By Lucy Rodgers
BBC News
As the global economic downturn gathers pace, police in the UK say protesters are planning in an "unprecedented" way for London's G20 summit next week. But who are those taking to the streets and what do they want?
The coming together of the world's biggest economic powers has always attracted vocal and sometimes violent demonstrations.
But this year there are fears anger over the recession could make next week's G20 meeting of the world's most powerful countries the focus for mass protest on a scale not seen for some time.
The Metropolitan Police warned last week anarchists and environmentalists were planning in an "unprecedented" way ahead of the summit, and that groups active in the late 1990s were re-emerging and forming new alliances.
And Foreign Office Minister Lord Malloch-Brown has said anger over the financial crisis will mean people are more likely to "sympathise" with the hard-line G20 protesters.
Those inside the more radical groups themselves have claimed a "groundswell" in support, and warn the downturn is bound to boost numbers on the streets before and during the summit on 2 April.
A number of coalitions - both mainstream and militant - have formed to co-ordinate action ahead of G20. They will be campaigning on a vast range of subjects, from poverty, inequality and jobs to war, climate change and capitalism.
Poverty and inequality
So, who will be waving what banners next week?
In the first scheduled protest on Saturday, thousands are expected to join the Put People First march through London, when more than 100 charities and unions will call for democratic governance of the world economy, measures to tackle climate change and an end to global poverty and inequality.
The alliance brings together household names, such as development charities ActionAid, Oxfam and Plan, green campaigners Geenpeace, Friends of the Earth and Stop Climate Chaos, and jobs and homelessness groups like the TUC, the Salvation Army and Shelter.
G20 LONDON SUMMIT
World leaders will meet next week in London to discuss measures to tackle the downturn. See to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.
Organisers of the march - which police say is not expected to be "anything other than lawful" - argue protesting this year is particularly important because the downturn is hitting the poorest hard and is offering governments an opportunity for change not seen for decades.
"Many people think things are possible now who didn't think so six months ago," says Dr Claire Melamed, head of policy at ActionAid. "And that's not just among NGOs [non-governmental organisations] but also in the government."
Plan's UK chief executive, Marie Staunton, agrees that London's G20 comes at a "pivotal time" and says it is crucial richer countries take advantage of the recession to make changes to tackle poverty and climate change.
"There are some very simple things that could be done if there is the political will to do them," she says.
'Spectacular action'
In addition, veteran campaigners CND have joined forces with Stop the War Coalition, the Palestine Solidarity Campaign and the British Muslim Initiative.
They will stage a demonstration on 1 April calling for the abolishment of nuclear weapons and the removal of foreign troops from Iraq and Afghanistan, as well as action over the Middle East.
But those groups of most concern to the authorities are the band of activists planning direct action, including Camp for Climate Change Action and those acting under the umbrella name G20 Meltdown.
“ We are at an absolutely pivotal point ”
Professor George McKay University of Salford
Climate Camp - the group behind direct action at Heathrow airport and power stations in North Yorkshire and Kent - has been using text messages, emails and social networking sites to plan what it calls a day of "spectacular action", which will see supporters "set up camp" in the City.
It has seen support grow, with more than 1,000 people already signed up to the group's Facebook site ahead of the 1 April protest against the policy of carbon trading.
"I don't think that there has been such a clear sense of the need for change in the general public for quite some time," said one Climate Camp member.
"That's bound to reflect in greater levels of unrest on the streets."
'Angry energy'
Meanwhile, G20 Meltdown is appealing to those who have lost their "homes, jobs, savings or pensions" to join what they call a "Financial Fools' Day" targeting the banking elite on 1 April.
Organisers say they have seen a "groundswell" in support since the start of the recession and their Facebook site has attracted more than 1,000 members.
"There really is a shift because people feel no-one is listening - the government is in some world of its own," said one of the organisers, Camilla Power.
"Our aim is to challenge the legitimacy of the G20 summit."
But while G20 Meltdown insists its intentions are peaceful, the authorities fear other protest groups are preparing more disruptive tactics - such as attempting to enter banks and financial institutions - to fulfil their aim of bringing the City of London to a halt.
Protest expert Professor George McKay, of the University of Salford, says the economic crisis has served to boost support for such street protests this year because it has made criticising capitalism acceptable again - something that had all but disappeared in the 1980s and 90s.
"Here we are at an absolutely pivotal point," he says. "That, I think, will add to a new level of angry energy."
Cdr Bob Broadhurst, in charge of policing the G20, has said a £7.2m police operation is being launched, but has admitted security and protest are not "always happy bedfellows".
Only time will tell whether demonstrators demanding change and the those defending the rule of law come into conflict once again.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/uk_news/7946068.stm
Published: 2009/03/25 01:25:20 GMT
Wednesday, March 25, 2009
Czech PM attacks Obama spending
The Czech prime minister has condemned US President Barack Obama's economic recovery plans as "a way to hell".
Mirek Topolanek was speaking in the European Parliament, in his capacity as current holder of the EU presidency.
