole economic and financial superpower. We face very turbulent waters ahead and gold not surprisingly is gaining in this uncertainty.

Copyright © 2009 F. William Engdahl
Editorial Archive

*F. William Engdahl is author of Seeds of Destruction: The Hidden Agenda of Genetic Manipulation (www.globalresearch.ca). He also authored A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press). His newest book, Full Spectrum Dominance: Totalitarian Democracy in the New World Order (Third Millennium Press) is now in print and will be available by mid-June. He may be contacted over his website, www.engdahl.oilgeopolitics.net.

US cedes economic control to IMF

This is the news you didn't hear about from the G20 that will change the way the world operates. This is the big step toward the NWO, the one that crosses the threshold of the way it was, and the way it will be in the future.

Whether the news is good or bad depends on one's point of view entirely: good for some, bad for others. Remember the IMF has imposed conditions of economic reforms on countries in the past that literally resulted in the death of millions in third world economies. On the other hand, the US fiscal policy will now be controlled by the IMF. One might almost guess that the consequences of the Federal Reserve's deplorably duplicitous decisions of monetary policy and how it affects common people, will now be blamed on the IMF instead of those who caused the economic collapse in the first place.

Do NOT underestimate the consequences of this unreported event at the recent G20. Those who fail to appreciate the monumental importance of this event are destined to grope in the darkness of reforms which will change the standard of living of millions: this time in the West. There is a very good reason the media did not report this event to US citizens.

The real import of the US ceding control to the IMF is yet to be disclosed.



Related

UN calls for new reserve currency

NWO = New reserve currency

I have tried in vain to convince Americans that the dollar will fall - and with it the standard of living to which the consumer zombie has been accustomed. Once again, I am presenting an article which should set off red alarm bells for anyone holding dollars. Those who do not take heed may live to regret it.

Wary of Dollar, China Wants Super-sovereign Currency

China's central bank calls for super-sovereign currency
Dollar's dominance has intensified risk, worsened crisis
IMF should manage part of its members' FX reserves

By Zhou Xin and Chris Buckley
Source
June 26, 2009
BEIJING
China's central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar's global domination, which it said had worsened the financial crisis.

In its annual financial stability report, the central bank did not mention the dollar by name but said it was a serious defect that one currency should tower over all others.

"An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis," the People's Bank of China said.

In thinly-veiled criticism of loose U.S. monetary and fiscal policies, the PBOC urged the International Monetary Fund to exercise closer supervision of the economic and financial policies of major reserve-issuing countries.

The 170-page report dusted off a call by the bank's governor, Zhou Xiaochuan, for the creation of a super-sovereign currency.

In an essay in late March, Zhou caused a stir by suggesting that the Special Drawing Right, the IMF's unit of account, could eventually displace the dollar as the principal reserve currency. [ID:nPEK184558]

Friday's report not only advocated a full role for the SDR but said the IMF should be entrusted with managing a portion of its member countries' foreign currency reserves.

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the report said.

DOLLAR DILEMMA

Chinese officials have expressed growing concern in recent months that massive U.S. fiscal and monetary stimulus will generate inflation and drive down the dollar, handing Beijing big losses on its vast portfolio of U.S. bonds.

Bankers say China holds perhaps 70 percent of its $1.95 trillion in official currency reserves in dollars.

"When a national currency becomes the global price-setting currency for primary products, the trade settlement currency and the reserve currency, that national currency has great difficulty attending to both domestic monetary policy goals and the reserve currency needs of various countries.

"And the economic development model of debt-based consumption is most difficult to sustain," the report said.

The PBOC also levelled criticism at international banking rules, drawn up by the Basel Committee on Banking Supervision, which it said had paid inadequate attention to the risks inherent in complex credit securities.

Oversight of derivatives had also been lax, the report said.

Turning to the domestic economy, the PBOC said the slump in global trade caused by the international financial crisis would spawn risks for China's banks as exporters ran into difficulties.

By weighing on incomes, the crisis might also slow China's drive to develop a consumption-led economy, the PBOC said.

The central bank also said China could face inflationary pressure in the medium- to long-term as a result of liquidity now being pumped into the global financial system, coupled with extensive deficit spending by many governments.

