Archive for the ‘IMF’ Category

Obama, Geithner: recession requires global action

March 11, 2009

The emphasis on economic stimulus has already been met coolly by many European nations, raising questions whether a gathering of finance chiefs from the Group of 20 rich and developing economies near London this weekend will make much headway battling a deepening downturn.

Read the rest:
http://news.yahoo.com/s/
nm/us_financial_g20

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Warning that the global recession is deepening, the Obama administration on Wednesday called on major U.S. allies to do their part and support strong stimulus programs to fight the downturn.

The administration said decisive action was needed by all countries to complement what is being done in the United States. Treasury Secretary Timothy Geithner outlined an ambitious agenda, including a tenfold increase in the size of an emergency fund the International Monetary Fund uses to help countries in trouble to as much as $500 billion.

“We can do a really good job here at home, with a whole host of policies, but if you continue to see deterioration in the world economy, that’s going to set us back,” President Barack Obama said in the Oval Office following a briefing by Geithner.

By JENNIFER LOVEN and MARTIN CRUTSINGER, Associated Press Writers

It’s essential for other major countries to commit to substantial and sustained efforts to bolster their economies in the face of a deepening recession, Geithner later told reporters.

The U.S. challenge highlighted a rift with European nations who are balking at U.S. calls for more stimulus spending, arguing they do not want to pile up huge levels of debt. Some European critics have charged that the U.S. demand for increased stimulus spending was an effort to divert a European call for a major overhaul of regulations governing the financial system to curb the types of excesses in the U.S. that spawned the crisis.

Obama said the U.S. has two goals for the G-20 summit in April: to make sure there is “concerted action around the globe to jump-start the economy” and to achieve consensus on regulatory reform to take place in each country.

However, many European nations have been critical of U.S. calls for increased stimulus spending. At a meeting this week of finance ministers of the 27-nation European Union, officials said they were doing enough already to support the world economy.

Geithner sought to play down any disagreement between the U.S. and Europe.

“I think you will find very broad support to address these objectives,” he said. Geithner will attend talks Friday and Saturday in London with finance officials from the Group of 20 nations.

Those meetings are designed to develop a common agenda for a summit April 2 in London to be attended by Obama and the other leaders of G-20 countries, a group that includes not only the world’s wealthiest nations but also major developing countries such as China, India and Brazil.

Geithner said the U.S. will seek approval to expand a $50 billion fund the IMF maintains to support countries in trouble to as much as $500 billion. The IMF needs much greater resources to be able to provide emergency loans to countries during the current crisis, he said.

Read the rest:
http://news.yahoo.com/s/ap/20090
311/ap_on_bi_ge/obama_geithner

World Bank Says Global Economy Will Shrink in ’09

March 8, 2009

The economic crisis that started with junk mortgages in the United States is causing havoc for poorer countries around the world, not only stifling their growth but choking off their access to credit as well, the World Bank said on Sunday.

By Edmund Andrews
The New York times

In a bleaker assessment than those of most private forecasters, the World Bank also predicted that the global economy would shrink in 2009 for the first time since World War II. The bank did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks.

Until now, even extremely pessimistic forecasters have predicted that the global economy would eke out a tiny expansion but had warned that even a growth rate of 5 percent in China would be a disastrous slowdown, given the enormous pressure there to create jobs for its rural population.

The World Bank also warned that global trade would shrink for the first time since 1982, and that the decline would be the biggest since the 1930s.

The report, released on Sunday, was prepared for a meeting next week of finance ministers from the 20 industrialized and large developing countries. It warned that the financial disruptions are all but certain to overwhelm the ability of institutions like itself and the International Monetary Fund to provide a buffer.

The bank, which provides low-cost lending for economic development projects in poorer countries, pleaded for wealthy governments to create a “vulnerability fund” and set aside a fraction of what they spend on stimulating their own economies for assisting other countries.

“This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis,” said Robert B. Zoellick, the World Bank’s president. “We need investments in safety nets, infrastructure, and small and medium size companies to create jobs and to avoid social and political unrest.”

The bank said that developing countries, many of which had been growing rapidly in recent years, are being devastated by plunging exports, falling commodity prices, declining foreign investment and vanishing credit.

Read the rest:
http://www.nytimes.com/2009/03/
09/business/09bank.html?_r=1&hp

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Vietnam beomes more poor:
http://ph.news.yahoo.com/afp/20090308/tbs-
finance-economy-vietnam-poverty-a179076.html

Related:
Stimulus Too Late, Wasteful, Reckless; Toxic Assets and Banks Still Unaddressed

NYT Interviews Obama; No Economic Recovery This Year

 NYT: After March 6 Economic News, “2009 is Probably a Lost Cause”

Has Barack Obama’s presidency already failed?

February 10, 2009

In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much. If he fails to act decisively, the president risks being overwhelmed, like his predecessor. The costs to the US and the world of another failed presidency do not bear contemplating.

By Martin Wolf
FT

What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.

Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.

The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this “progeny of the troubled asset relief programme” fails, Mr Obama’s credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it.