Hours before his remarks, President Obama appealed for all countries to bear the burden of spending to stimulate the world economy.
Mr Topolanek said the biggest success of last week's EU summit was its refusal to copy the US example.
His intervention comes 10 days before the G20 summit meeting in London and coincides with a visit to New York by UK Prime Minister Gordon Brown, who has called for a "worldwide fiscal and monetary stimulus".
“ When the US president turns up for the EU summit in Prague, whose hand will he shake? ”
Europe editor Mark Mardell
Other European leaders, particularly French President Nicolas Sarkozy and German Chancellor Angela Merkel, want tougher financial regulation to be the priority of the G20.
Mr Topolanek, whose government collapsed last night in a Czech parliament vote of no-confidence, said the United States was not taking "the right path".
He attacked the US's growing budget deficit and the "Buy America" campaign, saying "all of these steps, these combinations and permanency is the way to hell".
"We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way," he said.
EU wary of deficits
BBC correspondent Jonny Dymond says his comments are not quite a full frontal assault on US economic strategy - but they come pretty close.
He says Mr Topolanek has again underlined that European leaders see no need for a further global economic stimulus to come out of the G20 summit.
Mr Topolanek has said he will step down as Czech prime minister, but the Czech Republic is set to complete its six-month EU presidency regardless.
At the end of their Brussels summit last week EU leaders insisted that the EU's existing stimulus measures - put at about 400bn euros ($543bn; £375bn) - had to be given time to kick in.
In the US, correspondents say, President Obama faces a tough fight to get support in Congress for his draft $3.6tn (£2.5tn) budget.
The package means an increased deficit, reckoned to be $1.4tn for next year. Mr Obama says his goal is to create jobs, revive the housing market and encourage a resumption of bank lending by providing more liquidity.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/7963359.stm
Published: 2009/03/25 12:52:01 GMT
Mirek Topolanek was speaking in the European Parliament, in his capacity as current holder of the EU presidency.
Hours before his remarks, President Obama appealed for all countries to bear the burden of spending to stimulate the world economy.
Mr Topolanek said the biggest success of last week's EU summit was its refusal to copy the US example.
His intervention comes 10 days before the G20 summit meeting in London and coincides with a visit to New York by UK Prime Minister Gordon Brown, who has called for a "worldwide fiscal and monetary stimulus".
“ When the US president turns up for the EU summit in Prague, whose hand will he shake? ”
Europe editor Mark Mardell
Other European leaders, particularly French President Nicolas Sarkozy and German Chancellor Angela Merkel, want tougher financial regulation to be the priority of the G20.
Mr Topolanek, whose government collapsed last night in a Czech parliament vote of no-confidence, said the United States was not taking "the right path".
He attacked the US's growing budget deficit and the "Buy America" campaign, saying "all of these steps, these combinations and permanency is the way to hell".
"We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way," he said.
EU wary of deficits
BBC correspondent Jonny Dymond says his comments are not quite a full frontal assault on US economic strategy - but they come pretty close.
He says Mr Topolanek has again underlined that European leaders see no need for a further global economic stimulus to come out of the G20 summit.
Mr Topolanek has said he will step down as Czech prime minister, but the Czech Republic is set to complete its six-month EU presidency regardless.
At the end of their Brussels summit last week EU leaders insisted that the EU's existing stimulus measures - put at about 400bn euros ($543bn; £375bn) - had to be given time to kick in.
In the US, correspondents say, President Obama faces a tough fight to get support in Congress for his draft $3.6tn (£2.5tn) budget.
The package means an increased deficit, reckoned to be $1.4tn for next year. Mr Obama says his goal is to create jobs, revive the housing market and encourage a resumption of bank lending by providing more liquidity.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/7963359.stm
Published: 2009/03/25 12:52:01 GMT
Tuesday, March 24, 2009
Trade Unions to G20: Half Measures Will Not Fix Broken Global Economy
Brussels, 23 March 2009 (ITUC OnLine): In a worldwide push for action by G20 governments to pull the global economy out of recession and chart a new course for job creation, financial regulation and global governance, trade unions across the world are today delivering a common set of demands to their national governments. The five-point union plan, which includes detailed policy proposals, sets out the actions needed to tackle the crisis and build a fairer and more sustainable world economy for the future. It calls for:
a coordinated international recovery and sustainable growth plan to create jobs and ensure public investment;
nationalisation of insolvent banks and new financial regulations;
action to combat the risk of wage deflation and reverse decades of increasing inequality;
far-reaching action on climate change;
a new international legal framework to regulate the global economy along with reform of the global financial and economic institutions (IMF, World Bank, OECD, WTO).
The “Global Unions G20 London Declaration” , developed by the ITUC and the Trade Union Advisory Committee (TUAC) at the OECD, sets out the steps which need to be taken by the G20 in cooperation with other governments. It is being presented by national trade union movements to their governments today, and will be formally submitted to the G20 Leaders’ Summit in London on 2 April. Trade unions from around the world will be joining their colleagues from the British TUC in a huge civil society mobilisation planned for London on 28 March, to press home the need for coordinated global action by governments.
