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Meet the “Emerging Market” Superstars of Global Economic Governance, Part II

Meet the “Emerging Market” Superstars of Global Economic Governance, Part II

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By: Andrew Gavin Marshall

2 February 2016

Originally posted at Occupy.com on 19 January 2016 and at the Transnational Institute on 21 January 2016

This is the second of a two-part article that was co-produced and co-published with the Transnational Institute, timed to coincide with the World Economic Forum starting this week in Davos, Switzerland. The first installment of the article appeared on 18 January.

Monetary Orthodoxy and its Political Repercussions

Central bankers are notoriously conservative and orthodox in their ideological positions. In the world of economics, this puts them in the position of being the political guardians of the global neoliberal order. In terms of policies, this translates into being strong promoters of low inflation, often requiring them to raise interest rates; supporters of liberalization (or deregulation) of markets, particularly financial and debt markets; implementing austerity measures (cutting social spending), and undertaking various structural reforms (such as the deregulation of labour markets and privatization of state assets) designed to further transform their respective societies into modern market economies.

While central bankers themselves are confined to the strict mandates of their institutions, often focused around what’s called maintaining “price stability” (keeping inflation at a low and stable level, generally between 2-5% depending on the country), they are still able to greatly influence the broader set of economic policies and priorities, and through their control over monetary policy they have the capacity to inflate or shrink an economy, giving them immense leverage over other policy-makers.

One of the most important characteristics of modern central banks is their so-called “independence,” referring to the degree to which the central bank and its governor are accountable to political authorities. If a central bank is “independent,” this means it has the power to act independently of elected (or otherwise established) political authorities so long as it is operating within its mandate and using the various policy options and instruments available to it (such as raising or lowering interest rates). Some of the most powerful central banks in the world, such as the U.S. Federal Reserve, the European Central Bank (ECB) and the Bank of England, are examples of independent central banks led by unelected technocrats who are unaccountable to elected officials and the democratic process.

Thus, in the world of central banking, the prevailing orthodoxy revolves around the twin concepts of operational independence and a mandate focusing on price stability. The combination of these factors gives central bankers immense political power, for their economic decisions have profound social and political consequences, capable of causing recessions or depressions, creating mass unemployment, collapsing governments, bailing out banks and financial institutions (and handing the bill to the public), and transforming the very structure of society itself.

This political power is most frequently used to the benefit of the national and international private financial community (banks, insurance companies, asset managers, etc.) as opposed to the wider public community or nation. A mandate of “price stability” (low inflation), for example, is beneficial to creditors because it increases the amounts they are owed and protects the value of their savings. Higher inflation, on the other hand, can reduce the value of their savings and make it easier for debtors to pay off debts. There are of course exceptions and nuances to this general scenario. For example, hyperinflation is bad for everyone, and low to moderate inflation may be good for debtors so long as their wages are adjusted to inflation (which allows them to be paid more in dollar amounts for the same amount of work, and thus, helps to pay off debts faster).

Raghuram Rajan acknowledged the political nature of central banking during a speech at the annual congregation of global central bankers in Jackson Hole, Wyoming, in late August of 2015. While the work and focus of central bankers is largely “technical,” explained Rajan, both history and “the current political environment” have an immense influence on monetary policy and its technical components. Rajan noted that central bankers think of and promote themselves as “apolitical,” but the “background influence of political economy” is always present, “sometimes without recognizing it.”

The problem for central bankers, he suggested, was their communication of political issues, because once central bankers do so, they become engaged in “the political dialogue,” which they are supposed to avoid, “because you’re a technocrat whose supposed view is apolitical.” An unelected technocrat at a central bank is capable of “making decisions that infringe on the prerogative of elected officials,” he said, but such “decisions may mean political trade-offs,” or deals to be made with politicians. When it comes to making policy, he said, “nothing can really be clean.”

This is something that Governor Rajan knows very well. In January of 2015, he made a private deal with the elected government of Prime Minister Narendra Modi in which he agreed to cut interest rates, giving a boost to economic growth in return for the government agreeing to implement a host of austerity measures and “structural reforms” designed to further develop India’s “power, land, minerals and infrastructure.” But by early February, Rajan indicated that “the war on inflation” was far from won in India, and refused to cut rates further.

This was viewed as “a message” by the central banker to the government to include austerity measures and other reforms if the government expected any further monetary support. The government acquiesced to the Governor’s demands, and the budget submitted by the Finance Minister included a “panopoly” of austerity measures and other reforms. Private bankers and investors expressed their delight at the new budget.

