EU-DIGEST

G20 summit doomed to a legacy of economic disappointment - by Hamish McRae

If the April G20 meeting was perceived as a success.The Pittsburgh one may be seen more as a failure. That might seem a bit rough, for the meeting is only just beginning. But the reason has nothing to do with the meeting itself. It has more to do with the state of the economic cycle and the nature of government and central bank intervention. And the conclusion is that the next six months is likely to be a rougher period than the past six.

It is not possible for most governments to provide a further fiscal stimulus. The deficits are too big. Here in Britain we will see fiscal policy tightening next year, whoever is in power. Next year will also see monetary policy tightening, with the exceptional measures to boost money supply coming to an end and by the end of the year interest rates starting to rise. Indeed the central banks yesterday indicated that they would start to scale back their emergency liquidity programmes. In a co-ordinated announcement the Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank set out various measures designed to show that things were getting back to normal.

As the various other schemes to boost the world economy come to an end – the cash for old cars, the cut here in VAT and the various fiscal boosts worldwide – the drive for growth will have to come from the private sector, and in particular from consumption. There are a number of reasons to suspect that consumers throughout the developed world will be pretty cautious for some months yet. You can already catch a little of that caution, particularly here in the UK, but also in the US and Europe. By early next year people may be quite angry, and quite fearful, of what has been happening. We would be less than human if we did not blame the policy-makers for the economic woes.

Labels: G20

G-20: No Concrete Result - 'MORE BLA -BLA- BLA'

At the conclusion of the two-day summit, leaders of the G-20 nations, comprised of the largest developed and emerging countries, issued a 23-page statement that promised, among other things, to fix problems in the financial system that contributed to the economic crisis. They stated they would discourage excessive risk-taking and reduce the chance of future financial meltdowns, the leaders endorsed practices to limit bonuses and to tie executive compensation to long-term performance. European leaders had pressed for pay caps, but the idea was resisted by the United States and Britain and was never on the negotiating table, officials said.

Bottom line: once again there was lots of talk, many promises, but no real results to report. No caps on bonuses, or specific regulatory agreements were announced. Climate Change Advocate Groups which had hoped that under the chairmanship of US President Barack Obama the Group of 20 summit might agree to set aside 150 billion dollars to pay for this work and convince emerging economies to sign the deal were also disappointed. The final summit statement agreed on by the leaders, however, was extremely vague on this issue and the specifics, with only a promise they would study the matter more carefully. Pressure groups were outraged, singling out Obama and Germany's Chancellor Angela Merkel for particular scorn. "This is a crisis of leadership. The rich-country G20 leaders -- especially Merkel and Obama -- set themselves a deadline for a climate finance proposal, and then slept right through it," said Ben Wikler of Avaaz.

Mr. Sarkozy who had promised to go back home to France if there were no pay caps imposed on bankers bonuses, did not leave, even though the EU proposal for bonus caps was shot down by the US and Britain. Apparently, Mr. Sarkozy was pacified with the limelight given to him by being allowed to appear on stage with Mr. Obama and Mr. Brown on the unrelated G20 issue of Iran's nuclear proliferation problems. Mr Sarkozy and fellow political leaders remained in Pittsburgh for the full two days of the conference, which can only be described as another Bla-Bla-Bla meeting, paid for by the taxpayer. A sad state of affairs, as the worlds financial community continues happily on its unregulated path.

Labels: Angela Merkel, Barack Obama, Financial Community, Financial Reforms, Financial Regulation, G20, US. Nicolas Sarkozy

G20 - World's leaders can give Pittsburgh a truly global vision by address four key issues - by Kofi Annan, Amartya Sen, M. Camdessus

First, leaders need to follow through with the commitments they have made to a Global Plan for Recovery and Reform. A second area of action: ensuring that developing countries, including the least developed ones, have a greater say in global financial institutions; and strengthening regional bodies. A third achievement would be: agreement on a timetable for tackling the variety of biased trade rules, bloated subsidy regimes, intellectual property rules and other forms of market distortion that heavily disadvantage the developing world. Lastly, the G20 could also help drive momentum on climate change. Its members account for the vast majority of global greenhouse gas emissions; an agreement among them at Pittsburgh would go a long way towards ensuring that December's international climate change conference in Copenhagen does not end in hot air.

Labels: G20, Global Economy, Pittsburgh

G20 - Obama: Iran's secret nuke facility 'inconsistent with a peaceful program

President Obama opened G-20 summit day with a bang this morning, condemning Iran for hiding the existence of a secret nuclear facility and demanding that it be opened to international inspections. "The size and configuration of this facility is inconsistent with a peaceful (nuclear) program," Obama said, and further raises concerns that Iran is seeking a nuclear weapon. "Iran is breaking rules that all nations must follow, endangering the global nonproliferation regime," Obama said. "denying its own people access to the opportunity they deserve, and threatening the stability and security of the region and the world."

Obama made the announcement along with Great Britain Prime Minister Gordon Brown and French President Nicolas Sarkozy.

Note EU-Digest: Even though Iran's nuclear adventures are a most serious issue, it is important that the leaders present at the G20 remember that the principal reason they came to Pittsburgh is to work on remedies to correct the serious economic flaws which still exist in the world financial system.

Labels: Britain, EU, France, G20, Iran, Obama, US

G20 - Pittsburgh Protesters March as G-20 Leaders Gather- by Brian K. Sullivan

Pittsburgh police threw tear gas and blasted high-pitched sounds to disperse hundreds of protesters marching toward downtown in a demonstration aimed at today’s meeting of the Group of 20 nations. “Here comes the cavalry,” one of a smaller group of protesters and performance artists said shortly before 2 p.m., as Arsenal Park filled with demonstrators wearing black masks and carrying banners reading, “Eat the rich.” After shouts of encouragement, they began marching in defiance of police warnings that the assembly was unlawful. Police tossed smoke and gas canisters and set off whistles to try to break up the march, while protesters overturned trash bins and broke the window in a police car.

Stores and offices were boarded up and highways and mass transit lines were shut today as President Barack Obama and the leaders of 18 other industrialized or developing countries, along with the European Union, convened in the western Pennsylvania city.

Labels: . journalism, Economic Crises, EU, G20

EU Proposes Stronger Financial Oversight - by Andrew Willis

The European Commission came forward with a package of legal proposals for strengthened regulation of the financial sector on Wednesday (23 September), as the EU seeks to prevent a repeat of the last year's meltdown. The bundle of draft regulations is a direct result of political decisions taken by EU leaders meeting in Brussels in June and a meeting of finance ministers earlier the same month. "In Brussels' time, this rapid progress is equivalent to the speed of light," said internal market commissioner Charlie McCreevy, referring to the frequently torturous speed of legislation coming out of the EU institutions.

Labels: . journalism, Economic Crises, EU, G20

Nicolas Sarkozy may walk from G20 summit over failure to curb bank bonuses - "Show time or reality" ? by A.Michaels and H.Samuel

In an interview with The Daily Telegraph, Mrs Lagarde said bonuses were top of Mr Sarkozy’s list of issues to tackle at the summit in Pittsburgh.“I hope that we will save [Mr Sarkozy] the trouble of having to walk out,” she said. The finance minister also cautioned: “I would find it absolutely outrageous and extraordinary if leaders of other countries did not understand the necessity to change the system and not go back to business as usual.”

Note EU-Digest: The question remains, if Mr. Sarkozy, who obviously is trying to impress his audience at home that he is a though negotiator, will have what it takes to carry out the threat his finance minister has announced. Most people do not believe so.

Labels: EU, France, G20, Nicolas Sarkozy

US Economy - Mayor Bernero tells CNN that recession ‘ain’t over for a lot of our people’

Mayor Virgil Bernero was on CNN Wednesday morning responding to statements from Federal Reserve Chairman Ben Bernanke that the recession that has crippled our economy, tossed millions of Americans out of jobs and made the housing crisis worse, is over. Bernero told CNN’s John Roberts that while Bernanke might being seeing hopeful signs in the economy, it is not translating to Michigan. “Look, there’s a long way to go,” Bernero said. “But I would say it is premature at this point to say the recession is over. It ain’t over for a lot of our people. It’s not over for working people. It may be over for Wall Street but I will tell ya there is still a major disconnect between Wall Street and Main Street.”

