31/03/2009

The Washington Times reports that President Obama's 'first major trip abroad [to the UK] is a highly anticipated event that will test whether the new president canleverage his stratospheric popularity to the nation's competitive advantage'.

The Washington Post reports that at the G20 summit, 'the big winner will be the developing world, with the United States, Europe and Japan offering China, India, Brazil and other emerging nations unprecedented new influence in global financial decisions'. Several 'major developing countries -- most notably China -- are also in late-stage negotiations to win newauthority to shape decisions at the Washington-based International Monetary Fund, an organization that developing nations have long complained dictate to them rather than hear them out'.

30/03/2009

In an interview with the Financial Times Treasury Secretary Tim Geithner said the US and Europe ‘are united in their desire for far-reaching regulatory reform to strengthen the global financial system’. Geithner said the US has ‘a huge interest in acting quickly and comprehensively to use this opportunity to develop an international consensus on how to make the system more robust and stable’. He said all G20 nations agreed on the need for a strong regulatory response to the crisis and on the broad shape it should take.

The Wall Street Journal reports Japanese economy and finance minister Kaoru Yosano as saying that Japan was prepared to implement economic-stimulus steps that will 'far exceed' the 2% of GDP, clearing a goal set by the International Monetary Fund. He told the WSJ that without fiscal-stimulus spending and other steps by the government, Japan's economy could ‘deteriorate sharply down the path predicted by the IMF'.

In an interview with the Financial Times, President Obama reached out to allies and called for global unity toconfront the current financial crisis. Obama emphasized the need for G20 leaders to be 'singing from the same song sheet'.  'The most important task for all of us is to deliver a strong message of unity in the face of crisis,' he says. On the need for a coordinated stimulus, President Obama says: 'Each country has its own constraints, its own political rhythms and what we want to make sure is that everybody is doing something ... and that we are prepared to step into the breach should current efforts prove inadequate.'

USA Today calls Obama's trip 'one of the most anticipated presidential trips since John Kennedy went to Berlin in 1963,' and adds that while the President 'is ready to take on the world economy ... whether the world is ready for his remedy remains in doubt.'

German Chancellor Angela Merkel, interviewed in the New York Times, says she is not about to give ground on new stimulus spending, stressing the need to maintain fiscal discipline even as she professes to want to work closely with the new American president. The German Chancellor said she expected President Obama 'to keep his word to gradually rein in imbalances that would cause American indebtedness to grow sharply as a result of his domestic stimulus plans,' the newspapersays.

Another New York Times story reports that with world leaders gathering this week in London in response to the gravest global economic downturn since World War II, the Obama Administration has made 'fortifying the IMF one of its primary goals for the meeting of the Group of 20.' The newspaper says that China, India and other rising powers believe 'the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.'

27/03/2009

The Wall Street Journal reports that a build-up of protectionist measures could 'slowly strangle' international trade and undercut the effectiveness ofnational stimulus plans, according to a report the World Trade Organization sent to its 153 members. The WTO added, however, that the world will be spared 'an imminent descent into high-intensity protectionism' such as occurred during the Great Depression … thanks to existing trade treaties that cap tariffs on imports.

On the front page of its business section, the Washington Post notes the WTO's report adding that 'addressing protectionism ranks high on the agenda of the G20 summit next week in London'

26/03/2009

In an editorial column, the New York Times says every world leader knows that beggar-thy-neighbour strategies are likely to make the current global emergency worse. 'Still, protectionism thrives in economic crises as people seek scapegoats abroad for their troubles and demand protection for domestic jobs.'

25/03/2009

In a widely syndicated OpEd entitled 'Making the World Work Again', President Barack Obama says the London Summit provides a forum for a new kind of global economic cooperation. 'The United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose … Now is the time to work together to restore the sustained growth that can only come from open and stable markets that harness innovation, support entrepreneurship and advance opportunity,' he says.

24/03/2009

In an op-ed in the Chicago Tribune and the Los Angeles Times, President Barack Obama says G20 leaders have a 'responsibility to take bold, comprehensive and coordinated action that not only jump-starts recovery, but launches a new era of economic engagement to prevent a crisis like this from ever happening again.'

The President notes that the USand other countries have passed stimulus measures, and 'these efforts should be sustained until demand is restored. We should embrace a collective commitment to encourage open trade and investment, while resisting the protectionism that would deepen this crisis.'

President Obama calls for restoring 'the credit that businesses and consumers depend upon' by 'working aggressively to stabilize our financial system,' and to 'extend a hand to countries and people who face the greatest risk.'

AP reports that President Barack Obama and British Prime Minister Gordon Brown spoke by phone on Monday 'and are working together ahead of next month's financial summit in London.' The White House says Obama and Brown 'spoke for about 25 minutes Monday about the upcoming G20 summit,' which it says was 'a productive conversation and that the two will try to schedule another call before the summit.'

The Wall Street Journal reports that Australian Prime Minister Kevin Rudd on Monday had 'encouraged government stimulus spending and warned protectionism could hamper a return to global growth.' Speaking at the Journal's Future of Finance Initiative, Mr Rudd said: 'Governments temporarily need to stepinto the breach in terms of providing stimulus for growth and jobs in their economies.' He also spoke in support of the International Monetary Fund's recommendation for major countries to enact stimulus packages equal to about 2 per cent of global domestic product. Restoring normal credit flows, added Rudd, was the core challenge facing the global economy, commending a plan for removing toxic assets from bank balance sheets unveiled on Monday by Treasury Secretary Timothy Geithner.