All along two contrasting views have been held on what ails the financial system. The first is that this is essentially a panic. The second is that this is a problem of insolvency.

Under the first view, the prices of a defined set of “toxic assets” have been driven below their long-run value and in some cases have become impossible to sell. The solution, many suggest, is for governments to make a market, buy assets or insure banks against losses. This was the rationale for the original Tarp and the “super-SIV (special investment vehicle)” proposed by Henry (Hank) Paulson, the previous Treasury secretary, in 2007.

Read the rest:
http://www.ft.com/cms/s/0/9ebea1b8-f7
94-11dd-81f7-000077b07658.html?nclic
k_check=1

Global Economy Sparks Protests; Governments Fear Greater “Social Unrest”

January 31, 2009

Americans just started a new presidency but in China, Russia, France, Iceland and Britain, some leaders already fear that the worsening global economy will result in calls for new governments with new leaders and ideas.

Protesters in Rusia’s eastern most industrial hub and seaport, Vladivostok, called this week for new government leaders because of the economic down turn.

Opposition groups led by Communists protested the economic policies of the Russian government in the eastern city of Vladivostok on Saturday.
James Hill for The New York Times

The protest was peaceful; but more protests are planned.  And previous protests like this one in Russia ended in violence and the police making dozens of arrests. 

The crowd called for the replacement of Dmitri Medvedev and Vladimir Putin, Russia’s top leaders, for mismanaging the economy.

On Saturday protesters held demonstrations throughout Russia, offering largely subdued, but pointed criticism of the government’s economic policies as the country continues to sink deeper into an economic morass, the New York Times said.

In Britain, Prime Minister Gordon Brown is under fire.  He is currently taking heat for a jobs and rights protest that stems from his pledge that “British jobs need to be British.”
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Thousands of workers across Britain have walked off their jobs following protests over the use of foreigners at a Lincolnshire oil refinery.

On Saturday, the number of strikers multiplied, with hundreds of energy workers across the UK protesting — and with lines of police around them.

And millions of Chinese have gone home for the Spring Festival or New Year and told not to return to their jobs.  China is so worried about domestic unrest that it has started its largest anti-democracy crackdown ever: specifically targeting the media and Internet.

“People have this psychology of crisis,” said Victor Yuan, chairman of Beijing-based consultant Horizon Research Consultancy Group, which does polling for the private sector and the government.

Horizon’s latest survey showed consumer confidence at its lowest since the outbreak of severe acute respiratory syndrome, or SARS, in 2003.

“The real, real winter for the Chinese economy hasn’t come yet,” said Chen Jian, chairman of Hangzhou Hengwei Investment Co., which has business in restaurants, real estate and trading.

In France, President Sarkozy can’t get away from the jeers and shouts of protestors when he makes public appearances.  He has taken to firing public officials that  don’t keep protesters far away from the President’s ears.

A crowd of 300,000 protested in Paris this week in the largest protest in 10 years, some said.

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Paris this week

Countries such as France and Greece have been hit by riots and strikes as militant unions demand protectionist measures to keep out foreign rivals.

And both Germany and China expressed fears of American protectionism this week.  Angela Merkel of German told audiences at the economic conference in Davos that the U.S. auto bailout hurts the global economy and spells a new era of protectionism from the U.S.  China’s Hu Juntao told President Barack Obama that the “buy American” provision in the stimulus was rank protectionism and needed to be scuttled.

The economy has made the entire world more tense.

The French Finance Minister Christine Lagarde said, “We’re facing two major risks: one is social unrest and the second is protectionism.”

“We need to restore confidence in the systems and confidence at large,” she added.

Christine Lagarde
Lagarde

Former U.N. Secretary-General Kofi Annan says the world body needs to be reorganized in view of the economic crisis.

“The current architecture of managing global affairs is broken and needs to be fixed,” Annan said.

The worldwide economic recession has exposed a “crisis of global governance” that can only be addressed by the radical reform of the United Nations, said Mr. Annan.

And Britain’s Prime Minister Gordon Brown has called on world leaders to set about reforming international financial institutions to prevent a repeat of the circumstances that led to the current financial crisis.

“We’ve got to be far bolder and far more imaginative,” Brown said. “We want to create a global society. But we need to have global institutions that work and the problem is the institutions we built 60 years ago are out of date.”

By John E. Carey
Wakefield Chapel, Virginia

The BBC on Russian Protests:
http://news.bbc.co.uk/2/hi/europe/7862370.stm

Related:
Britain:
 Oil refinery strikes: Protests over foreign workers

France’s Sarkozy Getting Testy Amid Public Disapporval, Fires Public Servants

China, Germany Both Pressure Obama on Protectionism

Kofi Annan: Global Economy Tells Us, New forms of government needed

From CNN:
http://www.cnn.com/2009/BUSINESS/0
1/31/davos.wef.brown/index.html

http://www.cnn.com/2009/BUSINESS/0
1/30/britain.refinery.strikes/index.html

Paris:
http://www.belfasttelegraph.co.uk/news/
world-news/300000-protest-in-paris-14
162666.html?r=RSS