Note EU-Digest

The disconnect between Wall Street and Main Street has never been greater. It is also risky and unrealistic to make assessments of the US future economic health and overall market performance based upon stocks in which Uncle Sam holds anywhere from a 40-80% equity stake. Trading these stocks is pure gambling, not investing, and every honest economic analyst will agree with that evaluation. While the industrial segment of the US economy appears to be stabilizing as a result of savings made by reducing the payrolls by millions of people, the consumer, which controls 70% of the US economy, remains severely stressed. Delinquencies and defaults continue to run at a record pace across almost every form of debt, including mortgages, and credit cards. Also looming in the background as another danger is the commercial real estate market, which is ready to collapse at any moment.

Labels: Economic Health, G20, US Economy, Wall Street

G20: EU Profile - The $18.4 trillion European Union economy is larger than the U.S. economy

Though it might stretch the imagination of some American legislators and commentators, the European Union economy taken as a whole, at $18.4 trillion, according to the International Monetary Fund, is larger than the U.S. economy. It is as varied as that of America's. Heavy industry is concentrated in the core countries: Germany, Benelux (Belgium, the Netherlands, Luxembourg), France and the U.K. Italy and France are the world's leading manufacturers of luxury goods. The EU has a trade surplus with the U.S. (who doesn't?) worth more than $114 million. In the years immediately preceding the crash a third of the world's trade in goods and more than 40 percent of trade in services was between the U.S. and the EU. The EU has a trade deficit with China (who doesn't?) worth $241 million. Last year direct investment in China from EU member states totaled $5.9 billion.

At the G20 summit in Pittsburgh the EU will continue to press for closer scrutiny of banker pay and bonuses. But practically, Mr. Barroso speaks for no one. The EU, via the EC, negotiates trade issues on behalf of its members and it is very effective at doing so -- just ask any American trade negotiator who has taken a dispute with Europe to the WTO.

Labels: EU, G20, Pittsburgh

Europe - G20 split on bank crisis solution

Divisions are growing among Group of 20 nations on how to recover from the global economic crisis, as finance ministers meet in London, Britain's capital. While several European countries want a global agreement to curb bankers' bonuses, which many have blamed for the crisis, the initiative has not received strong support from the US or the UK.

The finance ministers of Sweden, France, Spain, Germany, Italy, Luxembourg and the Netherlands called on Friday for bonuses guaranteed for more than a year to be banned.Christine Lagarde, the French finance minister, said that she and other members of the group would be pressing the US to join the European-led move on bonuses.

Labels: EU, G20, US

European finance ministers back demand for a cap on bankers' bonuses - by Sam Flemming

European finance officials have backed France's call for a cap on bank bonuses, leaving Britain increasingly isolated over the issue. France yesterday led calls for limits on the size of pay windfalls in a radical attack on the lavish payouts at investment banks. And Anders Borg the finance minister of Sweden, which holds the rotating European Union presidency, demanded an outright end to the bonus culture.‘France is trying to lead the debate in the G20, and we will have to see what the outcome is, but I wouldn’t expect anything radical. ‘I don’t think you will get anything out of the G20 on caps on salaries or bonuses. That one isn’t going to run.‘I don’t think the Americans will go for it, and we have to get agreement (on bonuses) in the major financial centres otherwise you will get into pay arbitrage.’ The latter refers to banks shifting staff to jurisdictions where there are looser rules on bonuses. This is a major fear in Britain, which accounts for over a third of Europe’s wholesale financial sector.

Labels: EU, G20

EU to hold special summit ahead of G20 talks in US

European Union leaders will hold an extra meeting to discuss bonuses and the global financial crisis ahead of a summit of Group of 20 nations in the U.S. later this month, the bloc's presidency said Friday. Sweden, which holds the rotating EU presidency, said the talks in Brussels on Sept. 17 will focus on coordinating the 27-member bloc's position for the G-20 summit in Pittsburgh a week later.

Labels: EU, G20

Analyst: Up to 200 more US banks may fail in crisis

Analyst: Up to 200 more US banks may fail in crisis

Banking equities analyst Richard Bove said Sunday that it's possible 150 to 200 more U.S. banks could fail in the current banking crisis, putting greater stress on the Federal Deposit Insurance Corp.'s deposit insurance fund. The FDIC, which insures deposits, may be forced to turn to non-U.S. banks and private equity funds to help shore up the banking system, the Rochdale Securities analyst wrote in a note to investors. Among the 81 banks closed so far this year - compared with 25 last year and three in all of 2007 - were a stream of smaller institutions, many ruined by losses on ordinary loans amid the souring economy, tumbling home prices and spiking unemployment.

Labels: Banking Industry, G20, US Economy

France and Germany declare war on bankers' bonuses - by Phillip Inman

France and Germany are squaring up for a fight with Britain and the US over bankers' bonuses after President Nicolas Sarkozy and the German chancellor, Angela Merkel, agreed a hardline stance before the G20 finance ministers' meeting this weekend. France and Germany will seek widespread agreement for proposals that will limit bonus payments and the risks taken by banks. The proposals are aimed at preventing a repeat of the financial crisis. The French administration plans to ban banks from winning government contracts if they fail to agree to limits on bonuses, while bonuses must be deferred for at least four years under rules being considered by Merkel's cabinet.

However, the Obama administration is expected to say tomorrow that it wants the summit to focus on getting the world economy back on its feet and promoting financial stability. Note EU-Digest: Unfortunately the Obama administration, which faces an uphill struggle to pass healthcare reforms through congress does not seem to have the courage to oppose the risky bonus culture on Wall Street or the powerful financial industry.

Labels: Banking Industry, EU, France, G20, Germany

Obama invites Netherlands for Sept G20 meeting- by Lalit K Jha

US President Barack Obama has invited Netherlands to participate in the forthcoming G-20 summit to be held in the US.The meet is to take place at Pittsburg in Pennsylvania on September 24-25. The invitation was personally extended by Obama to the visiting Dutch Prime Minister Jan Peter Balkenende, when the two leaders met at the White House yesterday. The invitation was readily accepted by Balkenende. "I extended my personal invitation to the Prime Minister to participate in the next G20 summit in Pittsburgh, because we think that the Netherlands not only is one of the world's largest economies and most active internationally, but the Prime Minister has very specific expertise and experience in working with a whole range of world leaders and I think his contribution will be greatly appreciated," Obama told reporters later.

The Dutch Prime Minister said the two leaders are convinced that it's important that they are talking about not only the financial crisis, but also about the Millennium Development Goals, about the issue of energy, climate change. "So the Copenhagen summit must be successful. And therefore, it's important that we'll have a very successful meeting in Pittsburgh. And I want to thank you very much for the invitation to be there," he said.

Labels: Barack Obama, EU, G20, Netherlands

Defending Capitalism from Old Europe's G20 Guillotine - by Nadeem Walayat

"Germany and especially France have fought long and hard against the anglo-saxon model of unfettered and weakly regulated free market capitalism for the past 30 years, and as a consequence of which have seen their economic power diminish in relative terms as the anglo-saxon capitalism model was adopted world-wide following the collapse of the Soviet Union.

However the United States and Britain have illustrated by their actions rather than their words that they intend on preserving casino capitalism in more or less the form that led to the financial crisis in the first place, and since the United States still carries much of the clout as the worlds financial and economic super power, coupled with its trustworthy air-craft carrier Britannia off the shores of Europe, then the U.S. and Britain are expected to get their way during the G20 meeting, despite the rhetoric from old Europe as the fact of the matter is that much of what will be discussed at the summit has already been agreed upon before hand for there was NO ROOM for FAILURE or significant DISAGREEMENT's, as the consequences of FAILURE would be to wake up to another day of potential FINANCIAL ARMAGEDDON when markets would again panic in reaction to summit failure. Therefore much noise from the French and German leaders, but they still signed on the dotted line.