“If the G20 governments in London are only able to agree on half-measures, they will have failed to meet their responsibilities. As the world’s largest economies, they have the responsibility and the possibility to replace the failed neo-liberalism of the past with a whole new direction for globalisation,” said ITUC General Secretary Guy Ryder.
Recovery and sustainable growth can be achieved, according to the Declaration, but only if the focus is on job creation and public investment, active labour market policies, extending social safety nets and special measures for developing and emerging economies. The trade unions also put forward an eight-point specific action plan for global financial regulation, with immediate action to nationalise insolvent banks.
“Weak or non-existent regulation of banking and financial activity turned the world economy into an anything-goes casino, plunging the world into deep recession and causing the loss of tens of millions of jobs. This needs to be fixed urgently. Another main pillar of recovery and reform, creating decent, sustainable jobs and boosting purchasing power, must also be given priority attention at the G20,” said John Evans, General Secretary of the TUAC.
The London Declaration points to the real risk of wage deflation, and highlights the fact that growing income inequality across the world has been a major contributor to the current recession, as workers’ purchasing power has been insufficient to help maintain demand for goods and services. Ensuring that all workers have the right to collective bargaining, and strengthening wage-setting institutions, will establish a decent floor in labour markets and feed economic stimulus through more household buying power. This is closely linked to the broader requirement for reform of the IMF, World Bank, WTO and OECD, with the inclusion of the International Labour Organisation at the centre of an effective and accountable system of global governance.
“Financial regulation is essential, but it is not enough. The new global governance must be based on a strong pillar of social rights, including crucially the ILO’s core labour standards. The real economy, decent work and poverty reduction can no longer be left at the fringe of global policy. The G20 should not limit its horizons by simply making marginal changes to a discredited system. It needs to lead a complete overhaul in the way the world economy is run. Those who think that we can return to business as usual are seriously mistaken,” said Ryder.
The union proposals also focus on the urgent need for impetus to tackle climate change, given the enormous environmental, social and economic costs of inaction. Already, governments should be using coordinated global fiscal response to the economic crisis to set the world on a “green economy” path. Creation of green jobs, and action to ensure “just transition” in communities and sectors affected by the move to environmentally-friendly production, are central to achieving the levels of greenhouse gas reduction needed, and will contribute to pulling the world out of recession.
“Governments have the levers available now to turn the world towards a green growth path. Failure to take this opportunity would be a tragedy for humankind, and for the future of the planet,” said Evans.
The ITUC represents 170 million workers in 312 affiliated national organisations from 157 countries. http://www.youtube.com/ITUCCSI
a coordinated international recovery and sustainable growth plan to create jobs and ensure public investment;
nationalisation of insolvent banks and new financial regulations;
action to combat the risk of wage deflation and reverse decades of increasing inequality;
far-reaching action on climate change;
a new international legal framework to regulate the global economy along with reform of the global financial and economic institutions (IMF, World Bank, OECD, WTO).
The “Global Unions G20 London Declaration” , developed by the ITUC and the Trade Union Advisory Committee (TUAC) at the OECD, sets out the steps which need to be taken by the G20 in cooperation with other governments. It is being presented by national trade union movements to their governments today, and will be formally submitted to the G20 Leaders’ Summit in London on 2 April. Trade unions from around the world will be joining their colleagues from the British TUC in a huge civil society mobilisation planned for London on 28 March, to press home the need for coordinated global action by governments.
“If the G20 governments in London are only able to agree on half-measures, they will have failed to meet their responsibilities. As the world’s largest economies, they have the responsibility and the possibility to replace the failed neo-liberalism of the past with a whole new direction for globalisation,” said ITUC General Secretary Guy Ryder.
Recovery and sustainable growth can be achieved, according to the Declaration, but only if the focus is on job creation and public investment, active labour market policies, extending social safety nets and special measures for developing and emerging economies. The trade unions also put forward an eight-point specific action plan for global financial regulation, with immediate action to nationalise insolvent banks.
“Weak or non-existent regulation of banking and financial activity turned the world economy into an anything-goes casino, plunging the world into deep recession and causing the loss of tens of millions of jobs. This needs to be fixed urgently. Another main pillar of recovery and reform, creating decent, sustainable jobs and boosting purchasing power, must also be given priority attention at the G20,” said John Evans, General Secretary of the TUAC.
The London Declaration points to the real risk of wage deflation, and highlights the fact that growing income inequality across the world has been a major contributor to the current recession, as workers’ purchasing power has been insufficient to help maintain demand for goods and services. Ensuring that all workers have the right to collective bargaining, and strengthening wage-setting institutions, will establish a decent floor in labour markets and feed economic stimulus through more household buying power. This is closely linked to the broader requirement for reform of the IMF, World Bank, WTO and OECD, with the inclusion of the International Labour Organisation at the centre of an effective and accountable system of global governance.