20/03/2009

EU leaders say 'they are willing to provide $75bn to increase the International Monetary Fund's war chest, provided the US and China also pledge money,' reports the Wall Street Journal. But 'throughout Europe, the strain is reaching the real economy' and 'Germany and other major European countries are under pressure from the US to do more to support the sagging world economy through tax cuts or higher government spending'.

The Washington Post highlights a report from an advisory group to the Group of 20 industrialized and developing countries that is recommending broad reforms of the global financial system, including 'tighter regulations of hedge funds and rating agencies as well as higher capital requirements for banks'.

The UK and Germany appear ready to show 'how rules throughout Europe are likely to change', according to the Wall Street Journal. The UK and Germany are considering 'a much heavier regulatory burden on banks and other institutions'.

12/03/2009

NBC Nightly News reported President Barack Obama and the Treasury Secretary Timothy Geithner yesterday both called on European leaders and world leaders to do more to stimulate the economy. 'But some European leaders have said 'no thanks'. They feel they've done enough, they don't want to pile up a huge amount of debt. So it's a potential point of tension', it said.

Calling their statements a 'challenge' to other nations, the Wall Street Journal reports that the move 'ups the stakes' for the President on his first foray on the international stage at next month's summit. But 'parts of the new US approach could prove controversial, especially the push to expand the powers and scope of the IMF,' the Journal says, noting that increased funding would require approval from 'a balky Congress'.
 
Meanwhile, in his Wall Street Journal Capital column, David Wessel examines the question of what the goals should be for new regulation ofthe financial system to prevent future crises. The government 'must draw a circle to identify which firms or kinds of firms will be saved. No more sleep-deprived government officials making case-by-case decisions on Sunday nights.' Second, there was an 'emerging consensus that every country needs an overarching guardian of financial stability,' but 'the danger is that all we do is identify an agency to take the blame when the next crisis arrives.' Third, some rules' encouraged and sometimes forced banks to do things that are hurting the rest of us now.' He gave the example of a bank that wanted to set aside extra reserves in good times which would be blocked by accountants who deemed that to be improper earnings smoothing.

09/03/2009

The United States has sent a strong signal that it is fully engaged with the agenda of the London Summit meeting on 2 April with its call for a coordinated effort to boost global economic demand and pull the world out of recession. In an interview with the Financial Times, Larry Summers, chief economic adviser to US President Barack Obama, calls on all nations to increase spending.

09/03/2009

The US will press world leaders to boost emergency government spending to lift the global economy, risking a rift with European nations moreconcerned with revamping financial regulation, reports the Wall Street Journal. In President Barack Obama's first foray into economic diplomacy, Washington will urge the shift at a summit next month in London, USofficials say, as markets look for a unified plan of action from the world's most economically powerful nations.

Another Wall Street Journal story reports that Chinese Foreign Minister Yang Jiechi has said the US and China are 'in the same boat' economically and had to pull together to fix the world economy. Yang also 'urged other leading industrial countries in the Group of 20, which will meet next month in London, to make progress in solving the global economic crisis, in remarks to the media Saturday during China's annual legislative session'.

05/03/2009

Gordon Brown's speech to a joint meeting of Congress received coverage in most major US newspapers and network news programmes. Meanwhile, the New York Times said the globalised economy had not spared anyone during the global economic crisis: 'Helping the developing world is within reach, but it will require capital and concessions from rich countries'.  One way this could be done was for the US and Europe to 'drop their resistance to a vast new issue of special drawing rights - which like newly printed dollars by the Federal Reserve act as the International Monetary Fund’s own currency'.  They must also 'give more voting power to up-and-coming players' in the World Bank, such as China.

04/03/2009

The New York Times said the idea of global financial cooperation was one that both leaders find appealing, but once the specifics began to be put on the table, many constituencies are 'likely to balk at rules set by foreigners'. It quoted David Rothkopf, who worked in the Commerce Department under President Bill Clinton, saying: 'It will be easy to get the G20 into a room to ratify the idea that the world is in trouble, and that they need to cooperate. Getting them to actually sign on to a new international architecture and to get out their cheque book to give billions more to the World Bank and the IMF and to set up common regulatory systems will be very difficult.'

The Washington Post reports that Barack Obama and Gordon Brown 'reiterated their determination to work together to draft regulations to govern the world of modern global finance and agreed that coordinated international action is needed to stem the deepening economic downturn'.

03/03/2009

The Washington Times reports that 'Obama has left foreign policy largely to surrogates sincehe took office six weeks ago [but] may begin to pivot when he hosts British Prime Minister Gordon Brown at the White House to discuss the Group of 20 summit in London scheduled in one month'. 'The G20, along with the NATO summit in the Franco-German town of Strasbourg-Kehl days later, will be Mr Obama's first major foray into international matters.'

In his Wall Street Journal column,Gerald Seib says: 'Many of America's friends, particularly in Europe,have long used their disagreements with former President George W. Bush as an excuse to do less than they could to help the US.' The ObamaAdministration's 'message to the allies is going to be that they need to do more to help in crucial areas now that they can no longer use Mr.Bush as a reason to resist. The administration is seeking what officials refer to as a 'grand bargain' with allies'.