The problem at the root of the crisis is I warned of a year ago is the off the balance sheet derivatives exposure that is many orders of magnitude greater than the stimulus packages of approx $3 trillion, were talking about sums north of $600 trillions. Therefore as warned off in April 2008 when the Bank of England made the first loan of £50 billion to the bankrupt banks, that it was a drop in the ocean and I just cannot see how even $3 trillion, or $5 trillion or even fiat currencies busting amount of $10 trillion can counter a $600 trillion imploding derivatives market. This to me, means very high inflation, as the only option the governments have to spend money the governments do not have, and therefore increased debt, print money to spend and monetize government debt and finance bailouts, will it result in hyperinflation ?, well we don't need to be at Zimbabwe style hyper inflation to see our savings wiped out by inflation. An annualized inflation rate north of 10% AFTER the current deflation will be bad enough to discourage savings and holding of fiat currencies, which supports my mega-trends outlook to take the current deflation as an opportunity to invest in commodities at bargain basement levels as well as prepare for much higher interest rates and hence lower bond prices"

Labels: Capitalism, EU, G20, US

As world leaders were meeting to find solutions to the financial crisis, the U.S. Financial Accounting Standards Board moved to give banks more flexibility in valuing troubled assets. The changes, to take effect in the second quarter, could reduce writedowns and soften blows to bank earnings. In London's heavily guarded Docklands region, world leaders were set to triple the war chest of the International Monetary Fund to fight the worst economic crisis since the 1930s and impose new curbs on financial markets, monetary sources said.The G20 nations also agreed to a crackdown on tax havens, asking the Organization for Economic Cooperation and Development to publish a list of tax havens, and promising to enforce sanctions on noncompliant countries. This was a long-standing demand of the French side.

France and Germany raised the stakes Wednesday in the run-up to the summit, saying an overhaul of global financial oversight was a "nonnegotiable" take away from the gathering and dismissing calls for further stimulus packages. "We would never have hoped to get so much. This is not the victory of one camp against the other, but shows the growing awareness that the world needs to change", Sarkozy said. Obviously since this was basically a political meeting, everyone needed to declare some kind of victory. If results stay out the politicians we saw and heard will have to pay the bill. The voters usually have little patience.

Labels: Britain. EU, economic meltdown, G20, New World Order, US

Joint press conference Merkel Sarkozy: Hammer the bankers or I'll wreck G20 pact – by Ross Lydall

France and Germany warned they would not sign up to an agreement at today's G20 summit unless there was tough action to regulate the global financial markets.At a joint press conference in a hotel, Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, made it clear they were not satisfied with proposals on the table for today's gathering. "Germany and France will speak with one and the same voice," Mr Sarkozy said. "These are our red lines."

Meanwhile in London as rioters denounced American-fuelled capitalism, the 44th president of the United States insisted his favorite thing about Britain was "the people".

Labels: Angela Merkel, EU, G20, Nicolas Sarkozy

by Sandrine Rastello and Francois de Beaupuy

France and Germany are not satisfied with the Group of 20’s draft statement on solving the global financial crisis and are pushing leaders attending tomorrow’s summit to adopt concrete measures to increase international regulation, President Nicolas Sarkozy said. “In the current state of things, the projects don’t suit France, or Germany,” Sarkozy told Europe1 radio, citing a conversation he had with German Chancellor Angela Merkel last night. “No agreement is secured. I know by experience that we will need to fight until the last minute.” Finance Minister Christine Lagarde yesterday said Sarkozy would walk out of the summit if his push for stricter financial regulation is rebuffed. Sarkozy said today he hoped it wouldn’t come to that.

Labels: Angela Merkel, EU, G20, Nicolas Sarkozy

WELCOME TO EUROPE MR.AND MRS. OBAMA - the G20 Summit Build-up

As Mr. and Mrs. Obama arrived in Europe to participate and lead in the G20 Summit, Mr. Obama will find that at least 17 of the participating nations, including the United States, who had promised to fight protectionism at the last G20 Summit, have taken some preliminary actions to limit imports or to make sure that their stimulus money is spent at home.

Mr. Obama therefore has a very difficult task ahead as leader of the worlds most important economic nation in trying to honor his campaign promise for a new form of engagement on the international scene. He and his aides have been working dilengently these past weeks to find, among all the domestic problems they are also facing, a right mix which expresses not only humility but also exercises the US power of influence. It certainly will be a delicate diplomatic posture for Mr. Obama and what makes it even more difficult is that success is not guaranteed and failure is not allowed. Whatever the rhetoric or differences, keeping the firmly established Atlantic alliance between Europe and the US thriving is an essential pillar for the economic well being of the world. So as this G20 gets underway we welcome Mr. and Mrs. Obama and all the other leaders to the European continent - the whole world will be watching this G20 Summit and hoping the results will not be more rhetoric but a first step towards change for the better for all.

Labels: Barack Obama, Britain. EU, Europe, G20, US

For the complete report from the NYTimes.com click on this link

Sarkozy and Merkel Try to Shape European Unity - by Steven Erlanger and Nicholas Kulish

They are an extremely odd couple — he is short and hyperactive, she is dour and shy. He believes in the power of the state and big interventions; she believes in a softer role for the state, guiding and prodding the market. But the French president and the German chancellor find themselves in a forced marriage in these days of economic crisis. Responsible for the two largest economies among nations that use the euro, known as the euro zone, they are trying to shape European unity in the days before the Group of 20 economic summit meeting this week.

In general, when France and Germany agree, they bring the European Union along, so the two leaders’ relationship is crucial in a period of crisis. While they have produced very different national responses to the economic downturn — with Mrs. Merkel authorizing a larger stimulus package than France has — they have worked together to keep fiscal discipline in the euro zone, and resist American calls for even greater government spending. They have found common cause as well in a call for much tougher global regulation of financial markets, putting the blame for the crisis directly on the “Anglo-Saxons” — the United States and Britain, whose free-market practices, not widely copied in continental Europe, are viewed by France and Germany as not sufficiently disciplined by the state.

Note EU-Digest: The G20 could turn out to be very interesting, not only for the results it might produce, but also as it will be the first "match" opposing the eloquent populist US President Barack Obama, with his unique political showmanship qualities against the EU's pragmatic leadership team of Angela Merkel and Nicolas Sarkozy. To keep it in boxing terms, Obama might "sting like a bee", but Angela and Nicholas are the true "heavy weights" in this contest. Europe must rally behind them and win.

Labels: Angela Merkel, Barack Obama, EU, European Monetary Zone, G20, Nicolas Sarkozy, USA

U.S. couldn’t even join EU due to debt levels - by Michael O'Brien

The United States wouldn't even be eligible to enter the European Union if it wanted to because of its debt levels, Sen. Judd Gregg (R-N.H.) claimed Thursday. "We won't even be able to get into the EU if we wanted to," Gregg said this morning on MSNBC, "because our government is so large and so huge." The European Union's Stability and Growth Pact (SGP) adopted in 1997 requires a budget deficit to be less than three percent, and requires a national debt beneath 60 percent of Gross Domestic Product (GDP).

Note EU-Digest: The EU has always taken fiscal responsibility very seriously, because fiscal responsibility has been essential to creating a better, stronger, more prosperous EU. Unfortunately the US mind-set in general does not possess this fiscal responsibility. Consequently the so-called "free market "philosophy has gone completely out of control. Statistics show that the wages at the bottom of the pay scale are 30% bellow what they were thirty years ago. We seemed to think children would be better off than their parents, but the children of the bottom are worse off!

Noble Prize winner Joseph E. Stiglitz wrote: "what happened is also that in the United States we have this myth what we call Horatio Algier, a myth that everybody from anywhere can become president, wealthy, etc. The so-called "American Dream". And there are examples of that, but the statistics are against you. Statistics today show that the likelihood, if you are at the bottom, is that your children will also be at the bottom. Horatio Algier is becoming less and less true. And actually less true in United States than in some European countries."