(Reporting by Zhou Xin, Aileen Wang and Chris Buckley; Writing by Alan Wheatley; editing by Patrick Graham)

Copyright 2009 Reuters

End of the Dollar

Will the 'Dollar Wars' Kill
What's Left of the American Dream?

Countries yoked to America's currency, and therefore its cratering empire, want to kick the dollar to the curb. And that's bad news for the U.S.

By Scott Thill
Source
June 26, 2009

Here's a terrible joke: An elderly man walks into a bar and says, "I got good news and I got bad news."

"What's the good news?" the bartender asks.

"I stayed out of the stock market, so my retirement dollars are safe."

"What's the bad news?"

"They're dollars."

OK, I said it was a terrible joke. But that may be what the dollar is becoming, now that the critical mass of wartime spending, rampant consumption, hyper-real finance and environmental collapse has hit the fan.

The hangover from the last three presidential terms, but especially the last two, has taken the American economy down the rabbit hole, with the international monetary system begging for mercy while hitched to its off-the-ralls crazy train. But the ride has stopped, and some countries yoked to America's currency, and therefore its cratering empire, don't want to get back on.

Namely, Brazil, Russia, India and China, loosely termed BRIC by Goldman Sachs economist Jim O'Neill, who is not alone in predicting the four countries' ascendant power, as the United States and the Eurozone fade into the 20th century.

With Brazil and Russia lording over a large share of what's left of the planet's natural gas and oil, and China and India providing a titanic labor force that rivals the intelligence, productivity and regimentation of workers anywhere outside their borders, BRIC is in the house, big time. And it wants a say in what's going on, as Marvin Gaye sang.

What's going on is that the dollar, to which the majority of the planet's economies and currencies are now reliant, has us all by the proverbial balls, and BRIC is screaming about it in the press. Something has to give, it's saying, and that thing is the dollar.

"There is a lot of political and economic posturing involved," Rachel Zimeba, lead analyst at economist Nouriel Roubini's RGE Monitor, explained to AlterNet. "But I think there is substance to it. China has been trying, relatively unsuccessfully, to diversify for a couple of years, which has conflicted with its desire to have undervalued exports. Same thing has happened to countries in the Middle East, which are pegged to the dollar. And we're going to see even more pressure to diversify from these countries to reduce the share of their [dollar] assets.

"They see that the U.S. has a rising debt burden and record financing needs. Over time, they are worried that inflation and a weaker dollar will reduce the value of those assets."

They should be worried. Since the Bush administration took office, the dollar has lost 33 percent of its value. And since the Bushies left office, the dollar has been on autopilot, hovering beneath the pound and euro and jockeying for position with the Canadian dollar for the bronze medal in underperforming currencies, losing or gaining altitude every time a politician from Russia or China slams or praises it in the press. Like the American economy itself, the Humpty Dumpty dollar is wobbling on the fence, hoping reality doesn't hop along and give it a shove.

The good news? It could land softly.

"This is not an overnight thing," Ziemba added. "Same thing goes for these countries' attempts to turn their own currencies into transactional and reserve currencies."

That's reassuring, especially to what's left of those who still have a lot of dollars, as the American unemployment rate rises to levels nearly unseen since World War II. But once you wormhole a bit further into the future, the dollar's fate is much more murky.

"The debate between the inflationists and deflationists is red-hot these days, as the U.S. financial system continues to wobble and the 'real' economy of goods and services staggers," explained Jim Kunstler, author of The Long Emergency, World Made By Hand and the riotously acerbic column "Clusterfuck Nation." "The fate of the dollar in the short-term depends on which way this really goes. But in the long term, both sides say the dollar is toast."

Helping push America off the debt-soaked cliff it built for itself by hitching its future to hyper-real derivatives and unsustainable deregulation and development is beginning to look less like sacrilege and more like prudent international monetary policy. Whereas in the past, China and Russia's public protestations about the hegemonic corruption of the American empire would have been shooed away like jealous flies, now more countries are joining in the anti-American chorus, even as they shake President Barack Obama's hand and hope openly for a kindler, gentler global village.

What's going on behind the scenes is anybody's guess. But it's probably a good guess that more than a few long knives have been unsheathed.

