The Associate Press reported that five emerging market powers including Brazil, Russia, India, China and South Africa will launch their own version of the World Bank and the International Monetary Fund. Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution, said that the so called BRICS countries want an alternative to the existing world order which the U.S. dominates. At the summit Tuesday through Thursday in Brazil, according to the article Emerging nations plan their own world bank, IMF, the five countries will announce the $100 billion fund to fight financial crises much like the IMF and launch a World Bank alternative that will make loans for infrastructure projects across the developing world. The new bank called the New Development Bank will have all five countries equally invested in the lending, while the headquarter’s location is being heavily debated with some trying to keep China, the world’s second biggest economy, from dominating the new bank like the United States has with the World Bank. The countries involved cover vastly different economies, foreign policy aims and political systems from India’s raucous democracy to China’s one party state. The BRICS countries have shared the desire for a bigger voice in global economic policy and have all experienced economic sanctions imposed by Western powers or made painful budget cuts and met other strict conditions to qualify for emergency IMF loans. In addition, developing countries have been frustrated with U.S. Congress’ refusal to approve legislation to provide extra money to help the IMF make more loans to troubled countries. The money is part of broader reform to give China and other developing countries more voting power at the IMF. The IMF and the World Bank seem to be taking the new challengers in stride, the Associate Press reports. IMF spokeswoman Conny Lotze said: “All initiatives that seek to strengthen the network of multilateral lending institutions and increase the available financing for development and infrastructure are welcome. What is important is that any new institutions complement the existing ones.” Earlier in the month World Bank President Jim Kim said: “We welcome any new organizations … We think that the need for new investments in infrastructure is massive, and we think that we can work very well and cooperatively with any of these new banks once they become a reality.”
While the international community tries a new direction, the United States continues to grapple with the current status quo economics. On Tuesday, Federal Reserve Chair Janet Yellen announced that the economic recovery is not complete and insists for that reason the Fed will keep providing support to boost growth and improve labor market conditions, Martin Crutsinger reports, Fed’s Yellen says U.S. recovery incomplete, defends loose policy. During the delivery of the Fed’s semi-annual report to Congress, Yellen believe the Fed’s future actions will depend on how well the economy performs. If labor market condition improve quicker than anticipated, the Fed could raise its short term interest rate sooner. However, if the conditions become weaker, then low rates will last longer. Many economists believe the rate will not increase until next summer as it has been at a record low near zero since December 2008. In her testimony before the Senate Banking Committee, Yellen said the economy is improving and the sharp downturn in economic activity during the first three months of the year was a result of temporary factors such as significant slack in the labor markets such as weak wage growth with the lowest unemployment rate since 2008. Because labor market conditions have not fully recovered from the recession of 2007-2009 and inflation remains below target at 1.8 percent for the 12 months through May, Yellen said the Fed will continue with the current policies of low interest rates to boost activity. She told the committee: “The Federal Reserve does need to be quite cautious with respect to monetary policy. We have in the past seen sort of false dawns, periods in which we thought our growth would speed, pick up and the labor market would improve more quickly and later events have proven those hopes to be unfortunately over-optimistic. We need to be careful to make sure that the economy is on a solid trajectory before we consider raising rates.” The unemployment rate has fallen from 6.7 percent in February to 6.1 percent reflecting strong job growth in recent months with an average of 200,000 jobs created a month over the past five months, the strongest since the late 1990s Crutsinger reports. The Fed has two goals to promote max employment and keep inflation down. Many critics argue the Fed is setting the stage for a bubble in asset prices like stocks and real estate that could deflate rapidly making the market unstable once the interest rates are increased. However, Yellen assured the committee that the Fed is aware of such risks and noted that the price of real estate, stocks and corporate bonds have risen appreciably, but remain in line with historic norms. The minutes of the Fed’s June meeting showed that the Fed has discussed just how it planned to reduce its massive holding of Treasury bonds and mortgage-backed securities totaling $4.5 trillion which is four times the amount on the balance sheets when the financial crisis of 2008 hit.