Labels: Economic Reform, EU, Fiscal responsibility, G20, Joseph E. Stiglitz, NATO. US

EU - Obama at G-20 summit: Popular president, unpopular plan - by Christi Parsons

Across Europe, Obama's poll numbers are as high or higher than his substantial approval ratings at home. But neither popularity nor a more conciliatory approach has prevented some foreign leaders from brushing off Obama's proposals for recovery. German and French leaders have shunted aside the president's call for increased government spending to stimulate their economies. The Czech Republic's prime minister even characterized the U.S. proposal as charting "the road to hell." Instead of more stimulus spending, European and Asian leaders want more government regulation of the financial system. And they have been openly skeptical of Treasury Secretary Timothy F. Geithner's regulatory plans, suggesting they don't go far enough. Nor have foreign leaders responded wholeheartedly to Obama's call for a greater commitment to the war in Afghanistan.

"European governments, for the sake of pleasing Obama, are not going to make concessions on these fundamental interests and political requirements," said Reginald Dale, director of the Transatlantic Media Network and senior fellow at the nonpartisan Center for Strategic and International Studies, or CSIS.

Labels: Barack Obama, EU, G20

Obama not immune to criticism overseas -- by Christi Parsons

At the heart of President Barack Obama's approach to foreign policy has been a promise to end the "unilateral" strategies of his predecessor and to heal bruised relations with America's allies. But as Obama makes his presidential debut on the diplomatic stage at the G-20 summit in London this week, he faces an array of world leaders from Europe and Asia who have already rejected some of his most important proposals for rescuing the global economy. That means Obama's vision of himself as the great conciliator will face severe challenges right from the start, despite the diplomatic niceties that will surround the sessions. As Obama is discovering at home, so in foreign affairs, enormous personal popularity does not automatically turn specific policies and proposals into reality. German and French leaders have shunted aside the president's call for increased government spending to stimulate their economies. The Czech Republic's prime minister and EU President even characterized the American proposal as charting "the road to hell." Instead of more stimulus spending, European and Asian leaders want more government regulation of the financial system.

Labels: Barack Obama, Europe, G20, US

Blue-eyed bankers' prompt G20 divide- by Gaby Hinsliff

The attack last week by Brazil's president, Luis da Silva, on "white blue-eyed bankers" revealed a new anger among some of the world's most populous countries at being dragged into a mess not of their making - and a determination to hold the west to account. India's prime minister will use the summit to challenge what it says is creeping protectionism costing Asian jobs. China will exact more influence over the IMF in return for bailing it out. Chile's Michele Bachelet used a joint appearance with Brown to stress how, unlike Britain, her country saved vast revenues "during the good times" - which it is now having to spend.

One key issue for debate on Thursday is what role the difference in saving and spending habits between the two economic powerhouses of America and China played in triggering the crisis. While Americans love to shop, often on credit, Chinese households traditionally put money aside. For years, China used those savings to invest abroad, particularly in US bonds - thus pumping billions into the US economy and helping fund more cheap credit. Many economists believe a recovery now requires bursting that artificial bubble and rebalancing the economy so that Chinese consumers are encouraged spend a little more - reducing America's trade deficit - and Americans a little less. Malloch Brown suggests Britons, too, will need to relearn the art of saving.

Labels: EU, G20, World Economy

The graphic on FOREX reserves firmly proves the point that the balance of power has shifted to developing nations. Wealth accumulation leads to shifts in bank power. If the existing structures do not incorporate and accommodate the new reality, then new structures will come into form and take root. The US and UK have given nothing but lip service to Chinese, Arab, and Russian demands, their creditors. The time for revolt is here.

For the complete report from the Market Oracle click on this link

United States Economy, U.S. Dollar and the China Factor - by Jim Willie CB

Foreigners are aghast at four new trends. They lose respect when the financial market rules change periodically, obviously to favor the insiders, elite, and connected. They lose respect when the approach taken by the Obama Administration is marred by lack of consistency, coordination, or even thorough research. They lose respect at the flow of $trillion$ in rescues and redemptions for failed institutions, most of which are responsible for the global crisis. They lose respect at the prospect of $trillion$ in ongoing federal budget deficits as far as the eye can see. They lose respect at the prospect of $trillion$ in monetized US$-based bonds, with the prospect of repeated announcements.

View Ben Bernanke, now turned commodity supplier. He is shoveling and humping around confetti laced with mold reinforced by a massive flow of swill, and does not even realize it! Forget the helicopter images. His partner ‘TinyTim' Geithner is an outright rookie with a very questionable past record, whose errors are too numerous to properly cite, starting with the ruinous decisions he recommended for Indonesia with the IMF during the 1998 Asian Meltdown. Details of harsh criticism, hardly reported by the US press networks, were delivered by former Australian Prime Minister Keating.

Acceleration in flow of funds is necessary to sustain a bubble, and a similar acceleration is necessary to prevent a bubble collapse. These are characteristics of a Third World nation's management of a currency that has the unique advantage of operating as the global reserve currency. Such a juxtaposition has never in modern financial history been witnessed before. The perceived abuse by the Untied States is incredible, as numerous syndicates continue to operate under the protection of the system's many appendages. It is no wonder that foreign creditors are both aghast at the situation in the Untied States, and mobilized to defend themselves.

The longer foreign nations wait to establish a multi-polar global reserve working alternative, employed broadly within their continental regions, laced within banking and commerce, the greater their loss will be to wealth funds and the greater the disruption will be to their entire economies, their standard of living, and their internal political stability. So let's see what China is up to.

Chinese leaders are openly critical and expressing deep anxiety. Debate is rampant inside China about the wisdom of continued support to purchase US Treasury bonds. These are preliminary tectonic shifts to be identified before important new financial structures come to fore. They will disturb the US Dollar system at its global foundation, with much inherent hegemony. The shock waves will come region by region, in a succession. By attracting a lot of attention to this issue, China has decided to attempt to gain influence at the G-20 meeting. The sequence is simple, from offshore manufacturer to trade partner to global adversary to large scale credit provider to angry creditor to credit master, and maybe to receivership committee governor.

Labels: China, EU, G20, The US economic meltdown

G20 protesters to march in London

Thousands of people are expected to march through London later to demand action on poverty, climate change and jobs ahead of next week's G20 summit. The Put People First alliance of 150 charities and unions will march from Embankment to Hyde Park for a rally. Speakers will call on G20 leaders to pursue a new kind of global justice. A series of protests are planned around the London summit and police say the level of planned activity is creating an "unprecedented challenge".

Labels: EU, G20, World Economy

Why Europe's Criticism of the Stimulus Got Out of Hand - by Douglas A. McIntyre

There are now divisions forming in the European Union based on whether the countries in that alliance should put larger and larger sums of money into the credit and banking markets and their budgets to help slow the recession, or keep stimulus activities modest and have faith that free market systems will cause the economy to recover on its own without taking the world to Hades in the process. The debate over the ideology of saving the financial world turned ugly as Czech Republic Prime Minister Mirek Topolanek described the Obama stimulus programs as the "way to hell." Whether the comments are repudiated by other members of the E.U. now or not, the cat is out of the bag. After behind the scenes conversations about the aggressiveness of the U.S. approach, the views of a number of American allies are now crystal clear — America is spending itself into a hole which it cannot get out of, and the nation is on a course which will eventually lead to socialism.

Note EU-Digest: reading this op-ed by Mr. Douglas McIntyre in Time Magazine you quickly realize that American arrogance and superiority complex is still alive and well. Unfortunately.

Labels: Barack Obama, Economic Stimulus, EU, G20, US Administration

EU rejects China's calls for global currency- - by Joe McDonald

The European Union's top economy official said Tuesday that the U.S. dollar's role as the international reserve currency is secure despite Chinese calls for a global alternative. EU Commissioner Joaquin Almunia says he didn't see “major structural changes in the role the dollar plays today as a major reserve currency” following a call by China's central banker for a new global currency controlled by the International Monetary Fund.

Beijing has long been uneasy about relying on the U.S. dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any steps in response to the crisis that might erode the value of the dollar and Beijing's estimated $1-trillion holdings in Treasuries and other U.S. government debt. “A super-sovereign reserve currency managed by a global institution could be used to both create and control global liquidity,” Mr. Zhou wrote. “This will significantly reduce the risks of a future crisis and enhance crisis management capability.” Mr. Zhou also called for changing how SDRs are valued. Currently, they are based on the value of four currencies — the dollar, euro, yen and British pound.