A couple days after the budget was announced, another important announcement was made for Rajan, as he was granted special new powers with the central bank being given an “inflation target” (putting “price stability” into the mandate). This effectively gave Rajan and the Reserve Bank of India (RBI) greater independence from political authorities. The day after he was granted these new powers, Rajan cut interest rates in line with his previous deal with the government in return for the budget items he demanded, and possibly in a quid-pro-quo for granting him new independent powers. During 2015, there continued to be tussles between the RBI and the government about the independence of the Bank, but it seems likely that Rajan will emerge victorious.

Governor Carstens of Mexico also had his own struggles throughout the year, dealing with the repercussions of potential higher interest rates in the United States. However despite the Mexican economy slowing down, but Governor Carstens refused to cut interest rates any further, not wanting to “let inflation and the peso go adrift.” The main guideline of the central bank, he said, “should be inflation expectations,” adding that he would even consider raising rates if need be, possibly even before the U.S. Federal Reserve raised its own rates. “We will act,” he said in an interview with the Wall Street Journal. Carstens endorsed the austerity package introduced by the Mexican Finance Minister Luid Videgaray, but warned that, “What’s important here is that the Finance Ministry sticks to its promises.”

In late July, Governor Carstens enjoyed a notable victory in the world of central bankers: inflation in Mexico hit its lowest level since 1970, and at 2.76%, it was below the 3% target set by the central bank. As the Wall Street Journal opined, this achievement “polishes Mexico’s credentials as the most economically orthodox country in Latin America, and one where inflation-control policies are sacrosanct.” Carstens referred to it as “an important milestone for Mexico.”

In September, Mexican Finance Minister Luis Videgaray announced that President Pena Nieto would nominate Carstens for a second six-year term at the head of the country’s central bank, which was “likely to give confidence to financial markets.” And despite the inevitable negative consequences of higher U.S. interest rates on emerging market economies, both Governors even came out in support of the Federal Reserve raising rates. Carstens said such a move would be reflective of a stronger U.S. economy which would be “very good news.” Rajan, on the other hand, said, “It’s preferable to have a move early on and an advertised, slow move up rather than the Fed be forced to tighten more significantly down the line.”

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Emerging Markets – An Expanding Global Elite

Rajan and Carstens are also a reflection of one of the most important economic stories in the past several decades, which has been the rise of what we call the “emerging market” economies, countries like China, India, Brazil, Russia, South Africa, Mexico, Turkey and Indonesia, among others. In the 25 years prior to the global financial crisis, the Group of Seven (G-7) countries (United States, Germany, Japan, United Kingdom, France, Italy and Canada) accounted for roughly half of global GDP, but their share has declined relative to the growth of emerging markets. In 1990, emerging economies accounted for less than a third of global growth, but by 2013, they accounted for roughly half, in what The Economist called “the biggest economic transformation in modern history.”

Emerging markets have not risen in economic size and strength in opposition to the economic system defined and governed by the G-7 nations, but rather through their integration into that economic order and acceptance of the economic orthodoxy propagated by the developed economies. With their rise, they are demanding greater international political power to match their increased international economic weight.

Despite unity on economic policy, this shift has not been a smooth process or without resistance, given the reluctance of the United States and G-7 nations to give space for emerging nations to articulate alternatives particularly on issues of foreign policy where there is more divergence of views. In managing this process, the G-7 nations have granted special status to a small group of emerging economies and to the top financial diplomats that represent them in international circles. In particular, China, India, Brazil and Mexico are the most favoured emerging economies, the most integrated into the structures of global economic governance, and whose top diplomats (in particular, central bankers) are the most respected and represented in global financial circles.

The Emerging Consensus

These two governors of the global economy, perhaps the two most respected central bankers from emerging market economies, represent the changing faces of global economic governance, but also represent the fact that for emerging markets to get real power, they must first give up any alternative economic ideology or vision. Both Carstens and Rajan attended prestigious American universities, worked in high level positions at the IMF and in their respective finance ministries before ascending to the throne of monetary managers for Latin America’s second largest – and Asia’s third largest – economy.

Integration into the existing power structures of global economic governance requires first and foremost, ideological capitulation: to accept the market system as the ideal form of the global economic order. They may push for reforms and alterations, but the substance remains largely the same: the market remains supreme and sovereign. Carstens and Rajan may be global economic governors of a different variety than the world is accustomed to, but they are firmly entrenched within the existing apparatus and ideology of global economic governance. Keep your eyes on these two, they’re going places, and taking their respective countries – and the global economy – with them.