“Financial regulation is essential, but it is not enough. The new global governance must be based on a strong pillar of social rights, including crucially the ILO’s core labour standards. The real economy, decent work and poverty reduction can no longer be left at the fringe of global policy. The G20 should not limit its horizons by simply making marginal changes to a discredited system. It needs to lead a complete overhaul in the way the world economy is run. Those who think that we can return to business as usual are seriously mistaken,” said Ryder.
The union proposals also focus on the urgent need for impetus to tackle climate change, given the enormous environmental, social and economic costs of inaction. Already, governments should be using coordinated global fiscal response to the economic crisis to set the world on a “green economy” path. Creation of green jobs, and action to ensure “just transition” in communities and sectors affected by the move to environmentally-friendly production, are central to achieving the levels of greenhouse gas reduction needed, and will contribute to pulling the world out of recession.
“Governments have the levers available now to turn the world towards a green growth path. Failure to take this opportunity would be a tragedy for humankind, and for the future of the planet,” said Evans.
The ITUC represents 170 million workers in 312 affiliated national organisations from 157 countries. http://www.youtube.com/ITUCCSI
Monday, March 23, 2009
Dow jumps as Obama admin. moves on bad bank assets
By TOM RAUM, Associated Press Writer
WASHINGTON – The Obama administration aimed squarely at the crisis clogging the nation's credit system Monday with a plan to take over up to $1 trillion in sour mortgage securities with the help of private investors. For once, Wall Street cheered. The announcement, closely stage-managed throughout the day, filled in crucial blanks in the administration's financial rescue package and formed what President Barack Obama called "one more critical element in our recovery."
The coordinated effort by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. relies on a mix of government and private money — mostly from institutional investors such as hedge funds — to help banks rid their balance sheets of real-estate related securities that are now extremely difficult to value.
The goal, said Obama, is to get banks lending again, so "families can get basic consumer loans, auto loans, student loans, (and so) that small businesses are able to finance themselves, and we can start getting this economy moving again."
It was a huge gambit and one that came like a tonic to Wall Street, which had panned an earlier outline of the program that lacked detail.
Stocks soared, the Dow Jones industrial average shooting up nearly 500 points, thanks to the bank-assets plan and a report showing an unexpected jump in home sales.
The introduction of the plan was closely choreographed so that the president — rather than Treasury Secretary Timothy Geithner — would be the first administration official to appear on camera at midday to discuss it. Geithner met earlier in the day, before markets opened, with a group of reporters at the Treasury Department to go over specifics. But cameras and broadcast-quality audio recorders were barred.
It was the reverse of what happened Feb. 10. Then, after Obama had helped raise expectations toward Geithner and the plan, the treasury secretary went before cameras and bombed. The Dow plunged about 300 points amid investor confusion about details.
The fleshed-out plan is designed to help fix a value on damaged mortgage loans and other toxic securities.
If the value of the securities goes up, the private investors and taxpayers would share in the gains. If the values go down, the government and private investors would incur losses.
"This will help banks clean up their balance sheets and make it easier for them to raise capital," Geithner said.
The plan will take $75 billion to $100 billion from the government's existing $700 billion Troubled Asset Relief Program. The government will pair this with private investments and loans from the FDIC and the Fed to generate $500 billion in purchasing power.
Geithner said purchases eventually could grow to $1 trillion — roughly half of the estimated $2 trillion of toxic assets on bank books now.
On the hot seat, Geithner has a lot personally tied to the success of the new program. His performance in the Cabinet, including his slowness in learning about multimillion dollar executive bonuses paid by insurance giant AIG after taking bailout money, has been severely criticized by some in Congress.
Geithner testifies on Tuesday before the House Financial Services Committee.
Under a typical transaction, for every $100 in soured mortgages being purchased from banks, the private sector would put up $7 and that would be matched by $7 from the government. The remaining $86 would be covered by a government loan.
The plan was introduced ahead of a summit next week in London of 20 major and developing economies struggling with the global recession.
Obama is trying to get other wealthy countries to do more to stimulate their economies with government spending, as the United States has done. However, other countries, particularly ones in Europe, are resisting U.S. calls for more stimulus and would prefer to see more internationally coordinated bank regulation.
The administration was expected to outline its plan for financial regulation overhaul later this week.
Federal Deposit Insurance Corp. Chairman Sheila Bair said she expects her agency will finance as much as $500 billion in purchases of residential and commercial real estate loans.
Bair said the program should help banks clean up their balance sheets and raise fresh capital, though she added that "there may be some banks beyond help." The agency has said before it expects more bank failures, she said.
A joint statement by the Federal Reserve and Treasury Department said the Fed should play a "central role" in preventing future financial crises. That implied a wish that Congress expand the Fed's authority in regulating all financial institutions, not just banks.
Geithner said taxpayers still could lose money on the deal to soak up bad assets but there was no fixing the system without risk.
Other options, such as having the government purchase the securities outright or letting them languish on bank balance sheets, would pose even greater vulnerabilities, he said, and it was important to find the right blend of risk versus reward.