Labels: China, EU, G20

US and European paths to recovery diverge - by Robert Marquand

President Barack Obama, British Prime Minister Gordon Brown, and European leaders want the crucial April 2 London Group of 20 summit to end in a spirit of unity – a plan bold enough to check and reverse the global economic crisis. Yet a week ahead of the G-20 meeting, a fundamental difference in US and European priorities is intensifying in the public arena. The divide over the balance of stimulus and regulation reflects differences in Euro-American cultures, institutions, leadership – and not least, in German Chancellor Angela Merkel’s concern about keeping voters happy ahead of September polls. Whether the sides can hammer out an agreement – and how final decisions will be presented – is the trillion-dollar question. A cacophony of top voices is rising. European Central Bank chief Jean-Claude Trichet opposes stimulus, as does the German finance minister, the British central bank chief, the European president, and others.

Note EU-Digest: The European approach to resolving the crises has far less risks than the US/British plan, which creates an enormous debt at the expense of the tax payer and with little guarantee that it will succeed. The European plan also calls for very strong controls toavoid the financial sector making the same mistakes.

Labels: Barack Obama, EU, G20, US

The Next Bubble: Obama's Budget Deficit - by Joshua Zumbrun

As President Obama prepares to send his budget to the US Congress next week, he's run into a bit of a stumbling block. The Congressional Budget Office said Friday that the national debt under the president's budget will be $2.3 trillion deeper than the White House estimates. Now for the real bad news: Both estimates are optimistic. If the economy continues to deteriorate faster than economists project, those numbers will balloon further.Over the next decade, the CBO projects that the White House budget will run $9.3 trillion in deficits. The White House projection had been $7 trillion. The problem for Obama, as his budget moves to Congress: Lawmakers tend to trust CBO figures over all others.

The key metric, when determining if a deficit is controllable, is looking at the ratio of the debt to the country's GDP. If this ratio is shrinking, then the debt is manageable. The White House said this would happen by 2013. The CBO says this will not happen, even by 2019.

Labels: Barack Obama, G20, US

Obama launches media blitz ahead of G20, at home and abroad

Writing in 31 newspapers around the globe, Obama warned that it was up to world leaders holding an emergency summit in London next week to come up with a comprehensive solution to the global recession. Back at home, Obama planned to hold the second press conference of his presidency Tuesday night amid growing public anger over the government's bail-out of Wall Street firms considered critical to the survival of the US financial system. 'My message is clear: The United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose,' Obama wrote in the newspaper piece.

Labels: Barack Obama, EU, G20, USA

China Urges New Money Reserve to Replace Dollar - by David Barboza

In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar. China’s bold idea, released more than a week before world leaders are to gather in London for an economic summit meeting, also indicates that Beijing is worried that its huge dollar-denominated foreign reserves could lose significant value in coming years. China has the world’s largest foreign exchange reserves, valued at nearly $2 trillion, with more than half of those holdings estimated to be made up of United States Treasuries and other dollar-denominated bonds.

The timing of the Chinese announcement, analysts said, could also be aimed at giving Beijing more leverage to negotiate with the United States and other nations at the G20 in London on trade and on proposals about how to stabilize the global economy.

Labels: China, G20

Britain, not Europe, will be the outsider at the G20 summit - by Mary Dejevsky

Curl up in the warm cocoon of optimism and defensiveness being spun by Downing Street before G20 leaders convene next week in London, and quite soon you will feel a chill draught. The British are doing their utmost to save the world; they are best friends again with Washington, and most of the rest of the world is on their side. If only those pesky Europeans would see reason. If you dare, however, it is worth stepping outside the small world of British comfort-speak, and just listening. You will very quickly find – as I did, at a weekend meeting of EU politicians and others – that for many of those supposedly stubborn and suspect Europeans, it is the British who are out of line.The European misgivings are threefold. The first, and most immediate, relate to policy. The German and French governments adamantly oppose any international fiscal stimulus; they insist they have done enough to lubricate their own economies and want to wait to let the measures take effect. They worry about unleashing inflation – the same argument used a little half-heartedly by those in Britain opposed to increasing the money supply. If there is money to be contributed, the Europeans want to use existing institutions, such as the IMF – or, in the case of the ailing "new" European economies, EU mechanisms such as the European Central Bank.

Europe see in the whole British approach an arrogance quite insufferable, given Britain's role in what has happened and its abiding ambivalence towards the EU. They see it not just in our politicians, but still more in our diplomats and in the Foreign Secretary personally, for whose off-hand and didactic manner particular venom is reserved. They go on to cite two specific objections. London, they say, strove to be the global financial centre, without the national tax base to honour its international obligations.That the G20 summit will be held within sight of the bank towers of London's Docklands is an added irritation. As for anti-protectionism – the reserve summit theme if no international stimulus is agreed – they retort: What is the recent 30 per cent fall in sterling, if not protectionism by competitive devaluation?

Labels: Britain, EU, G20, Gordon Brown

Angela Merkel: German Newspapers - "Heroine of Brussels" Can Do No Wrong

Germany's newspapers are so full of praise for Angela Merkel's mediating skills at the European Union summit in Brussels that she must be tempted to cut out the headlines and pin them up at home. How often does a politician get applauded by media commentators on the left and right, in Germany and across Europe, and by all other European governments as well?

Even the left-wing daily Die Tageszeitung can't help but laud her negotiating skills. "Angela Merkel, the Talented Tactician," reads the paper's headline. The editors laud Merkel's frugality and cite German politicians who praise her as the "new star in the European sky," who used female pragmatism to separate Europe's two most notorious squabblers, British Prime Minister Tony Blair and French President Jacques Chirac. She even managed to improve German-Polish ties by handing Poland 100 million euros in funds that had been largely earmarked for eastern Germany, writes the paper.

The closing document agreed on by European Union leaders gathered in Brussels reads like a German wish list. Chancellor Merkel was able to convince the EU to focus on financial-market regulation -- and to resist new stimulus programs. The EU will take an unusually hard line on regulating financial markets. Any participant who might represent a systemic threat -- "without exception and without regard for home nation" -- would have to be monitored, according to the EU's recommendation. This would apply to private capital firms as well as hedge funds, private equity companies and alternative investment vehicles. Tax evasion will be fought "forcefully." Offshore businesses will be placed on a blacklist and a "toolbox with sanctions" will be developed to pursue countries that serve as tax havens.

Labels: Angela Merkel, Barack Obama, EU, G20, US

Gordon Brown's and US plan for recovery rejected by Germany - by Ian Traynor and David Gow

Angela Merkel, the German chancellor, yesterday opened up a new rift with Britain and the United States ahead of the G20 summit in London when she delivered a blunt rejection of extra fiscal stimulus packages as advocated by Gordon Brown and the Obama administration.

Germany noted it had won the argument with the "Anglo-Americans" over how to regulate and supervise the financial markets. But differences persisted in Brussels, with No 10 insisting the supervision of financial institutions should remain "a national competence". France and Germany demanded "decisive steps towards a European regulatory framework" by June. "The Americans are claiming they are doing a lot more," said a European commission official. "We're telling the US, you need not give us lectures."

Labels: EU, G20, US

Netherlands, Germany call for tighter regulation of financial markets

Financial markets must be subject to tight supervision and regulation, Dutch Prime Minister Jan Pieter Balkenende and German Chancellor Angela Merkel wrote in an article published on Thursday by Dutch daily NRC Handelsblad and several other European newspapers. Balkenende is supporting the German and French side in the transatlantic debate on how to take on the economic crisis. The United States accuses the European Union of doing too little to stimulate the economy.

"Apart from the discussion on how to bring our economies back onto a robust growth path, the key challenge we face in London is to build a new financial architecture that meets 21st century requirements," Merkel and Balkenende wrote. "The credibility of the process hinges upon whether we deliver on our Washington commitments, e.g. that all financial markets, products and participants must be subject to appropriate oversight or regulation, without exception and regardless of their country of domicile," they said.