Highlights from Carsten and Rajan’s calendar in 2015 

The following is a list of some of the most important meetings and gatherings of international financial diplomats and technocrats attended by one or both of governors Carstens and Rajan over the course of 2015.

Jan. 11-12: Bi-Monthly meeting of the Bank for International Settlements (BIS), Basel, Switzerland

Jan. 21-24: World Economic Forum (WEF) Annual Meeting, Davos, Switzerland

Feb. 8-10: Institute of International Finance (IIF) G20 Conference, Istanbul, Turkey

March 9: Bi-Monthly Meeting of the BIS, Basel, Switzerland

March 26: Financial Stability Board (FSB) Plenary Meeting, Frankfurt, Germany

April 16-19: World Bank and International Monetary Fund (IMF) Spring Meeting, Washington, D.C.

May 10-11: Bi-Monthly Meeting of Bank for International Settlements (BIS), Basel, Switzerland

June 11-13: 73rd Plenary Session, Group of Thirty (G-30), Hosted by the Central Bank of Brazil

July 7: Bi-Monthly Meeting of Bank for International Settlements (BIS), Basel, Switzerland

Aug. 27-29: Federal Reserve Bank of Kansas City Economic Policy Symposium, Jackson Hole, Wyoming, United States

Sept. 4-5: G20 Finance Ministers and Central Bank Governors Meeting, Ankara, Turkey

Sept. 25: Financial Stability Board (FSB) Meeting, London, U.K.

Oct. 8-11: World Bank and International Monetary Fund (IMF) Annual Meeting, Lima, Peru

Nov. 9: Bi-Monthly Meeting of Bank for International Settlements (BIS), Basel, Switzerland

Andrew Gavin Marshall is a freelance writer and researcher based in Toronto, Canada. 

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Meet the “Emerging Market” Superstars of Global Economic Governance, Part I

Meet the “Emerging Market” Superstars of Global Economic Governance, Part I

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By: Andrew Gavin Marshall

25 January 2016

Originally posted at Occupy.com on 18 January 2016 and at the Transnational Institute on 21 January 2016

One is Mexican, described by the Financial Times for his “Wall Street-sized reputation for financial wizardry”; the other is Indian hailed by India’s Economic Times as “the Poster Boy of Banking” whose “chiselled features are as sharp as his brain.” Meet Agustin Carstens and Raghuram Rajan. As the world’s economic elite gathers this week to meet in Davos, they are a perfect example of what has been called the “Davos class” – what Samuel Huntingdon described as a class who “see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations.” U.S.-educated central bankers in two emerging market economies, their stories focused on their activities in one year, 2015, reveal how global power has both shifted and yet ultimately reinforced a global economic empire. Carstens entered the inner circle of financial elites, via his role as Mexico’s finance minister from 2006 to 2009, during which time he was responsible for managing the country’s response to the global financial crisis. In that capacity, Carstens turned to the IMF in April of 2009 for a $47 billion credit line to help Mexico weather the financial fallout from the crisis. During this time, he was appointed Chairman of the Joint Development Committee (JDC) of the World Bank, and after being appointed Governor of the Central Bank of Mexico in 2010, he became a member of the steering committee of the Financial Stability Board (FSB), set up to help coordinate response to the financial crisis, and was also appointed to the board of directors of the Bank for International Settlements (BIS) in Basel, Switzerland, which coordinates between 60 major central banks around the world. This impressive career resumé led to him being considered in 2011 as a contender for the top spot at the International Monetary Fund (IMF).

Raghuram Rajan’s rise to Governor of the Reserve Bank of India (RBI) followed a reverse trajectory to that of Carsten – not building his career first at a national level, but rather by gaining financial market legitimacy for his work at the IMF making himself a highly-sought after candidate within India’s elite circles. However, like Carstens, he started off in the U.S. education system, obtaining a PhD in economics from MIT in the United States in 1991, then became a professor at the University of Chicago before, in 2003, becoming the first non-Westerner and youngest person ever to fill the post of Chief Economist at the IMF, a position he held until 2007. His predictions in 2005 that “financial innovations” of the previous years and decades could make financial markets increasingly fragile, vulnerable and prone to crisis may have been questioned at the time, but after the global financial crisis hit in 2008 and proved Rajan correct, they led to him becoming well respected.

