Friday, July 31, 2009

Rich Nations FAll Short on Bank Recovery Spending

Bob Davis for WSJ

Wealthy industrialized nations have provided less than half of the support they pledged to prop up their financial sectors, according to new data from the International Monetary Fund.

The so-called advanced economies of the Group of 20 have made capital injections of $425 billion in banks and other financial institutions, 42.3% of the amount announced, the IMF said. The countries' treasuries have also spent $333 billion to purchase assets and make loans to financial institutions -- just 18.4% of the amount announced over the past year or so as they sought to address the effects of the global financial crisis.

The IMF said the relatively limited spending suggested the financial crisis hasn't turned out to be as dire as once anticipated. "This outcome appears to reflect a variety of factors including the precautionary nature of initial announcements, indications of increasing stability and improved bank liquidity," said an IMF report.

The IMF warned that the rate of spending could reflect "lags in implementation." If that were to occur, debt levels would rise even more steeply than they have thus far. The G-20 includes industrialized and large developing nations. Among the industrialized nations are Canada, Australia, France, Italy, Germany, Japan, Britain and the U.S.

The new data came as part of a report warning again that debt levels in industrialized nations are rapidly increasing and that governments need to make clear how they will ultimately reduce the debt to more-sustainable levels. Otherwise, the IMF warned, interest rates could rise, undermining the effect of government stimulus spending and weakening an anticipated recovery.

By 2014, debt levels in industrialized G-20 nations are expected to climb to about 119.7% of gross domestic product from 78.8% in 2007, the IMF said. That 40.9-percentage point increase, the steepest since World War II, is the result of stimulus spending aimed at fighting the recession, and increasing payouts for pensions and health care for aging populations. The IMF generally views a 65% debt level as more appropriate for industrialized nations.

The IMF warned that it was too early for nations to start eliminating stimulus spending, and that a new round may be required in 2010.

It urged nations to lay out specific steps to show how they will handle debt in the longer term, to avoid spooking markets. It cited deficit-reduction commitments announced by Germany, Japan and the U.S., but said they weren't sufficient.

"The risk is that if the public starts to worry about medium-term sustainability and an inevitable rise in interest rates, that that will undercut the effectiveness of the stimulus," an IMF official said. "So it's critical that countries now begin to develop and enunciate medium-term and longer-term plans for dealing with the rise in debt."

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Thursday, July 30, 2009

APEC to Fight Protectionism Through Concrete Plans

Asia-Pacific Economic Cooperation (APEC) economies will take concrete measures to fight protectionism, provide fresh momentum to the Doha Round talks and enhance regional economic integration, trade ministers from the region agreed here on Wednesday.

Trade ministers from 21 APEC economies have gathered here for the two-day Ministers Responsible for Trade Meeting to discuss policy responses to the economic crisis as well as to prepare for recovery in the longer-term.

During the meeting, which kicked off on Tuesday, the trade ministers said that sustaining trade and investment flows remains critical to the future prosperity of the region.

According to WTO's annual world trade report launched on the sidelines of the meeting, the world merchandise trade volume is expected to decline by 10 percent in 2009.

The trade ministers noted that while pressures for protectionism were greater during these difficult times, the political resolve to resist them must be even stronger.

China's Minister of Commerce Chen Deming stressed that China will continue its mutually-beneficial opening policy and actively support the agreement reached by G20 summit leaders to fight against protectionism. He called on APEC economies to make continuous efforts to enhance free trade and trade facilitation.

In order to restore trade and spur economic recovery, APEC trade ministers said that they will take concrete measures to combat protectionism.

They agreed to extend till end of 2010 the commitment made in Lima last year by APEC leaders to refrain from raising new barriers to trade and investment in the region, adding that they stand ready to extend the commitment further if necessary.

They shared the view that the main threats to a revival of trade flows include rising protectionist pressures, and continued delay in concluding the Doha Round.

"Concluding the Doha Round by 2010 will be the most effective way to resist protectionism and strengthen the multilateral trading system," they said in a statement after the meeting.

They will accelerate efforts to conclude modalities in Agriculture and NAMA, and utilize all possible avenues of engagement to encourage greater transparency and understanding of what is on the table to fill the remaining gaps in the negotiations as soon as possible.

They also discussed ways to strengthen the region's competitiveness by accelerating integration efforts, which will position the Asia-Pacific for a strong and sustained recovery.

In achieving this, the minister agreed to accelerate trade at the border with simpler customs documentation procedures, to reduce regulatory impediments behind the border, and to improve connectivity across the border by identifying the checkpoints in trade logistics and reviewing logistics policies.

The ministers also touched on the issues of climate change, anti-terrorism, food security and dealing with global pandemic, pledging to ensure that the APEC economies' growth strategies are sustainable.

The Ministers Responsible for Trade Meeting is the first APEC Ministerial Meeting of APEC 2009. Singapore is playing host to the APEC meetings held from February to November 2009. They will culminate in the APEC Economic Leaders' Meeting, where leaders of APEC's 21 member economies will meet in Singapore from Nov. 14 to 15 this year.