Labels: EU, France, G20, Germany, Netherlands, World Economy

Sarkozy, Merkel See Regulation as Top G-20 Priority - by Francois de Beaupuy and Rainer Buergin

German Chancellor Angela Merkel and French President Nicolas Sarkozy said the Group of 20 rich and developing nations meeting in London on April 2 must agree on a new “global financial architecture” as its top priority. In a joint letter released by the offices of both leaders today, Merkel and Sarkozy also said that European Union heads of state and government holding a March 19-20 summit must press for all hedge funds and other funds that may create “systemic risks” to be registered, regulated and supervised. “We are deeply convinced that we must use this unique, historic chance to fight the causes of this global crisis,” Merkel and Sarkozy said in the letter addressed to European Commission President Jose Manuel Barroso and Czech Prime Minister Mirek Topolanek, whose country holds the EU’s six-month rotating presidency.

Labels: EU, euro, G20, US

Still divided over the best way to fight the global economic downturn, finance officials of the leading industrial nations agreed on Saturday to commit more money to help developing countries, step up efforts to revive bank lending and regulate hedge funds. Still divided over the best way to fight the global economic downturn, finance officials of the leading industrial nations agreed on Saturday to commit more money to help developing countries, step up efforts to revive bank lending and regulate hedge funds. The United States Treasury secretary, Timothy F. Geithner, took pains on Saturday to present a united front, saying that the world was committed to increasing consumer demand — despite stated European reluctance on that matter. “The world is with us on this,” Mr. Geithner said. “We will do what is necessary to get the economy moving again.”

Germany and France were the only two countries to give a joint news conference following the meeting, in which they reiterated their position that the focus of the G-20 meeting in London next month should be on reforming regulation rather than additional stimulus measures to deal with the global economic emergency. Note EU-Digest: the EU approach is the right one - without taking the medicine the patient can't get better.

Labels: EU, G20, USA

Wallstreet-"There is a sucker born every day"

The Capitalist system of doing business is usually based on raising capital through public markets. Funds are accessed that are made available by institutions and individual investors. In this scenario, the likelihood that the individual investor somewhere along the line gets the shaft is pretty high, because the market is set up in such a way as to favor the large institutional investors. Basically one could say that the game is rigged and because there are very few rules to avoid that. Brokers and traders today make deals and can manipulate prices every day. So since tens of millions of trades are made around the clock daily in the global marketplace, one could also say that the financial markets operate very much like a multi-national casino. What makes it even more scary is that most of the public is sucked into believing what some of the "insider pundits", like a Cramer, who plays in one market and promotes another says. Therefore, don't be fooled or take any of these market terms - 1y Target Est.,T-Bill index, Actual EPS, CPS, or DPSwe - you get bombarded with serious. Most, or just about all of these terms used have absolutely no scientific base and must be seen as a clever attempt to give legitimacy to what is nothing else but a complex uncontrolled and unregulated financial gambling operation.

The purpose of the stock market has never been to spread wealth, maintain financial order, or support the economy. For every winner in Wall Street you can find a loser, for without losers, there are no winners. Wall Street is a gambling place where the winner takes it all. And like at any Casino the House always takes a cut. Brokers will make commissions no matter what happens, win or lose. Should the taxpayer fund such a rigged and unregulated financial system. Absolutely not.

Labels: Financial Regulation, G20, Stock Market, Wall Street, World Economy

Germany, France underscores common ground in fighting financial crisis

They may not see eye-to-eye occasionally, but German Chancellor Angela Merkel and French President Nocolas Sarkozy showed a united front on Thursday in rejecting U.S. calls for more economic stimulus plans amid a global economic downturn, and they stressed that the upcoming summit of the Group of 20 (G20) should achieve binding results on tougher financial regulations.

Speaking after a German-Franco summit meeting in Berlin, Sarkozy stressed that the two countries have already invested a lot to check economic meltdown. "We don't want to spend more, " said Sarkozy, adding that the European priority now is to achieve international agreements to tighten up regulation of financial markets. Merkel said on Thursday that British Prime Minister Gordon has signed up to agreement achieved at a European summit in Berlin last month which called for tougher regulation of hedge funds, a crackdown on tax havens and more funds for the International Monetary Fund (IMF) to help countries in crisis.

But British Chancellor of the Exchequer Alistair Darling seemed to send a different signal by saying on Wednesday that his country and the United States "see eye-to-eye" on the need for economic stimulus.

Labels: Angela Merkel, Economy, EU, G20, Gordon Brown, IMF, Nicolas Sarkozy

Europe has done enough, says Jean-Claude Juncker - by Bruno Waterfield

Eurozone countries have rejected American calls for increased and continued public spending increases to tackle the global recession highlighting transatlantic divisions. Jean-Claude Juncker, the chairman of the 16 Eurogroup countries and Luxembourg's prime minister, has insisted that in terms of economic recovery spending Europe had "done what it has needed to do". "We take the view that we don't need to make a further effort for the moment. We mustn't pile deficit upon deficit."

Disagreement also looms over how to save collapsing banks and how much regulation is needed of the financial markets and institutions responsible for triggering the economic crisis. The splits are a setback for Gordon Brown who will welcome Barack Obama on his first European visit as US President to the G20 meeting on April 2 in London. The British Prime Minister has also angered key European countries by bypassing the EU in efforts to negotiate a separate America-friendly G20 deal on recovery spending and financial regulatory plans.

Note EU-Digest: Its high time Britain chooses where its alliance lies. Its high time Britain understand the reality that you can’t have your cake and eat it too.

Labels: EU, G20

Bush Calls G20 Meeting Successful, More Meetings Needed he says - Public at large (73%) not hopeful about results CNN Poll shows

Outgoing President Bush said the G20 discussed making financial regulations more consistent worldwide, reform of financial regulations and the desire to avoid protectionist responses to the crisis, among other matters.
The president, whose second term ends in January, said he will work "tirelessly" to make sure the U.S. government transition to a new presidential administration is smooth. He also said President-elect Barack Obama's leadership team has been fully briefed on the goals of the G20 meeting that was just concluded.

Contrary to the positive words coming from most of the participants in the G20 summit a CNN poll showed the public at large does not share that enthusiasm when asked.

CNN Poll: Are you optimistic that G-20 leaders can fix the economy?

Yes 27% 2371
No 73% 6311
Total Votes: 8682

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Labels: EU, G20

Chavez: G20 summit a waste of time

Hugo Chavez says that G-20 summit in Washington is a waste of time, because it excluded the poor and is hosted by the people who caused the problem. "Really, I don't know what they are going to do in Washington, the host is to blame," Chavez said, referring to Saturday's meeting of the world's 20 richest countries to tackle the problems of world economy. "They are going to waste their time," Chavez said in a television speech to supporters.

Note EU-Digest: Probably not a complete waste of time. It will provide an opportunity for some of the major economic players in the world to exchange ideas, say goodbye to President Bush and to issue a positive statement. However, without the key player, President elect Obama, who is not yet sworn in as the leader of the USA, which deregulated financial system caused this whole problem in the first place, no decisions of any importance can be made. It's also interesting to see that the British PM Gordon Brown, who fought his country's participation in a common European currency and close regulatory and monetary cooperation, has now suddenly become an advocate of a more structured global financial system. In this respect, it seems that the only world leader who has come up with well thought out plan for a badly needed restructured capitalist system is Mr. Nicolas Sarkozy, the President of France, presently also holding the Presidency of the EU.

Labels: Barack Obama, EU, G20, George Bush, Gordon Brown, Hugo Chavez, Nicolas Sarkozy, US, Venezuela

Nicolas Sarkozy calls for rethink over US missile defence system in Europe - by David Charter

Barack Obama was handed an early foreign policy hot potato yesterday when President Sarkozy proposed a truce in the row over US plans for a missile defence system in Europe. Taking it upon himself to make the EU’s first intervention in the debate – and getting the backing of Russia, which has threatened to position missiles in Kaliningrad – Mr Sarkozy proposed a summit next year on a new pan-European security system, after a suspension of activity from both Moscow and Washington. The French President’s latest piece of off-the-cuff diplomacy caught most of the main players by surprise and raised eyebrows for seemingly trying to bounce the next US President into a policy change as well as talks about a security organisation to rival Nato

Note EU-Digest: compliments to Mr. Sarkozy. The "missile project" was an initiative by the Bush administration, against the wishes of a majority of the citizens in the countries involved and the EU. The missile shield plan also turned into a major stumbling block for Russia and the EU to develop neccesary closer ties. Mr. Obama once in the White House does best to scrap it.

