MONDAY, FEBRUARY
21, 2011
G20 seeks deal on economic indicators P
ARIS: G20 nations struggled on Saturday
to
overcome
Chinese
opposition on how best to measure and tackle massive global economic imbalances, key to their flagship initiative to avoid another financial crisis, Agence France Presse reported on Saturday. Finance
ministers and
central bankers from the 20 top developed and developing
economies
sat down for talks after their negotiators worked through the night to resolve disagreement.
"There
is
still
decided to delay discussion on them to the end of the talks later on Saturday, a G20 source said. Discussion as a result sh ifled to other French priorities for its turn at the G20 helm reforming the international
monetary
system and reducing volatility in commodities markets. Failure to agree on the indicators could hobble G20 efforts to remedy the huge trade and currency imbalances at t~e root of the 2008 global crisis and which
no
many believe continue to
consensus but it's evolving,"
threaten disaster. G20, whose The members account for 85 per cent of total world output, became the top global forum in the wake of the 2008 crisis, with avoiding
a G20 diplomatic source told AFP before the talks got underway.
But faced with Chinese opposition
to
several
of
the key indicators being considered, French Finance Minister, Christine Lagarde,
and better coordination to eliminate them. Despite Beijing's reluctance. France still hopes agreement can be reached on Saturday, said the diplomatic source. Germany, another major exporter nation like China, is trying to mediate a deal so a final accord can be announced. France wants agreement as soon
an as
possible so that in the second half of this year the International Monetary Fund can make economic policy recommendations to nations.
"We need a thermometer that works so we can examine
the
imbalances
in all their aspects to make as useful a diagnosis as possible," one negotiator said. A series of four indicators are under discussion. Two measure imbalances
between them, for example the huge Chinese trade surplus with the lInlted States which Washington blames on a weak yuan. "China is reluctant, it prefers the trade balance
within countries: the public deficit and debt, plus the level of private savings. The other two measure external imbalances, the
balance," which is favoured by other countries, said the diplomatic source. China is also hostile
current account balance or
to
trade balance, or foreign
it has accumulated huge
currency reserves exchange rates.
or real
The disagreement centres on the external indicators, which capture different
to
the
current
currency
foreign
account
indicators as
currency
reserves
and the yuan is not freely convertible. China last year resisted a lInited States proposal
aspects of a country's position vis-a-vis the rest of
balances by setting a four-
the world and so are crucial to measure the imbalances
deficits and surpluses.
to stabilise current account per cent cap on countries
The Western
LIS
and
powers
other accuse
Ch ina of holding down its currency to boost Chinese exports.
China denies any such manipulation, blaming the imbalance
problems
on
structural
in
its
trade
partners' economies.
In welcoming remarks on Friday, French President Nicolas Sarkozy warned the ministers that failure to put aside national interests and reach a deal would kill off the G20. "The temptation to give priority to national interests
is great. But let me tell you clearly that would be the death of the G20.·' said Sarkozy.
a repeat its top priority through the parly oiClgno<;is of economic imbalances
'Irish deposit sales caused ECB borrowing spike'
D
lIBLlN: Anglo Irish Bank and Irish Nationwide Building Society were behind the spike in
said the source. "The buyer may continue to put the assets in the overnight facility until the next normal
emergency borrowing from
refinancing operation on a
the European Central Bank as they seek a speedy sale of their deposit books. Reuters reported on Saturday. The two troubled lenders, at the heart of Ireland's
Tuesday." ECB overnight borrowings hit more than 16 billion euros on Friday, the highest amount since June 2009 and well above the (1.2bn which banks were taking before the figure first jumped on Thursday. Anglo Irish. the poster child for the reckless lending that sparked Ireland's financial crisis, has 11 billion
financial crisis. are selling
deposits and corresponding assets as part of a wind-
down of their operations under a European Union and International Monetarv
Fund bail-out deal. To ensure a sale within the next week, they have had to withdraw the un<;leriying assets, around' €I5bn ($20.5bn) in state-backed lOlls, as collateral from the normal week-long ECB borrowing facility and swap them instead for emergency overnight loans. the source,
who is familiar with the sales process. said.
"If they are tied up in the normal monetary operations
they can't be sold." said the source, who declined to be
euros in customer deposits
after losing €16bn in mainly corporate deposits last year. Irish Nationwide Building Society has deposits of €5.3bn at the end of 2009, it has not yet reported for 2010. lInder the Ell/IMF deal, Ireland has pledged to shut down Anglo Irish and Irish Nationwide and shrink its other lenders to reduce their dependence on emergency funding from the ECB and its own central bank.
identified. The source sa,d the spike in ECB overnight funding, which caused a stir across
European
markets,
could
continue "even after a sale
because the buyer of the deposits, expected to be a bank in Ireland, would have to wait until the next ECB weekly refinancing operation
to switch out of the more expensive overnight facility.
"Ifs possible this spike in overnight borrowings could last for a couple of weeks, "
Obama promotes jobs by way of education
W
ASHINGTON: President Barack Obama has said better education in math and science is critical to pushing the lInited States forward in the global competition for innovation and jobs, and
he wants the private sector to get involved in making it happen. According to the Associated Press on Saturday, Obama recorded his weekly radio and
Internet address during a visit to Intel Corporation outside of Portland, Oregon. He praised the company on Saturday for making a 10year, $200m commitment to promote math and science education and held it up as an example of how corporate America would make money at the same time it builds the country. • "Companies like Intel are proving that we can
compete that instead of just
Rising food prices nearing danger point - World Bank
ARIS: World Bank's President, Robert Zoellick, warned leaders of the top global economies on Saturday that the world was reaching a danger point
P
• L-R: Chief Executive Officer, Intel, MrPmi/ OteWni; and United States President Barack Obo",o. speaking at Intel Corporation all Friday. Photo Reuters.
in Hifls/Joro, Oregon ...
where soaring food prices
threatened further political instability, AFP reported on Saturday. "I mentioned' that we are reaching a da~ger point,"
Zoellick said, adding that he had urged G20 finance
and governments could fall
ministers and central bank
and societies could go into turmoil."
chiefs meeting here to "put food first in 2011." Zoellick said rising prices would eventually result in increased. food supplies but in the intervening couple of years, "there could -be an awful lot of tur-moil
Soaring food, fuel and other basic costs have been one of the key factors driving political unrest across the Middle East and North Africa which has forced the ouster of long-standing au tocratic rulers in Egypt and Tunisia.
being a nation that buys
and resisting new spending.
what's made overseas, we can make things in America
The GOP is also taking Obama to task for avoiding significant changes to the biggest budget busters: Social Security. Medicare and Medicaid. In the Republicans:., • .,., weekly radio address, 'Rep. ,. Tom Price, trumpeted the GOP's push to cut $60bn from the current fiscal year budget and promised a 2012 budget proposal thae unlike Obama's, offers "real entitlement reform." "Our reforms will focus both on saving these
and sell them around the globe," Obama said. "Winningthiscompetition depends on the ingenuity and creativity of our private sector.. But it's also going to depend on what we do as a nation to make America the best place on earth to do business."
Obama's West Coast swing, which also included a dinner with big names in California's Silicon Valley including Apple's Steve Jobs and Facebook's Mark Zuckerberg, was part of his push to promote a budget proposal that increases spending in targeted areas like
education,
research
and development and highspeed Internet, while culting in other areas. Republicans newly in control of the House are pushing much deeper cuts
programmes
for
current
and future generations of Americans and on getting
our debt under control and our economy Price said.
growing,
"By taking critical steps forward now, we can fulfill the mission of health and retirement security for all Americans without making
changes for those in or ~ear retirement. ..