"I am very confident this scheme dominates all the alternatives for trying to find that balance," he said.
The sentiment was echoed by congressional Democrats, who said risk seemed inevitable with any plan big enough to work.
But House Republican Whip Eric Cantor of Virginia called Obama's plan a "shell game" that hid the true cost.
He said he hoped the administration would consider instead an earlier Republican proposal to set up a government-sponsored insurance program for mortgage-related securities.
The administration plan "seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer," Cantor said in a statement.
The new program marks a return by the government to a strategy of acquiring toxic securities. Henry Paulson, who was treasury secretary in the final days of the Bush administration, abandoned plans to purchase these securities, largely because they were impossible to price.
The plan builds on earlier programs to pump money into banks, help some homeowners repay their mortgages and stimulate college, small business and other forms of lending.
"There's still great fragility in the financial systems, but we think that we are moving in the right direction," Obama said after meeting Geithner and Fed Chairman Ben Bernanke.
Obama said the plan will allow taxpayers to "share in the upside as well as the downside."
Treasury officials had no firm forecast on when the government would begin making the asset purchases although market expectations were that the process could begin within weeks.
___
AP writers Martin Crutsinger, Anne Flaherty, Christopher S. Rugaber and Jeannine Aversa contributed to this story.
WASHINGTON – The Obama administration aimed squarely at the crisis clogging the nation's credit system Monday with a plan to take over up to $1 trillion in sour mortgage securities with the help of private investors. For once, Wall Street cheered. The announcement, closely stage-managed throughout the day, filled in crucial blanks in the administration's financial rescue package and formed what President Barack Obama called "one more critical element in our recovery."
The coordinated effort by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. relies on a mix of government and private money — mostly from institutional investors such as hedge funds — to help banks rid their balance sheets of real-estate related securities that are now extremely difficult to value.
The goal, said Obama, is to get banks lending again, so "families can get basic consumer loans, auto loans, student loans, (and so) that small businesses are able to finance themselves, and we can start getting this economy moving again."
It was a huge gambit and one that came like a tonic to Wall Street, which had panned an earlier outline of the program that lacked detail.
Stocks soared, the Dow Jones industrial average shooting up nearly 500 points, thanks to the bank-assets plan and a report showing an unexpected jump in home sales.
The introduction of the plan was closely choreographed so that the president — rather than Treasury Secretary Timothy Geithner — would be the first administration official to appear on camera at midday to discuss it. Geithner met earlier in the day, before markets opened, with a group of reporters at the Treasury Department to go over specifics. But cameras and broadcast-quality audio recorders were barred.
It was the reverse of what happened Feb. 10. Then, after Obama had helped raise expectations toward Geithner and the plan, the treasury secretary went before cameras and bombed. The Dow plunged about 300 points amid investor confusion about details.
The fleshed-out plan is designed to help fix a value on damaged mortgage loans and other toxic securities.
If the value of the securities goes up, the private investors and taxpayers would share in the gains. If the values go down, the government and private investors would incur losses.
"This will help banks clean up their balance sheets and make it easier for them to raise capital," Geithner said.
The plan will take $75 billion to $100 billion from the government's existing $700 billion Troubled Asset Relief Program. The government will pair this with private investments and loans from the FDIC and the Fed to generate $500 billion in purchasing power.
Geithner said purchases eventually could grow to $1 trillion — roughly half of the estimated $2 trillion of toxic assets on bank books now.
On the hot seat, Geithner has a lot personally tied to the success of the new program. His performance in the Cabinet, including his slowness in learning about multimillion dollar executive bonuses paid by insurance giant AIG after taking bailout money, has been severely criticized by some in Congress.
Geithner testifies on Tuesday before the House Financial Services Committee.
Under a typical transaction, for every $100 in soured mortgages being purchased from banks, the private sector would put up $7 and that would be matched by $7 from the government. The remaining $86 would be covered by a government loan.
The plan was introduced ahead of a summit next week in London of 20 major and developing economies struggling with the global recession.
Obama is trying to get other wealthy countries to do more to stimulate their economies with government spending, as the United States has done. However, other countries, particularly ones in Europe, are resisting U.S. calls for more stimulus and would prefer to see more internationally coordinated bank regulation.
The administration was expected to outline its plan for financial regulation overhaul later this week.
Federal Deposit Insurance Corp. Chairman Sheila Bair said she expects her agency will finance as much as $500 billion in purchases of residential and commercial real estate loans.
Bair said the program should help banks clean up their balance sheets and raise fresh capital, though she added that "there may be some banks beyond help." The agency has said before it expects more bank failures, she said.
A joint statement by the Federal Reserve and Treasury Department said the Fed should play a "central role" in preventing future financial crises. That implied a wish that Congress expand the Fed's authority in regulating all financial institutions, not just banks.
Geithner said taxpayers still could lose money on the deal to soak up bad assets but there was no fixing the system without risk.