Labels: EU, France, G20, Nicolas Sarkozy, US

UN General Assembly President Omitted From G-20 Guest List?

UN General Assembly President Omitted From G-20 Guest List? - by Michael Brasky

For Fr. Miguel d'Escoto Brockmann, president of the U.N. General Assembly, the guest list of the G20 is far too exclusive. On Thursday, when asked what Fr. d'Escoto's position was on the Washington summit, his spokesperson responded: "President d'Escoto believes, that the solutions and the dialogue should not come only from the G-8. And it should not come only from the G-20, or the G-40, for that matter. That it should come from the G-192, which is the General Assembly of the United Nations." Unanswered in the exchange was whether Fr. d'Escoto himself would be attending.

In a 2004 interview, he condemned President Reagan as "the butcher of my people" in reference to the Contra War in Nicaragua. This struck a nerve with many Bush administration officials who are devout adherents to the ethos of the Reagan era. Fr. d'Escoto has called American democracy a farce. "When they talk democracy, they mean a country that has submitted to them and that would comply with whatever they say," he was reported as having said. "When they apply the name democracy to another country, they mean it is an obedient country."

Labels: G20, United Nations, US

"US economic Leadership: Incompetence at exstraordinary levels- Paulson Plays While the World Pays" - by Nicholas von Hoffman

In the past couple of months Bernanke has loaned out $2 trillion to unnamed companies under eleven different programs, all but three of which have been slapped together in the past fifteen months of financial crisis. To repeat, we do not know who got this money or what collateral was put up in return for the loans or what conditions were attached to them. In the past couple of months Bernanke has loaned out $2 trillion to unnamed companies under eleven different programs, all but three of which have been slapped together in the past fifteen months of financial crisis. To repeat, we do not know who got this money or what collateral was put up in return for the loans or what conditions were attached to them.

Paulson appears to have given away, invested, loaned or lost about $300 billion of the first $700 billion Congress gave him, but he has lost more than money: nobody believes him or Bernanke anymore. Every day another company steps forward with its handout--American Express, Chrysler, GE Financial--and every day it appears Paulson and Bernanke are prepared to accommodate these corporate mendicants.

Labels: G20, US Economic Meltdown

World recession deepens ahead of G20 Washington crisis summit

The economies of all 27 EU countries contracted by 0.2 percent in the third quarter, escaping recession only because second-quarter growth was zero and not negative. Another sign of the brutal economic climate came from the Organization of Petroleum Exporting Countries which said it would hold a special meeting in Cairo on November 29 to discuss how to respond to the slump in prices. Some members want a new production cut to hold prices up despite the acceleration this might give to the downturn. French President Nicolas Sarkozy, European Commission head Manuel Barroso met Russian President Dmitry Medvedev in Nice, France, to work on proposals for the summit.

Mr.Sarkozy, current president of the European Union, said on Thursday: "I leave for Washington tomorrow to explain that the dollar, which at the end of World War II was the only world currency, can no longer claim to be the sole world currency. The world changes. We are in the 21st century and the French view is that we cannot continue into the 21st century with a system (established) in the 20th century," he said.

Labels: G20, Nicolas Sarkozy, US Economic Meltdown

EU Talks Washington Summit Unity Amid More Bad Economic News - Bright spot: Investor confidence improves

European leaders agree on the need to speak with one voice at Saturday's economic summit in Washington. But Europe remains split of how to deal with the increasingly dire economic situation. As the world's leading economic nations and the EU prepare to convene for the emergency economic summit in the American capital, European politicians are stressing their commitment to unity -- at least in words. Even Britain, traditionally somewhat of an outsider in Europe, is talking togetherness.

While some EU states may see the financial crisis as an occasion for governments to rein in out-of-control capitalism, others are more likely to view it as a problem to be overcome while preserving the basics of the current system. Positive news was provided by Germany's Center for European Economic Research, which announced a slight improvement in its poll of investor sentiment. At a near record low last month, the mood has improved slightly as investors have observed the government taking action to respond to the crisis.

Labels: EU, G20

Europe ( as a result of British Generalities) unable to unite in credit crisis - by John Huizing

French President Nicolas Sarkozy, who currently holds the European presidency, has called on his European colleagues to reconvene in Brussels to tackle the credit crisis. During a lunch arranged at the last minute, the European leaders formulated a common position on Friday for the G20 summit, due next week in Washington. But Europe is not expected to play a strong leading role. "They are hardly long-term solutions," says Karel Lannoo from the Brussels think tank CEPS. He also questions the idea to give the International Monetary Fund (IMF) a larger role. If the IMF really wants to act as a financial policeman, then national governments would more or less have to be obliged to adopt its recommendations. And for this to happen the structure of the IMF itself would have to change radically. The US already has trouble accepting interference by international organizations in its national politics, warns Mr Lannoo. And there's another difficulty.the IMF is largely controlled by Europe. But the United States and the newer industrialized countries might prefer to see the voting positions and the capital chairs within the IMF rearranged. Something European countries may not like. Dutch Finance Minister Wouter Bos said: "We should watch out that we don't just formulate a general ambition, a general agenda for things that need to happen across the globe. In the worst case, it would result in endless discussions about what needs to be done in the world, while we forget there's a couple of things we need to do right now in Europe." It was a deliberate sneer at the British. They would like to arrange everything globally in the hope that London's financial center, the City, stays free of strict European regulation.

Labels: Britain, Council of Europe, G20, IMF, the Financial crises

Recipe for a Successful G-20: Preparation, the Right Actors, and Political Sensitivity - by C. Randall Henning

The impending Group of 20 summit in Washington, DC, November 14–15, organized to discuss solutions to the economic crisis and reforms to the international financial architecture, is potentially the most important international economic meeting in a very long time. However, it has been hastily convened, insufficiently prepared, and President-elect Barack Obama will not participate. To make this meeting and those that will follow successful, officials of the Bush administration and other governments should heed six key principles for successful international negotiations. The Obama team should also reflect on them as it prepares to take office.

Labels: G20, World Economy

Barack Obama: Europe should throttle down their expectations

Even though Obama's victory was a watershed political development of historic proportions, the European public and policy makers should not see him as the “new Messiah” or expect that the transatlantic relationship has suddenly become a “marriage made in heaven”. The reality is that Obama is the US President elect and that his main objective is to serve the American people and US interests. Therefore his principal focus, at least initially during his Presidency, will be to try and clean up the terrible mess the Republican Administration has left him. Obviously European relations are very important to any US Administration, but one should also realize that given Europe's already solid long term relationship and existing mechanisms of cooperation with the US, Europe will not be at the very top of Obama's Administration "to-do" list. European leaders therefore need to move forward with their own views and plans about solving the global financial crisis, or in dealing with environmental or foreign policy issues, independent of what the new Administration is saying or doing. At the same time the EU and the US should continue working together to uphold Western values, even though they might have a different interpretation or implementation of this philosophy.

uropeans and Americans must also not make the mistake to identify Mr. Obama as a left wing politician in the European sense of the word. If he was a European politician he would probably be catogorized as a “right from center” politician. Francis Wurtz, leader of the left wing Group in the European Parliament, said pressure from Wall Street to reassert US leadership of the financial world, which it lost to London after the Enron corporate scandal, was likely to be very high on the new president's agenda as he deals with the financial crisis. The challenges are therefore numerous for the EU and regardless of what the new Obama Administration does or not do, the EU must take a variety of independent decisions, to include, a realistic review of NATO's Afghan mission, dealing with the instability in Pakistan, reviewing Russia's long term relationship with the EU based on common needs, managing the emergence of China as a world power and partner of the EU, dealing with the the Middle East and Palestinian issues in a more balanced political and economic way than in the past. The EU must also realize that US support for a break-through global deal on climate change is not certain at all, even with Obama as the president. US domestic action to cut greenhouse gas (GHG) emissions is unlikely to be dramatic to say the least. The best the EU can expect is that the US Congress and Senate will sign off on the 2007 bi-partisan American Climate Security Act, proposed by US Senators Joe Lieberman (Independent Democrat, Connecticut) and John Warner (Republican, Virginia). While the relationship with Russia is a top priority for Europe, the Obama Administration will in all likelihood be dealing with it in the context of a variety of strategic relationships. Advisers to Obama have already stated that the missile defense shield alongside the Russian border, planned by the Bush Administration, is not high on their agenda.

