Archive for the ‘IMF’ Category

G20 Summit & the protests in London streets

April 1, 2009

The Group of Twenty (G20)

“The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy. The inaugural meeting of the G-20 took place in Berlin, on December 15-16, 1999, hosted by German and Canadian finance ministers.

The G-20 is an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. By contributing to the strengthening of the international financial architecture and providing opportunities for dialogue on national policies, international co-operation, and international financial institutions, the G-20 helps to support growth and development across the globe.

The G-20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America, and also the European Union who is represented by the rotating Council presidency and the European Central Bank.”—-Source: http://www.g20.org/

Meeting in London, UK

The G20 leaders of major economies worldwide are meeting in London to thresh out measures to solve the conomic crisis. The one day summit on April 2, 2009 will be attended by countries from where ¾ of the earth’s people live and generate 80% of the world’s trade. They will focus on reforming rules of international banking, investments and trade, funding to stimulate the economy, and oversight over the global markets—to stave off the effects of the worsening economy.

France’s Pres. Nicolas Sarkozy earlier threatened to leave the conference if leaders can’t come up with a strong international regulation of the financial markets which is opposed by Britain and the United States. China’s Central Bank governor Zhou Xiaochuan and Finance Minister Xie Xuren called for reforming the international financial system, with Zhou adding a proposal to replace the dollar as the global currency. IMF Dominique H. Strauss and Brazilian Pres. Luis Inacio Lula da Silva think having a global currency other than the US dollar is a reasonable idea.

Earlier, da Silva decried that poor countries had to suffer because of the mistakes of rich nations and the crisis is caused by “white people with blue eyes” who appeared all-knowing before the economic downturn.

Attending the summit with big promise because of his popularity, US President Barack Obama, comes with a huge baggage of spending — an over-bloated domestic budget that puts taxpayers money in line and the finances of future generation. A growing number of Americans are pessimistic that Obama will succeed in countering the economic meltdown that treathens to bankrupt America. There is disapproval to his aggressive government regulation and overspending.

Many G20 nations question how America, bogged by astronomical budget deficits and debts and blamed for the bad economy, is using its dollar to bring health to the economy. With differing suggestions to solve the crisis, leader attendees have to work beyond mere cooperation.

The heads of state from the top industrial nations are met with opposition from about 1,200 anti-capitalists, anarchists, and environmental groups in the British capital. People frustrated with the economic slump battle truncheon-wielding policemen with knives, stones, and eggs. At the eve of the meeting, an angry protester held a placard which says, “It’s our money that they have stolen.”

There is a mix of high expectation and pessimism for this summit. Confidence in the financial system is low. Poor and developing countries, some on the edge of collapse, are alarmed that a protracted money crisis can push economies to fall and cause instability and chaos.

Setting aside $250 billion as a rescue fund to bail out fragile economies has been proposed. “I’m going to ask the G20 summit to support a global expansion of trade finance of at least $100 billion to help revive trade in all parts of the world,” said British Prime Minister Gordon Brown. (Photo Credit: Ben Heine x 2) =0=

=========================================================

Fearless economic forecasts

March 10, 2009

Dominique Strauss-Khan

In a warning delivered by IMF Managing Dir. Dominique Strauss-Khan during a conference of African finance ministers and central bank governors, the International Monetary fund (IMF) speaks of the deepening global financial crisis and the possibility that the world’s economic growth will be zero.

The financial meltdown can cause massive suffering, social displacement, and chaos in vulnerable countries.

The effects of the downturn may not be fast in reaching Africa, but Srausse-Khan said, “continued deleveraging by the world’s financial institutions, combined with a collapse in consumer and business confidence, is depressing domestic demand across the world.”—-Philstar (03/10/09)

Warren Buffet

On the other hand, American billionaire Warren Buffet who has the common sense of living “below his means” believes America will bounce back even though “it has fallen off a cliff.” The “Oracle of Omaha” who predicted the worst case scenario in the last 6 months, watches a nation swept with a housing slump, high unemployment, and inflation. He sees lack of confidence, confusion, and fear are defining consumer behavior at this time.—The Washington Times/ AP (03/09/09, Funk J)

Harry S. Dent

Similar gloomy predictions have been made by American economist Harry S. Dent in his book “The Great Depression Ahead : How to Prosper in the Crash Following the Greatest Boom in History.” The book is a good read. He speaks of this year as a bad season—ushering economic turmoil that none of the current generation has seen.

Nouriel Roubini

Nouriel Roubini, professor of NYU’s Stern School of Busicness believes the US recession could last up to 36 months. With no hope of ending the recession this year, “Dr. Doom” said,, “Growth is going to be close to zero and unemployment rate well above 10 percent into next year.”—-CNBC (03/09/09, Wells, J)

Pres. Barack Obama

But President Barack Obama offers bright economic forecasts with his proposed $3.55 trillion budget. He predicts that the economy will shrink by only 1.2%, and will recover in 2010 with a growth of 3.2%. However, non-partisan analysts believe this is overly-optimistic.—McClatchy Newspapers (02/26/09, Hall, K)

The public is less upbeat than Obama, but people are willing to give him the benefit of the doubt. Midway in the 100-day honeymoon period after assuming presidency, he gets a 67% approval rating, a very good grade at this time when Americans are fearful and disconsolate over the financial ruin they are dealing.(Photo Credit: Atsibatsi)=0=

============================================================

Iceland’s government fails as the economic crisis worsens

January 26, 2009

After attempts to reverse Iceland’s financial crisis since October last year, Reykjavik’s government has collapsed amid street protests from citizens who set fires and hold noise barrages with pots and saucepans. Having lost trust in government, angry Icelanders protest a mismanaged economy, worsening joblessness, and rising cost of goods.

Prime Minister Geir Haarde couldn’t quell the public’s disappointment after Iceland’s currency lost its value and banks failed that mirrored the financial troubles in Wall Street and many countries in Europe.

“The IMF announced in November it would pump about $827 million into the Icelandic economy immediately, with another $1.3 billion coming in eight installments. Iceland’s Nordic neighbors — the governments of Finland, Norway, Denmark and Sweden — announced they would lend Iceland another $2.5 billion.”—CNN.com/europe (01/25/09, Nyeberg, P)

Calling for an earlier election in May, Haarde, who had been afflicted with cancer, resigned and announced he wouldn’t run for another election. Fearing national bankruptcy, he dissolved the coalition government he headed— formed by the Social Democrat party and Independence party.

With the government’s future uncertain, the island-country’s figurehead President Olafur Ragnar Grimsson said he would consult with Iceland’s four main political parties before asking that an interim government is formed.

Similar economic and political troubles are happening in many parts of the world as well. Hard hit are the economies of the United States (USA) and Great Britain which have embarked on their respective financial remedies. The outlook of the crisis at this time is grim even if economic bail-out packages at the expense of taxpayers have been laid out. Nobody seems to know how and when the financial mess will end. Ordinary citizens are left confused and fearful of what next will happen. (Photo Credit: Nele en Jan; Jon Palma)=0=

===========================================================