Other options, such as having the government purchase the securities outright or letting them languish on bank balance sheets, would pose even greater vulnerabilities, he said, and it was important to find the right blend of risk versus reward.
"I am very confident this scheme dominates all the alternatives for trying to find that balance," he said.
The sentiment was echoed by congressional Democrats, who said risk seemed inevitable with any plan big enough to work.
But House Republican Whip Eric Cantor of Virginia called Obama's plan a "shell game" that hid the true cost.
He said he hoped the administration would consider instead an earlier Republican proposal to set up a government-sponsored insurance program for mortgage-related securities.
The administration plan "seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer," Cantor said in a statement.
The new program marks a return by the government to a strategy of acquiring toxic securities. Henry Paulson, who was treasury secretary in the final days of the Bush administration, abandoned plans to purchase these securities, largely because they were impossible to price.
The plan builds on earlier programs to pump money into banks, help some homeowners repay their mortgages and stimulate college, small business and other forms of lending.
"There's still great fragility in the financial systems, but we think that we are moving in the right direction," Obama said after meeting Geithner and Fed Chairman Ben Bernanke.
Obama said the plan will allow taxpayers to "share in the upside as well as the downside."
Treasury officials had no firm forecast on when the government would begin making the asset purchases although market expectations were that the process could begin within weeks.
___
AP writers Martin Crutsinger, Anne Flaherty, Christopher S. Rugaber and Jeannine Aversa contributed to this story.
Global trade 'will shrink by 9%'
Global trade flows are set to shrink by 9% during 2009, according to a forecast by the World Trade Organization (WTO).
Hardest hit will be developed nations, where trade is set to fall 10%. Poorer countries will see exports fall 2-3%.
The WTO blames the deepening recession for the downturn, but says trade could be "a potent tool" for recovery.
It would be the biggest drop in trade since World War II, said WTO Director-General Pascal Lamy, who called on global leaders to fight protectionism.
“ Any further protectionist measure which will render global recovery efforts less effective ”
Pascal Lamy
WTO director-general
Trade is one of the top issues on the agenda when the heads of state and government of the world's leading economic powers meet at the G20 summit in London on 2 April.
"In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective," said Mr Lamy in the organisation's annual assessment of world trade.
He warned that the use of protectionist measures was on the rise, with dangerous consequences: "Many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs."
The WTO report was released while Mr Lamy was in Washington to meet key officials in the Obama administration ahead of the G20 summit.
Positive signs
While global trade grew 2% during 2008, WTO data suggest that the downturn started last summer, with trade slowing during the second half of the year.
In 2007, when the credit crunch started, world trade had still managed to grow 6%.
Unusually, global trade was now falling simultaneously around the world, the WTO said.
Some "commentators" had assumed "that a 'decoupling' effect would have made developing countries less vulnerable to economic turmoil in developed countries," but the WTO experts noted that "this has not turned out to be the case".
The WTO also warned that it was difficult to predict the depth of the global recession. "If the drop in world trade is deeper than expected or if recovery happens more quickly, then the growth forecast will need updating."
However, the WTO also reported some positive signs, with exports from China, Singapore, Taiwan and Vietnam growing again during February for the first time in months.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7960416.stm
Published: 2009/03/23 23:13:52 GMT
Hardest hit will be developed nations, where trade is set to fall 10%. Poorer countries will see exports fall 2-3%.
The WTO blames the deepening recession for the downturn, but says trade could be "a potent tool" for recovery.
It would be the biggest drop in trade since World War II, said WTO Director-General Pascal Lamy, who called on global leaders to fight protectionism.
“ Any further protectionist measure which will render global recovery efforts less effective ”
Pascal Lamy
WTO director-general
Trade is one of the top issues on the agenda when the heads of state and government of the world's leading economic powers meet at the G20 summit in London on 2 April.
"In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective," said Mr Lamy in the organisation's annual assessment of world trade.
He warned that the use of protectionist measures was on the rise, with dangerous consequences: "Many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs."
The WTO report was released while Mr Lamy was in Washington to meet key officials in the Obama administration ahead of the G20 summit.
Positive signs
While global trade grew 2% during 2008, WTO data suggest that the downturn started last summer, with trade slowing during the second half of the year.
In 2007, when the credit crunch started, world trade had still managed to grow 6%.
Unusually, global trade was now falling simultaneously around the world, the WTO said.
Some "commentators" had assumed "that a 'decoupling' effect would have made developing countries less vulnerable to economic turmoil in developed countries," but the WTO experts noted that "this has not turned out to be the case".
The WTO also warned that it was difficult to predict the depth of the global recession. "If the drop in world trade is deeper than expected or if recovery happens more quickly, then the growth forecast will need updating."
However, the WTO also reported some positive signs, with exports from China, Singapore, Taiwan and Vietnam growing again during February for the first time in months.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7960416.stm
Published: 2009/03/23 23:13:52 GMT
Sunday, March 22, 2009
Unions press G20 to take new tack
Union leaders from the UK and overseas have put forward a global five-point plan they want G20 leaders to adopt as a way of tackling the economic crisis.