While things are looking up for the overall economic picture according to the Fed, Congress continues to struggle to get their acts together on key issues. On Tuesday a critical highway trust fund bill was set for a vote in the House and the backers of the bill worried about defection from Democrats. Rep. Peter Welch (D-Vt.) told Huff Post Tuesday that he will not support the bill backed by House Ways and Means Chairman Dave Camp (R-Mich.), according to the article published, Critical Highway Trust Fund Bill Loses Support Of House Dem. His reasoning is two fold as the measure relies on accounting gimmicks to replenish the trust fund and lawmakers are abdicating responsibility by only funding the trust until next May. On Monday, two top conservative groups, Heritage Action for America and Club for Growth, opposed the measure and would score the vote for members with their primary complaint being the use of pension smoothing to allow delay in payments to pension funds from corporations resulting in higher corporate tax bills. While Welch agrees with the argument of pension smoothing, his preference is not to see the paring back of the highway trust fund to meet limited revenue streams, but to increase revenue to expand the fund. In addition Welch sees the idea as creating “a pothole in the pension system to fill a pothole in the highway” and sees his vote as protest to a short term solution rather than a long term one. However, he predicts that few Democrats will oppose the bill and his no vote will do little to stop the Camp bill from passing in the House before merging with the Senate’s version. On Monday, the White House came out in favor of Camp’s proposal. Unfortunately, Camp’s measure will be the last considered in the House before the highway trust fund runs out at the end of August. Even before then, states will make smaller, staggered payments on transportation projects as the federal government struggles to meet funding demands. Should the House fail to act, a substantial loss in transportation projects and jobs may result, according to Huff Post.
As Congress waits to find a long term solution to the crumbling transportation infrastructure, another hot button issue continues to be a thorn in the side of protestors and world leaders alike. The question on many peoples mind to seems to be when did America stop believing the words inscribed at the base of the Statue of Liberty. If you don’t know, here’s a refresher:
“Give me your tired, your poor,
Your huddled masses, yearning to breath free,
The wretched refuse of your teeming shore,
Send these, the homeless, tempest tost to me,
I lift my lamp beside the golden door.”
While many still hold true to these words, since let’s face it most of the people residing in the United States immigrated at one point or anther in history except the Native Americans, dozens if not hundreds of people choose to protest the transport of undocumented workers around the country especially the children. According to the Associate Press article, Arizona protesters hope to stop immigrant transfer, dozens of protestors on both sides of the immigration debate swarmed a small town near Tuscon on Tuesday after the sheriff announced that the federal government plans to transport 40 immigrant children to an academy for troubled youth. One group waved American flags, held signs and blocked a bus arriving with immigrant children. A few miles away, pro-immigrant supporters held welcome signs. Protestor Loren Woods said, “We are not going to tolerate illegals forced upon us,” while Emily Duwel of Oracle felt her town was misrepresented by a minority of people against the children staying here. She explained, “I’m just concerned about these children who have had to escape worlds of incredible violence.” Anger has spread throughout Oracle since the Sheriff warned residents last week of immigrant children from Central America crossing the border illegally would be placed at the Sycamore Canyon Academy. Protestors hoped to mirror the demonstration in Murrieta, California, where immigrant buses were blocked from entering. The sheriff is credited with stirring up the anti-immigrant protestors with social media and a press release Monday in addition to leaking information about the migrants coming to local activist. Since the massive surge in unaccompanied children crossing the border illegally began more than a month ago, anger has been spreading and the influx of immigrants has become political fodder even though most consider it a humanitarian crisis. On the international radar, Pope Francis confronted the issue of undocumented immigrants by directing his address at the thousands of unaccompanied children that make up part of the influx. As Antonia Blumberg reports, Pope Francis: Immigrant Children Must Be ‘Welcomed And Protected’, on Monday the Pope delivered a message to the Mexico Holy See Colloquium on Migration and Development paying special attention to the migrant children who undertake the dangerous border crossing alone to escape violence in their own countries:
“This humanitarian emergency requires, as a first urgent measure, these children be welcomed and protected. These measures, however, will not be sufficient, unless they are accompanied by policies that inform people about the dangers of such a journey and, above all, that promote development in their countries of origin.”
In addition, Pope Francis noted the urgency of the problem as the numbers increases day by day with U.S. Customs and Border Protection reporting more than 50,000 unaccompanied migrant children crossing the Southwest border in 2014. Meanwhile, Vatican Secretary of State Cardinal Pietro Parolin spoke at Mexico’s Foreign Relation Secretariat urging clergy and foreign ministers to protect young migrants.
“Whether they travel for reasons of poverty, violence or the hope of uniting with families on the other side of the border,” Parolin said, “it is urgent to protect and assist them, because their frailty is greater and they’re defenseless, they’re at the mercy of any abuse or misfortune.”
Outside of the church, the Pope called on international communities to step up to find solutions to this humanitarian crisis. On Sunday Health and Human Services Secretary Sylvia Matthews Burwell met privately with dozens of governors of states that will host these children from Central America, Blumberg reports. The program started by the Obama administration will take effect in October and try to tackle the increase influx of child migrants. Burwell added, “We want to make sure they’re placed in a safe and supportive home or placement….but also, it should be somebody that is legal and somebody that will be responsible to see that they show up for the hearing.”