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Elbonian wrote : "The size of the US debt relative to GDP is irrelevant until such time as the people of the world stop treating the US dollar as a reserve currency. The only real competitor to the dollar is the Euro, and the folks who run the Euro are not at all ready to try to run the dollar out of its predominant position as the reserve currency of choice in the world ".

Very well said. The US is not ready and is not anticipating the world wide switch to another currency as their reserve currency either,. This will have a colossal effect on US economy and consequently on its stature as world leader too.
It is not that Europe is not ready to replace the dollar with Euro but unwilling to take on it for all the reasons there are.
When Iran gave the notion of replacing the dollar with petro dollar as a currency for some of the oil producing countries it was seriously threatened with the regime change.

Any Wall Street crook (Ken Lay, Bernie Ebbers, etc.) will tell you that you can always bury problems under sufficiently large profits. China is not in trouble unless the USA stops buying clothing, electronic goods, and other manufactured goods. As the USA has no manufacturing capability of its own left, it cannot stop buying from China.

The size of the US debt relative to GDP is irrelevant until such time as the people of the world stop treating the US dollar as a reserve currency. The only real competitor to the dollar is the Euro, and the folks who run the Euro are not at all ready to try to run the dollar out of its predominant position as the reserve currency of choice in the world.

Frankly, there are no "other economies" left in "our ever-shrinking world." The US capitalist economic system is all the world has. The only exceptions are tiny nations like Nepal whose economies are stuck firmly in the 18th century. They continue to exist as economic backwaters precisely because they remain as small insulated islands. But they have no measurable effect on any other part of the global economy.

It may well be time to throw Bretton Woods into the trash. Eventually, I would expect the Europeans to replace the World Bank and IMF with a European-dominated institution with similar underpinnings but detached from dollaritus.

But such a change will not happen for any of the reasons you mention. It will, instead, happen because Europe wishes to re-take its leadership of Western Civilization.

The world is smaller now, so we need to streamline these old bureaucratic organisations and avoid duplication in functions. Also debt forgiveness for very poor countries has received lip service and no significant debt conversions to education programs, health, etc. has actually materialised.

Calling China a Communist country is ridiculous. It's now a capitalist oligarchy with a few bizarre holdovers from its Communist days.

Agree with reform but there is no discussion on how to reform, anywhere. I think the writer's point about following the WTO model is a good one as the WTO was new agreement and not a refurbishment of the old GATT, although many elements were borrowed from it.

There is also UN Development Organisation, now run by a former vice president of WB, Mr. Kemal Dervis of Turkey. Incidentally, it was Mr. Dervis that finally rescued Turkey with its 18th agreement with the IMF, within 22 years!!!!

Let's start with the premise that the funders of the WB & IMF get to have a say in the running of those institutions in proportion to their level of funding. Let's continue with the premise that the generosity of the funding institutions is reliant on the understanding that their hard-earned national wealth and generosity should not be squandered through corruption, bureaucratic waste or non-functional idealism. Participating countries should have the ability to vote and control the organization proportional to their funding while the beneficiaries should be grateful for the global largess and, as in "A Streetcar named Desire", the kindness of strangers.

These two premises therefore suggest that both supranational institutions require reform and integration. However, given the historic and continuing acceptance of waste, corruption and non-functioning projects- frequently to further an country's individual commercial interests- suggests that simple reform of process is probably not sufficient as Nero fiddles while Rome burns. However, while reform is also desparately needed at the UN, given it's different strategic function, it should not be included as part of the reform of the two global financial institutions

Correct, two other pieces to the wholesale reform needed in practically all international organisations.

Interesting comments about communists being the big creditor of the biggest capitalist. Keen observation!

A classic situation that the rich do not understand the poor and vice versa.

There are too many competing development banks, plus the UN Development Organisation. All want to be "good". So, as the author says, let's merge them and create one organisation, or set up regional ones and merge organisations like Asian Development Bank or Islamic Development Bank, etc. into one cowboy for each region. The savings on reduced staff and operating costs will be significant and can be used for projects.

Another problem is that IMF and World Bank stay a way from energy projects, unless it is a power plant. But the world needs alternative energy investments. Solar, wind, etc. Time to change the mandate.

We are living in very interesting times. Aeroflot, the Russian flagship airline is bidding to buy Alitalia, the Italian flagship.

I agree with the author that old thinking at IMF and WB must be refurbished. The U.S. might soon find itself in the same position that UK did in early 1970s when it call in IMF to rescue its government finances. The debt build-up in USA is spiralling out of control and all of it is hinges upon rapid growth in the future. But we see in the mortgage market that many are relapsing back on that assumption.