The plan includes job creation, some bank nationalisation, tackling wage deflation, and climate change action.
The ITUC union body said global economic "neo-liberalism" had failed.
The G20 meeting in early April brings together leaders from industrial and emerging market countries that make up 85% of the world economy.
'Responsibilities'
"If the G20 governments in London are only able to agree on half-measures, they will have failed to meet their responsibilities," said ITUC General Secretary Guy Ryder.
"As the world's largest economies, they have the responsibility and the possibility to replace the failed neo-liberalism of the past with a whole new direction for globalisation."
The Brussels-based body, which represents 170 million workers in 312 affiliated national organisations from 157 countries, wants to see:
a co-ordinated international recovery and sustainable growth plan to create jobs and ensure public investment
nationalisation of insolvent banks and new financial regulations
action to combat the risk of wage deflation and reverse decades of increasing inequality
increased action on climate change
new international legal framework to regulate the global economy, and reform of the IMF, World Bank, OECD, WTO
'Worrying signs'
But the UK-based union grouping the TUC said there were worrying signs that the G20 leaders attending the conference in London would not meet the challenges ahead.
"We need both," TUC general secretary Brendan Barber said.
"Without a big co-ordinated fiscal stimulus this could be a deep and dangerous recession that may easily turn into a prolonged slump.
"But the Europeans who want to ensure that we never again face meltdown of the world's financial system and say we need a tough global system of regulation are also right."
The weekend before the summit, the TUC is helping to organise a Put People First march involving more than 100 unions, development agencies, environmental and campaign groups.
'Anger out there'
However, alongside such peaceful actions, police fear a number of hard-line protesters will attempt to bring central London to a standstill with a series of demonstrations.
On Sunday Foreign Office Minister Lord Malloch-Brown told the BBC's Andrew Marr Show there was "enough anger out there" for people to support any major demonstrations around the G2 meeting.
But he appealed to potential protesters to not "disrupt a critical moment to try and get the global economy moving again".
Lord Malloch-Brown told BBC1's Andrew Marr Show that he hoped the majority of protesters would be demonstrating "on behalf of the summit" to highlight the needs of the "poor" and the "workers".
"That will overshadow probably a handful of real hardcore troublemakers," he said.
G20 LONDON SUMMIT
World leaders will meet next month in London to discuss measures to tackle the downturn. See to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.
It also expressed worry at reports some European politicians were resistant to a fiscal stimulus, and that some in the new US administration were opposed to more global regulation..
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7957862.stm
Published: 2009/03/23 02:47:20 GMT
The plan includes job creation, some bank nationalisation, tackling wage deflation, and climate change action.
The ITUC union body said global economic "neo-liberalism" had failed.
The G20 meeting in early April brings together leaders from industrial and emerging market countries that make up 85% of the world economy.
'Responsibilities'
"If the G20 governments in London are only able to agree on half-measures, they will have failed to meet their responsibilities," said ITUC General Secretary Guy Ryder.
"As the world's largest economies, they have the responsibility and the possibility to replace the failed neo-liberalism of the past with a whole new direction for globalisation."
The Brussels-based body, which represents 170 million workers in 312 affiliated national organisations from 157 countries, wants to see:
a co-ordinated international recovery and sustainable growth plan to create jobs and ensure public investment
nationalisation of insolvent banks and new financial regulations
action to combat the risk of wage deflation and reverse decades of increasing inequality
increased action on climate change
new international legal framework to regulate the global economy, and reform of the IMF, World Bank, OECD, WTO
'Worrying signs'
But the UK-based union grouping the TUC said there were worrying signs that the G20 leaders attending the conference in London would not meet the challenges ahead.
"We need both," TUC general secretary Brendan Barber said.
"Without a big co-ordinated fiscal stimulus this could be a deep and dangerous recession that may easily turn into a prolonged slump.
"But the Europeans who want to ensure that we never again face meltdown of the world's financial system and say we need a tough global system of regulation are also right."
The weekend before the summit, the TUC is helping to organise a Put People First march involving more than 100 unions, development agencies, environmental and campaign groups.
'Anger out there'
However, alongside such peaceful actions, police fear a number of hard-line protesters will attempt to bring central London to a standstill with a series of demonstrations.
On Sunday Foreign Office Minister Lord Malloch-Brown told the BBC's Andrew Marr Show there was "enough anger out there" for people to support any major demonstrations around the G2 meeting.
But he appealed to potential protesters to not "disrupt a critical moment to try and get the global economy moving again".
Lord Malloch-Brown told BBC1's Andrew Marr Show that he hoped the majority of protesters would be demonstrating "on behalf of the summit" to highlight the needs of the "poor" and the "workers".
"That will overshadow probably a handful of real hardcore troublemakers," he said.
G20 LONDON SUMMIT
World leaders will meet next month in London to discuss measures to tackle the downturn. See to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.