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IMF Economic Counselor and Research Department Director Raghuram Rajan briefs the press on the World Economic Outlook on April 13, 2005 at the International Monetary Fund Headquarters (IMF), Washington, D.C. The IMF World Economic Outlook presents analysis and projections of economic developments at the global level, in major country groups and in many individual countries. IMF Staff Photographer/ Stephen Jaffe

But this independence of thinking didn’t dim his belief in central tenets of neoliberalism, necessary to receive the support from financial markets to stand for office. In August of 2012, Rajan was appointed as the chief economic adviser to India’s finance ministry, praised by the Wall Street Journal as “a strong believer in liberalization and privatization,” who felt that India should continue with many of the market reforms it began implementing in the early 1990s. And the following August, in 2013, he was appointed to head the central bank by Indian Prime Minister Manmohan Singh. Immediately upon becoming Governor of the Reserve Bank of India, Rajan told the Financial Times that he planned to turn India into “a more continental and open economy” within a globalized world. Such a task is not easy, and comes with a great many risks. “I have to be careful,” he concluded.

Fostering a common vision in support of private financial capital

As central bankers in a globalized financial order, Carstens and Rajan have plenty of opportunities to meet up. They both sit on important committees of the Bank for International Settlements that meets every two months. Rajan is Vice Chairman of the BIS Board of Directors while Carstens is Chairman of BIS’s Economic Consultative Committee (ECC) and Chairman of the Global Economy Meeting (GEM). The latter has been described by its former chairman and President of the European Central Bank, Jean-Claude Trichet, “as the prime group for the governance of central bank cooperation.” The Spring and Annual Meetings of the World Bank and International Monetary Fund (IMF), taking place in April and September (or October), are also another regular stop in their calendars, especially for Carstens who has been appointed Chairman of the International Monetary and Financial Committee (IMFC), a secretive steering committee for the Fund. In addition, both Rajan and Carstens attend the private gatherings of the Group of 20 (G-20) nations that take place four times a year.

Beyond the world of inter-state financial cooperation, both Carstens and Rajan are frequent guests at meetings of private financiers – and thus all too easily pulled into the vision and interests of the private financial world – through gatherings of groupings such as the Institute of International Finance (IIF), the world’s largest and most important association of global financial institutions. IIF brings together the top executives of nearly 500 major banks, asset management firms, insurance companies, sovereign wealth funds, credit ratings agencies, hedge funds and other investment institutions.

During the IMF’s Spring Meeting in Washington in 2015, D.C., Carstens along with the Chinese Central Banker Zhou Xiaochuan, spoke at a forum on the subject of “International Capital Markets and Emerging Markets.” Carstens also sits as a member of an IIF exclusive advisory working group dedicated to supporting capital flows to emerging market countries, called the “Group of Trustees of the Principles,” sitting alongside other current and former central bankers, finance ministry officials and private bankers and financiers.

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In 2013, shortly after his appointment as Governor of the RBI, Rajan spoke to an audience of the IIF outlining his objectives for reforming India’s economy over the coming years, which included further “liberalization” of India’s various financial and debt markets and to transform his own institution into a modern central bank with strict Western standards and credentials. Governor Rajan is also a member of the very exclusive Group of Thirty (G30), a private research and advocacy group of roughly 30 individuals, including current and former central bankers.

Among these meetings, the annual meeting in Davos in January, which Carstens attended in 2015, is a key forum to meet other elites outside financial circles including dozens of heads of state and hundreds of ministers and other high-ranking government officials, business and financial leaders, media and academic figures, and the chiefs of every major international organization.

Carsten and Rajan’s interactions and meetings at least ten times a year alongside other top financial diplomats help to foster shared experiences, understanding and objectives, encourage cooperation at the supranational level, and further align their ideological positions relative to one another. Similarly, their extensive interactions and affiliation with private financial market participants helps to create a community of shared interests between central bankers and financiers. Ultimately, these groupings and exchanges allow the central bankers to come face to face with their main constituents, for it is the interests of financial markets that central banks protect above all else, whether through the promotion of liberalization and other “structural reforms,” including austerity measures that are frequently demanded by markets.

Central banks also serve financial markets through the implementation of bailout programs designed to save banks and financial institutions when markets fail, as well as through the management of monetary policy with its primary objectives of achieving ‘price stability’ (low and stable inflation), which generally favours creditors at the expense of debtors. The prevailing orthodoxy of central bankers is closely aligned with the interests and objectives of private financial institutions, and Governors Carstens and Rajan are no exceptions.