"Geopolitically, I suspect there is whispered consensus between our various partners and rivals that the American situation is pretty hopeless," Kunstler cracked, "and that they would now all more or less benefit from the diminishment of U.S. power across the board. The Chinese, for instance, must know that we will never again ramp up the orgy of credit spending. Why keep throwing away their wealth to keep us consuming?"

It's a good question. One of the BRIC members' solutions to the conundrum is to spend more time on their own currencies, as well as those of the beleaguered International Monetary Fund, which has its own currency, called special drawing rights. The SDRs are pegged to a currency basket, containing the U.S dollar, the euro, the yen and the U.K. pound sterling. In other words, the currencies of the 20th century's superpowers.

BRIC, the purported superpowers of the 21st century, have been buying SDRs like mad lately. When BRIC met in mid-June in the Siberian city of Yekaterinberg, it committed to giving $80 billion to the IMF, with China carrying the lion's share at $50 billion. Add that to the $250 billion that the G20 coughed up in April, and the IMF is quickly becoming the planet's reserve bank of choice.

“There is a need to make the IMF a true representative of the world’s leading economies," Russian Finance Minister Alexei Kudrin asserted in June. "It’s not there right now,” he said, adding that it would be a decade before what People’s Bank of China Governor Zhou Xiaochuan recently called a super-sovereign reserve currency mounted enough of a challenge to displace the dollar.

In the meantime, Russia, China and the other BRIC members are putting their money where they want their mouths to be, which is in the International Monetary Fund's ear. But whether that super-sovereign reserve currency is the SDR is too soon to say.

"The SDR can't handle the load in its current form," Zimeba argued. "You'd need a payment system that accepted the SDR, for one. But where it can grow is in reserve assets, and this upcoming issuance of IMF bonds denominated in SDR will be a significant increase. But SDRs will only be open to governments, not the secondary market where they can be traded, which fails the requirements of convertibility and liquidity.

"Right now, the SDR doesn't have that mechanism. But that can change over time. In the near term, this is a way towards diversification, because the dollar doesn't have a majority share in the SDR."

Kunstler adds: "They're obviously hedging their bets as much as possible. Put yourself in their shoes. They see the U.S. financial system's stupendous swindles, and they know the score. So their interests are strictly tactical and strategic in the interests of their survival. They also surely want to try to insure the continuation of world trade, with or without the U.S. consumer."

Which is why BRIC, and by extension the countries beneath its heel or shaking its hand, are diversifying their dollars and dumping cash into the IMF, where they can attempt to influence the international monetary system in their favor. The United States has so far committed $108 billion, including $5 billion siphoned from the controversial war-funding bill that passed in mid-June.

In addition, it has arranged for the IMF to receive over $500 billion altogether, mostly to prop up zombie European banks that drank too much of the derivatives Kool-Aid. So BRIC has an uphill battle ahead of it. But it's gaining strength, and wants to convert that to IMF say-so.

"They want more significant voting rights in the IMF," Ziemba said. "The money is in exchange for leverage. China has talked in detail about how the over-reliance on the dollar was adding to global instability, creating a situation where the optimal monetary policy for the U.S. is not optimal for countries tacked to the dollar. But it's fairly obvious that, in five to 10 years, the role of these countries in the global economy will only increase. But they also have to figure out how much responsibility they want to take on."

Or can take on. BRIC is ascendant for sure, but it's about to inherit a global economy and environment that is nothing like the respectively stable climates American and European empires have enjoyed over the last few hundred years. From the econopocalypse to climate crisis and beyond, BRIC is quickly going to find its hands full of problems that will doubtlessly dampen its upward surge. Sure, the dollar is toast, but so is Earth's biodiversity and store of natural resources. It's hard to build a superpower on that heap.

"I think all nations are losing the ability to control events at the global level," Kunstler concluded. "It's a symptom of the crack-up of globalization, per se: A set of transient economic relations that only existed because of special conditions, namely, the final blowout of the cheap energy era. With that over, it's now a mad scramble for each player to survive.

"Observers seem to think that China will become the new global hegemon, but I doubt it. They have problems with water, food, overpopulation and environmental degradation that are much worse than ours. The world is comprehensively headed for a reduced standard of living."

Scott Thill runs the online mag Morphizm. His writing has appeared on Salon, XLR8R, All Music Guide, Wired and others.