It also expressed worry at reports some European politicians were resistant to a fiscal stimulus, and that some in the new US administration were opposed to more global regulation..
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7957862.stm
Published: 2009/03/23 02:47:20 GMT
Saturday, March 21, 2009
US budget 'to create huge deficit'
UPDATED ON:
FRIDAY, MARCH 20, 2009
22:28 MECCA TIME, 19:28 GMT
Obama says he will not cut "investments that will lead to real growth and prosperity" from the budget [EPA]
The US budget that Barack Obama, the president, is trying to push through congress will produce a $9.3 trillion deficit over the next 10 years, congressional budget office figures say.
At $2.3 trillion more than predicted by the White House, the figures released on Friday could prove to be a major obstacle to passing the budget.
Obama's budget promises universal health care and higher spending for other domestic programmes such as education and research into renewable energy.
Democrats are preparing to put the budget for preliminary voting before congress next week.
Republicans began to pile on the pressure after the figures were released.
"Under the president's plan, our debt will increase to shocking levels that are simply unsustainable and will devastate future economic opportunities for our children and grandchildren," Judd Gregg, the senior Republican senator on the budget committee, said.
Worsening economy
The worsening economy has created many of the deficit problems facing Obama, with the shortfall for this financial year, which began on October 1, set to be about $1.8 trillion - about $93bn more than forecast by the White House - according to the figures.
"What we will not cut are investments that will lead to real growth and prosperity over the long term"
Barack Obama,
US president
The 2009 deficit, fuelled by the $700 billion Wall Street bailout and falling tax revenues, is four times the previous $459bn record set just last year.
However, the White House responded to the news by stating that the deficit would not force Obama to lessen his ambitions or thwart his plans to halve the deficit to $533bn by 2013.
"None of the numbers today changed the president's either objectives or his ability to achieve that deficit reduction," Robert Gibbs, the White House spokesman, said.
Earlier, without referring to the figures, Obama insisted that his agenda was still on track.
"What we will not cut are investments that will lead to real growth and prosperity over the long term," he said.
"That's why our budget makes a historic commitment to comprehensive health care reform. That's why it enhances America's competitiveness by reducing our dependence on foreign oil and building a clean energy economy."
Unsustainable
The budget office says the deficit under Obama's policies would never go below four per cent of the size of the economy, figures that many economists agree are unsustainable.
By the end of the decade, the deficit would exceed five per cent of gross domestic product, considered to be a dangerously high level.
"I think deficits of 5 per cent is unsupportable," Mark Zandi, the chief economist at Moody's Economy.com, said.
"It will lead to higher interest rates to the point where it will force policymakers to make changes."
FRIDAY, MARCH 20, 2009
22:28 MECCA TIME, 19:28 GMT
Obama says he will not cut "investments that will lead to real growth and prosperity" from the budget [EPA]
The US budget that Barack Obama, the president, is trying to push through congress will produce a $9.3 trillion deficit over the next 10 years, congressional budget office figures say.
At $2.3 trillion more than predicted by the White House, the figures released on Friday could prove to be a major obstacle to passing the budget.
Obama's budget promises universal health care and higher spending for other domestic programmes such as education and research into renewable energy.
Democrats are preparing to put the budget for preliminary voting before congress next week.
Republicans began to pile on the pressure after the figures were released.
"Under the president's plan, our debt will increase to shocking levels that are simply unsustainable and will devastate future economic opportunities for our children and grandchildren," Judd Gregg, the senior Republican senator on the budget committee, said.
Worsening economy
The worsening economy has created many of the deficit problems facing Obama, with the shortfall for this financial year, which began on October 1, set to be about $1.8 trillion - about $93bn more than forecast by the White House - according to the figures.
"What we will not cut are investments that will lead to real growth and prosperity over the long term"
Barack Obama,
US president
The 2009 deficit, fuelled by the $700 billion Wall Street bailout and falling tax revenues, is four times the previous $459bn record set just last year.
However, the White House responded to the news by stating that the deficit would not force Obama to lessen his ambitions or thwart his plans to halve the deficit to $533bn by 2013.
"None of the numbers today changed the president's either objectives or his ability to achieve that deficit reduction," Robert Gibbs, the White House spokesman, said.
Earlier, without referring to the figures, Obama insisted that his agenda was still on track.
"What we will not cut are investments that will lead to real growth and prosperity over the long term," he said.
"That's why our budget makes a historic commitment to comprehensive health care reform. That's why it enhances America's competitiveness by reducing our dependence on foreign oil and building a clean energy economy."
Unsustainable
The budget office says the deficit under Obama's policies would never go below four per cent of the size of the economy, figures that many economists agree are unsustainable.
By the end of the decade, the deficit would exceed five per cent of gross domestic product, considered to be a dangerously high level.
"I think deficits of 5 per cent is unsupportable," Mark Zandi, the chief economist at Moody's Economy.com, said.
"It will lead to higher interest rates to the point where it will force policymakers to make changes."
Subscribe to:
Posts (Atom)
Posts