Andrew Gavin Marshall is a freelance researcher and writer based in Toronto, Canada. 

 

When the IMF Meets: Here’s What Happened At the Global Plutocracy’s Pow Wow in Peru

When the IMF Meets: Here’s What Happened At the Global Plutocracy’s Pow Wow in Peru

By: Andrew Gavin Marshall

26 October 2015

Originally posted at Occupy.com

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On October 6, the finance ministers, central bankers and development ministers from 188 countries convened for the Annual Meeting of the World Bank and International Monetary Fund in Lima, Peru. The yearly gathering is one of the top scheduled events on the calendar of economic diplomats, bringing them together for private discussions, seminars and press conferences with journalists. And of course it’s a big deal for the thousands of private bankers and financiers who are there to cut deals with the chief financial policymakers in those 188 IMF-member nations.

It was ironic that this year’s meeting took place in Peru at a time when emerging market economies are experiencing increased economic problems: the result of a combined slow-down in economic growth in China, a collapse in commodity prices, and threats by the U.S. Federal Reserve to hike interest rates in the near future. Indeed, talk of China, interest rate hikes and emerging market crisis was plentiful in Peru. Central bankers, unsurprisingly, came out generally in favor of raising rates, with top monetary officials from emerging markets saying they more feared the uncertainty about when rates would rise than the rise itself, and urged the Fed to simply get on with it.

Global Pow Wow

The annual meetings bring together the Board of Governors of the IMF, made up of the central bankers or finance ministers from the Fund’s 188 member nations. But the Governors are given their marching orders from the 24-member International Monetary and Financial Committee (IMFC), made up of ministers and central bank governors from the 24 major constituencies represented on the IMF’s Executive Board, and whose membership largely reflects that of the Group of Twenty (G20).

The IMFC held their meeting in Lima on Oct. 9, presided over by the committee’s chairman, Agustin Carstens, the Governor of the Central Bank of Mexico, and the IMF Managing Director Christine Lagarde. In attendance were the finance ministers of Japan (Taro Aso), India (Arun Jaitley), Argentina (Axel Kicillof), Brazil (Joaquim Levy), France (Michel Sapin), Italy (Pier Carlo Padoan), Germany (Wolfgang Schauble), Singapore (Tharman Shanmugaratnam), Great Britain (George Osborne) and the United States (Jack Lew), along with top-level central bankers from Saudi Arabia, Nigeria, Norway, Algeria, Colombia, Belgium and China.

Also participating in the IMFC meeting were Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board (FSB); Jaime Caruana, General Manager of the Bank for International Settlements (BIS); Valdis Dombrovskis, Vice President of the European Commission; Angel Gurria, Secretary-General of the Organization for Economic Cooperation and Development; Mario Draghi, President of the European Central Bank (ECB), and other top representatives from OPEC, the World Bank and the World Trade Organization (WTO).

These various financial diplomats met and made prepared statements, but the real work and decision-making took place in the IMFC’s off-the-record discussions. These discussions also included, as usual, a joint meeting between the IMFC and the G20, after which the G20 held a press conference discussing recent agreements made by the world’s top economic diplomats collectively representing roughly 85% of global GDP.

The meetings followed the consistent hierarchy of operations among the world’s most powerful economies, starting with a private gathering of the finance ministers and central bankers from the Group of Seven (G7) nations, including the U.S., Germany, Japan, UK, France, Italy and Canada. This was followed by a gathering of ministers and monetary chiefs from the G20 nations (consisting of the G7 plus China, Brazil, Russia, India, South Africa, Argentina, Australia, Turkey, Saudi Arabia, Mexico, South Korea, Indonesia and the European Union). The heads of the world’s major international organizations also attended these meetings, functioning effectively as a steering committee for the global economy. The G20 then held a joint session with the IMFC, which functions as the steering committee of the IMF.

The IMFC’s communiqué following its meeting warned that global economic growth was “modest and uneven” with increased “uncertainty and financial market volatility.” Risks to the global economy “have increased,” it noted, in particular for emerging markets.

Apart from the IMFC and G20, a number of other important meetings took place on the sidelines of the annual gathering, many of which prominently featured bankers. One of the most important gatherings of global financiers was the Annual Membership Meeting of the Institute of International Finance (IIF), a consortium of roughly 500 global financial institutions including banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks, credit ratings agencies and development banks.