On the other hand President Obama can be expected to demand more support from the Europeans, particularly as it relates to the NATO activities in Afghanistan. In return, Europeans must call on the US to deliver solid progress on issues that are of key importance to Europe, such as the financial crisis and the control mechanisms to be established, climate change, and non-proliferation. Equally urgent is a new US policy towards the UN, the International Criminal Court of Justice and the closing down of the Guantanamo Bay prison. All this while a time bomb is ticking away for the US in the form of a current account deficit of over 10 trillion dollars. To finance both the current account deficit and its own foreign investments, the United States must import about $1 trillion of foreign capital every year or more than $4 billion every working day. This situation is unsustainable in both international financial and domestic political (i.e., trade policy) terms. Right now this debt is covered largely by China and a variety of other countries. If any of these countries withdraws their support of the US economy the dollar won't be worth the paper it is printed on. Consequently the US bargaining position in the world market place has weakened. We can be sure the new US President will be dealing with that as a critical priority.

A Chinese proverb says “these are interesting times”. Yes they are indeed. So, regardless of the fact that the EU wants to, and should give Mr. Obama the benefit of the doubt, time is pressing and it certainly won't hurt the EU to be more assertive when it comes to urging the new US Administration to move swiftly in a more realistic direction than it has done during the past eight years.

Labels: EU, G20, Obama Administration, US, US Foreign Policy, World Economy

Spain barred to attend G20 summit by Bush Administration as payback for their Iraq position

Spain,which has the world's eight largest economy has pressed for an invitation to next week's global G20 financial crisis summit in Washington. They have won French support, which presently also represents the EU presidency, to attend as an observer, officials said yesterday. France, which first proposed the summit last month, has asked the U.S. to let Spain attend as an "associate". As the host of the summit, the Bush Administration is in charge of the guest list.

Labels: EU, G20, Spain, World Economy

For the complete report from the guardian.co.uk click on this link

The EU likely will take a 5 key point message to Washington

Europe is likely to take a five key point message to the Washington meeting on the overhaul of global financial institutions. This boils down a more extensive list of actions agreed by EU finance ministers, a draft paper showed. The paper, prepared by the French presidency of the European Union for a meeting of EU leaders on Friday, also said the EU would like the Washington summit to produce concrete proposals on priorities agreed within 100 days from Nov. 15.

The five priorities identified by the EU stick closely to the priority wish-list approved by the EU finance ministers earlier this week, and they are:
- to give the IMF "primary responsibility", together with the Financial Stability Forum, to recommend steps to restore confidence and stability. The IMF should be given the necessary resources and appropriate tools to help countries in trouble.
- registration of rating agencies and surveillance of implementation of codes of conduct relating to them.
- convergence of accounting standards and a review of the application of the "fair value" rule in financial institutions. The "fair value" rule currently requires instititions to value their assets at market value, which creates valuation problems when the market for a given security is not functioning.
- to take steps to ensure that no market segment, territory, or financial institution, including hedge funds, is beyond regulation or surveillance.
- to implement codes of conduct to avoid excessive risk taking in the financial industry, including the sphere of compensation. These codes should be taken into account by supervisors in evaluating the risk profile of institutions.

Labels: EU, G20, IMF, World Economy

"Poverty and a failing economy is created by the system not the people"

The current financial crisis is a direct result of the utterly unregulated derivatives and other speculation driven markets combined with large scale lending and borrowing which have choked the system to the point of no return. As average income of all economic units are usually equivalent to the average wage of all working people, only a few can draw very high salaries at the expense of the majority drawing less than average. In order to deal with this inequality and the potential opposition to it, the corporate powers developed a multi-layered income structure whereby income can be widely distributed in a trickle down fashion among people, without endangering the income levels of the top 1.5 percent of the people at the top. The ones who control more than 90 % of the wealth.

Nobel Peace Prize winner Muhammad Yunus says: "Globalization is not working for people who are poor. ... Sometimes, it acts like a 20-lane highway running across the world. But the problem is the big trucks from the USA are taking over all the lanes. No lane is safe for rickshaws. ... So if that image is correct, why don't we have traffic rules? This lane is reserved for rickshaws ... that lane is for heavy vehicles. Today, heavy vehicles are taking over everything. ... So we need traffic rules and traffic police". Today, in globalization, there are no traffic police.

But the system is not only creating more poor people in the developing world. Even the US considered the worlds economic powerhouse has had the most unequal distribution of wealth in the past 30 years. opinion polls show that a substantial majority of Americans say the rich don't pay their fair share of taxes. A growing number also say the U.S. is becoming a nation of haves and have-nots. The public's concerns reflect a shifting dynamic in recent years, as an increasing share of the wealth has gone to people at the top of the income scale. The top tenth of U.S. households now earn an average of 11.2 times what those in the bottom tenth make, according to the Census Bureau. That's up from a ratio of 8.7 three decades ago. The wealthiest fifth of U.S. households now take in 50 percent of all income, up from 44 percent in 1977. The differences are even more pronounced in analyzes of incomes for the top 1 percent of households. Already in 2005 the then Federal Reserve Chairman Alan Greenspan said: "The income gap between the rich and the rest of the U.S. population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself." Today at the end 2008 the economic system as we know it is broken on a world-wide scale and needs urgent repair. Bandages in the form of tax breaks or economic stimulus programs, or propping up failed banks just won't solve the problem anymore.

Labels: G20, the Financial crises, The Financial Meltdown, World Economic Order, World Economy

EU - Merkel Wants New Financial Rules Within A Year

Merkel also said she expected Europe to push its views forcefully in the talks, which will include leaders from the so-called G20 nations.The White House has said the Nov. 15 summit will be the first in a series at which major nations will discuss reforms to the financial system. The meeting comes in the midst of the worst financial crisis in nearly 80 years. Speaking at the same conference, German Finance Minister Peer Steinbrueck spoke of a window of opportunity for creating new rules for the financial system and cautioned that a change in government in the United States should not delay their implementation. "My hope is that ... we don't see any developments that might change the path we are on," he said, referring to the U.S. election. The United States will vote next Tuesday in an election contested by Democrat Barack Obama and Republican John McCain.

Both Merkel and Steinbrueck have criticised the United States for resisting European efforts in past years to introduce tougher regulation of the financial system, including more supervision of hedge funds.

Labels: Angela Merkel, EU, G20, Germany

Reshaping World’s Financial System Now a Must - by Andrew C. Schneider

The West knows it can’t set the terms as it has in the past. That’s why the biggest developing nations were invited to join the G-8 in Washington on Nov. 15 for the first in a series of summits that will run well into 2009. Remaking the G-8 into something closer to the G-20 also appears likely. A large part of the reason the G-8 has been seen as increasingly irrelevant in recent years has been its exclusion of so many of the world's new stars.

Most of the economies poised to join the IMF's leadership are each worth $1 trillion or more. Two, China and Brazil, are already larger than some current members. The Group of 20, whose full membership President Bush invited to the Nov. 15 summit, comprises the G-8 countries as well as China, Brazil, India, South Korea, Mexico, Argentina, Australia, Indonesia, Saudi Arabia, South Africa, Turkey and the European Union (EU).

Note EU-Digest: "contrary to what the above Kiplinger report indicates, the major hurdle to establish stricter international regulatory rules will be to overcome the US reluctance to allow more transparency and controls over their own financial system. They have historically opposed most forms of regulatory safeguards when it appears to tamper with their own laissez-faire style of capitalism. Unfortunately we recently have seen what kind of havoc this has created in the world financial system."

Labels: G20, World Economy