DTN News - EUROPEAN FINANCIAL CRISIS: BRICS Plan To Revive The Global Economy
(NSI News Source Info) TORONTO, Canada - November 12, 2011: Brazil, Russia, India, China and South Africa are worried about the world economy and they want fundamental reforms.
Well, not yet. At least not this Thursday, in Washington, when finance ministers and central bank governors of the BRICS group of emerging powers - Brazil, Russia, India, China and South Africa - get together on the margins of a G-20 meeting.
Brazilian finance minister Guido Mantega started the ball rolling last week, when he announced the BRICS would “talk about what to do to help the European Union get out of this situation” - ie the European-wide financial meltdown.
Hold your horses. Was this an emerging cavalry to the rescue? Could this be the end of the eurozone (eurotrash?) self-induced liquidity panic? Or was it just the BRICS graphically showing the writing on the global economic wall?
The basic (Brazilian) idea was for BRICS financial muscle to buy some extra European sovereign debt. But only “solid” bonds - from Germany or the UK - would qualify. The rationale is that BRICS would win by diversifying reserves - China at $3.2tn, Brazil at over $350bn, India at over $320bn - and making more money than investing in US Treasury bonds.
But the thing is selected BRICS have already started diversifying their reserves for quite a while – especially China.
India was not very enthusiastic about the Brazilian idea.
Nor was Russia; Moscow, via Arkady Dvorkovich, President Dmitry Medvedev’s chief economic adviser, stated flat out the Europeans must come up with a clear strategy for rescuing the PIGS (Portugal, Ireland and Italy, Greece, Spain) before Moscow starts buying more eurozone bonds.
No wonder Brazil finally decided to drop the idea.
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