From Oct. 9-10, the world’s top bankers and financiers then held luncheons and private meetings with the world’s top economic policy-makers, who were also invited to attend or speak at the conference proceedings. The IIF’s opening ceremony was addressed by Peru’s President Ollanta Humala Tasso, and included guest speakers like the finance minister of Indonesia and central bankers from Thailand and Malaysia, as well as the top Swedish central banker, Stefan Ingves, who serves as chairman of the Basel Committee on Banking Supervision (BCBS) which is responsible for shaping and implementing global banking regulations known as Basel III.

On the second day of the IIF’s meeting, guest speakers included top officials from Brazil’s finance ministry, the World Bank, and a keynote address was delivered by the governor of Canada’s central bank, Stephen S. Poloz. The rest of the day included talks by finance ministers and central bankers from Colombia, Chile and Peru; a top official from the central bank of France; and an official from the Financial Stability Board (FSB), which is a group of global central banks, finance ministries and regulators responsible for managing stability of financial markets.

Another important gathering in Lima was the Group of Thirty (G30), presided over by its Chairman Jean-Claude Trichet, the former President of the European Central Bank. The G30 was established in 1978 as a nonprofit group of roughly 30 sitting and former central bankers, finance ministers, economists and private bankers, with the aim “to deepen understanding of international economic and financial issues” and “to examine the choices available to market practitioners and policymakers.”

Among the G30’s current members are former Federal Reserve Chair Paul Volcker; Mark Carney of the Bank of England and Financial Stability Board; Jaime Caruana of the BIS; Mario Draghi of the ECB; William C. Dudley of the Federal Reserve Bank of New York; former U.S. Treasury Secretary Timothy Geithner; former Bank of England Governor Mervyn King; economist Paul Krugman; Bank of Japan Governor Haruhiko Kuroda; Bank of France Governor and BIS Chairman Christian Noyer; Reserve Bank of India Governor Raghuram Rajan; Tharman Shanmugaratnam of Singapore; former U.S. Treasury Secretary Lawrence Summers; Chinese central banker Zhou Xiaochuan; and top bankers from UBS, JPMorgan Chase, BlackRock and Goldman Sachs.

This year, the G30 held its annual International Banking Seminar in Peru, “an invitation-only, off-the-record forum that allows for frank discussion and debate of the thorniest issues confronting the central banking community,” bringing together “over fifty percent of the world’s central bank governors, the Chairmen and CEOs of the financial sector, and a select few academics to debate financial and systemic issues of global import.”

The meeting included a short speech by Federal Reserve Vice Chairman Stanley Fischer, who told the audience that the Fed’s interest rate rise was “an expectation, not a commitment.” Fischer acknowledged that “shifting expectations concerning U.S. interest rates could lead to more volatility in financial markets and the value of the dollar, intensifying spillovers to other economies, including emerging market economies.” He reassured his audience, however, that the Fed will “remain committed to communicating our intentions as clearly as possible… to assist market participants, be they in the private or the public sector, in understanding our intentions as they make their investment decisions.”

Behind Closed Doors

But the true importance of the annual IMF meetings is not what happens in formal proceedings and seminars, but the various secret meetings of finance ministers, central bankers and private financiers that take place on the sidelines of the official conference. In these closed-door events, a select group of government and monetary officials, primarily those from the G7 and G20 nations, were invited to wine and dine with bankers at decadent dinners and lavish parties, and speak to private gatherings of the world’s top investors and money managers. It’s here, in these various meetings, where the world’s chief financial diplomats were able to meet, greet and receive praise or criticism from their true constituents: the global financial elite.

As usual, the annual pow wow of the global plutocracy came and went with little comment outside the financial press. But as always, the annual IMF meetings – and the more secretive, simultaneous gatherings of global economic diplomats and financiers on the sidelines – represented the core of global economic governance, manifest in the various ad-hoc committees that in essence rule the world.

These individuals’ main interactions were not with the populations in their home nations – the people who suffer under austerity, who have to “adjust” to the restructuring of their societies into “market economies” – but rather with those from whom they have the most to gain: bankers, billionaires and financiers. And rest assured, when the officials retire from their central bank and finance ministry positions, they will be stepping out of their membership in the G7, G20 and IMFC, and into the boardrooms of JPMorgan Chase, Goldman Sachs, BlackRock, Barclays and Deutsche Bank. They will be well rewarded, with large salaries and bonuses for a job well done while in public office. And the revolving door of global economic governance will keep turning.