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Sunday, July 12, 2009

Italy's minimalist G8 summit

7 July

After the day of actions in many italian universities, bloomed as a reaction to the arrests of 21 italian activists for protests against university G8, yesterday the repressive face of italian government hit again those who are active against the responsibles of this new global crisis.

Around 10 am a demonstration, following the "V-Strategy" call, inside the "Welcome Days to G8s", started from the occupied building of university Roma3 and blocked the streets of Testaccio neighbourhood trying to reach subway station Piramide to join the other demonstration starting from La Sapienza. Police hardly attacked activists and started a 1 hour man-hunt through the neighbourhood with 34 people caught, 8 of
whom got arrested and are now in jail waiting for confirmation. many of the others are still halted and will undergo on trial, assisted by a legal team. There's no date for hearing yet. among the arrested there are many of our activists and people who had arrived from abroad to demostrate against G8.

Repression has caught media attention, moving it from the G8 of the Crisis, where the weakness of Berlusconi and the government emerges: they try to cover it repriming dissent, particularly against people active daily on social struggles.

Our mind goes to the comrades and to the people deprived of personal freedom. We are looking forward to have them back by our side.


From: BBC

Switching the venue of this year's G8 summit to an active earthquake zone sounded like a hostage to fortune.

Why invite the world's most powerful leaders to perch on the same precarious spot of the Earth's crust which in April killed 300 people and left 60,000 others homeless?

Just think what global chaos would ensue if - mid session - the ground opened up and swallowed them all.

When the town of L'Aquila was rocked by a new - though less powerful - set of tremors last Friday, the summit's prospects began to look decidedly dicey.

In the town centre many buildings were already cracked and cordoned off. On every corner caved-in roofs and ripped-out walls hinted at the prospect of new collapses to come. It felt as though at any minute it could all start to shake again.

I had visions of us journalists stuck, incommunicado and cowering under tables in the so-called media village. Reporters turned refugees, caught in a new disaster zone, while summit leaders were airlifted out to Rome.

But in the event, nothing happened. Not a tremble.

To my surprise earthquake survivors living in local tent camps thought the summit an excellent idea.

What better way to draw attention to the fact their lives had been reduced to rubble, than to pull in the likes of George Clooney and other celebrity hangers-on who tend to pitch up at major summits.

At one formal function, the eyes of a weary Barack Obama glazed over and his shoulders slumped. Not just us hacks, it seems, were getting by on hard mattresses with very little sleep

"My home won't get repaired for another three or four years. The entire tower block fell on top of it. Any publicity is welcome," said one woman, Anna, sitting with her neighbours under a sun parasol outside her blue canvas home.

The pathway between the tents was lined with drying washing and children's bicycles. A hand-painted notice, decorated in big childish crayon, announced it was Butterfly Row.

There was also Cat Alley, and Moon Street, all clearly marked. An air of semi-permanence had set in.

Roughing it?

In keeping with the earthquake tragedy, the summit itself had an air of austerity. So different from the usual lavish attempts to promote a country at its best.

President Putin revamped an entire 18th Century palace in St Petersburg. Tony Blair took over one of Scotland's grandest hotels.

But Italy's Silvio Berlusconi commandeered the local barracks of the Finance Police and required world leaders and their delegations to sleep in dormitories on site.

"How is the accommodation for VIPs?" I asked one UN official.

He sighed and replied wearily: "It's not quite what we're used to."

He was lucky. Some of the journalists unable to find places to stay locally were reduced to begging space among the tents of the earthquake refugees. Our BBC team drove back nightly over the mountains to a village two hours away.

Also minimalist and unpredictable were the communications facilities. It was almost impossible to find out schedules or contact numbers for delegations. The only truly reliable information was the time of the prime minister's late afternoon press conference.

That you could not avoid. On large screens, beaming down at you would be the unmistakable jovial grin of Mr Berlusconi.

And if you did miss it, never mind. It was played over and over again.

Press conferences by those with critical views, like the so-called G5 group of emerging countries (India, Brazil, China, South Africa and Mexico)seemed to occur with almost no prior warning or publicity.

It was almost as though these Asian and Latin American giants were G8 dissidents, deliberately kept to the fringe.

The same world

One morning we arrived at the media centre to find the broadband connection we were using had been cut off. Local Italian technicians claimed it was on the orders of the Italian authorities.

A few hours later it was restored. But in situations like this, you soon start to get paranoid. Was this an attempt to control our output to what could be monitored?

Probably not, but - instead of the usual eagerness for media coverage - it felt distinctly odd to be prevented from telling the world what was going on.

In some ways this new "bare bones" G8 style suits the mood of the moment.

For a change the journalists were not kept 50 miles away from the leaders, or worse - as has happened - sequestered on a separate island.

The summiteers were a short walk away. It felt as though we could keep them under our gaze.

At one formal function, the eyes of a weary Barack Obama glazed over and his shoulders slumped. Not just us hacks, it seems, were getting by on hard mattresses with very little sleep.

This year, in L'Aquila, we were all part of the same world.

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