EU-DIGEST

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