Avoiding the New Mediocre:The IMF,Doha and the New Multilateralism

Madame Christine Lagarde,Managing Director of the International Monetary Fund,addressed the Atlantic Council in Washington on 9 April.She spoke about the "new mediocre" she feels the global economy is falling into for reasons including aging populations and falling productivity growth.Reversing that decline in developed markets takes improving access to finances for SMEs,small and medium-sized enterprises,which represent most of the employment.The same applies to China.In Japan and the euro area,there are too many tax disincentives for them.
In too many countries,legal inequities still exist preventing access by women to the labour market.There are potentially huge global gains to be had by trade reform and integration.Completion of the Doha Round could give an economic boost of a trillion dollars.
The Doha Round is a series of trade negotiations among the World Trade Organization membership.It aims to achieve major reform of the international trading system through the introduction of lower trade barriers and revised international trade rules.The negotiations were named after the WTO's Fourth Ministerial Conference in Doha,Qatar,where they officially began in November 2001.The Doha Ministerial Declaration that came out of the Conference set forth the mandate for the negotiations,including on agriculture,services and an intellectual property topic,which had already begun.
The ministers at the Fourth Ministerial Conference also agreed on how to address the problems developing countries face when implementing the current WTO agreements.A fundamental objective of the Doha Round is to improve the trading prospects of developing countries.
How to dispel this new mediocre that is lurking on the horizon? We can only win by working together,Madame Lagarde insisted.The challenge for policy makers is to combine the policies that create growth with those that boost tomorrow's prospects.If countries strengthen their banks,it will reinforce the global financial system.If they implement climate-friendly policies,it will benefit their people and lower the global level of emissions.There is simply no alternative to the new multilateralism.The emerging markets and developing countries must have a seat at the table.Virtually our entire membership agrees,and they all await ratification by the United States Congress-if only to assert US leadership to a major institution for global financial stability,enhancing cooperation with new institutions in Asia and other places,the integration of dynamic emerging markets into the global economy through:
1.Financing for development.
2.New,sustainable development goals.
3.Addressing climate change.
They all interlink in many ways.How can we contribute on the IMF's three core deliverables?
1.Financing:we recently gave 390 million euros to the Ebola-affected countries from a catastrophe and containment relief trust that was set up.
2.Policy advice and analysis such as on domestic resource mobilisation;the role of inequality;energy subsidy reforms;carbon taxation-the time is right to price it right.
3.Technical assistance and training,such as our Massive Online Open Courses,which range from debt sustainability analysis to removing energy subsidies.Success will require a recommitment to international cooperation.In conclusion,Madame Lagarde quoted Winston Churchill,"I never worry about action;only inaction."

Greek Debt Worries;Oil Optimism

The Greek finance minister expressed doubts about being to repay its big loans,although it can manage its public sector expenses.We will definitely have problems in making debt payments,said Yanis Varoufakis to Alpha Radio.Greece has an IMF loan of 1.6 billion euros comig due in March;i also has 7.5 billion of ECB bonds coming to maturity in July and August.
This skepticism comes after Greece got a four-month bailout extension from the EU on Tuesday.Any major Greek credit problems could roil world financial markets.*
In the port of Jizan,Saudi Arabia,Saudi oil minister Ali al-Naimi voiced optimism to reporters.The oil markets are calm now,and demand is growing,according to Mr.al-Naimi.
As well,China's manufacturing sector is growing,according to the flash HSBC/Markit Purchasing Managers Index.China is the world's second-largest energy consumer after the US.
The cheery news caused Brent crude to soar 5% to 61.63 per barrel;while Cushing crude went up 1.71 to 50.99.*
iShares China Large-Cap ETF(FXI),iShares U.S. Oil&Gas Exploration&Production ETF(IEO)

Ukraine:Crisis and Context

President Vladimir Putin put Russian troops on high alert to stage war games in the Western Military District,near Ukraine,on Wednesday at 1400 hours,Russian Defence Minister Sergei Shoigu said.Russia was also taking measures to guarantee the safety of facilities,infrastructure and arsenals of its Black Sea Fleet in Crimea,where Russia leases a naval base from Ukraine.
Ethnic Russians staged a protest in Crimea,saying Crimea was Russian and calling for independence from Ukraine.Most of the Crimean penninsula's population is ethnic Russian.Eastern Ukraine is also heavily ethnic Russian and looks to Moscow for support,while Western Ukraine is the center of Ukrainian nationalism and leans to Western Europe and the United States.*
In the Ukrainian capital Kiev,the Western protest movement's Euromaidan Council appointed several interim officials.Former economy minister Arseny Yatseniuk was named interim prime minister;career diplomat Andriy Deschytsya,foreign minister;and former economic minister and deputy central bank head Oleksandr Shlapak,finance minister.
The new ministers must engage in talks with the IMF to secure the country's finances,as Russia will probably cancel its 15 billion dollar support package extended to Moscow ally Victor Yanukovych,now believed to be in hiding in Crimea-perhaps in the Russian naval base.The EU and US have also expressed a willingness to financially aid the fledgling government in Kiev.*
The Russian military alert announced Wednesday raised a red flag in Western circles in light of Putin's actions of 2008,when he invaded the Republic of Georgia to defend ethnic Russians in two breakaway regions there,and recognised their independence after a brief war.Any Russian invasion of Ukraine would be a grave mistake,US Secretary of State John Kerry warned on Wednesday.

Voices and Trends in Global Business,July 2013

Apple has been slowing iPhone production,said Brian Blair,a senior research analyst at Wedge Partners.We believe there's been a 20% haircut to iPhone production.Most of the component suppliers will stay the same,despite the cuts. Apple's been cutting because they've been watching market leader Samsung,which hasn't been selling as many smart phones as they thought they would.The market for high end smart phones is slowing,and Apple's been responding to that. The IMF has cut its annualised global growth forecast from 3.3% in April to 3.1% in July.Their forecasts for commodity prices,as well as Russian,Brazilian and Spanish growth,were also lowered.The cause of the revision is the downturn in emerging markets and the lengthy Euro-zone recession. Hong Kong property agents marched against government price curbs over the weekend.Up to 5500 agents demonstrated,appalled at the fact that Q2 real estate transactions were at a two decade low because of new taxes and marketing restrictions.About a third of estate agents stand to lose their jobs in consequence. The government measures are making things worse,according to Michael Kilbaner of Jones Lang Lasalle.The rise in property prices both reflects and impacts the strength of the economy.A lot of the movement is really in tier one and upper echelon tier two property.A two bedroom flat in Hong Kong goes for a half million US dollars,with a similar price in Beijing.

Hedge Fund Advisor:Fighting and Grinding

You've got to watch Europe now,said Sarah Quinlan,founder and Chief Investment Officer of QAM.The IMF and EU are fighting.There was a joint national strike in Spain and Portugal.I think it's sort of a grind lower.Eventually the car runs out of gas.
I'm loving my sovereign bonds-obviously from the emerging markets and the US.
If they start a more entrepreneurial economy,they could start to grind out of it.The austerity is the wrong move.They'd better do something today.
Treasury Secretary Tim Geithner should stay through February to keep the market calm till we get through the debt ceiling.It's an overall anemic volume world that we're living in.
We are way overstaffed on Wall Street.Fewer partners were made at Goldman Sachs this year.I think it's a fundamental change.
QAM is a hedge fund advisory firm.Founder Sarah Quinlan is active in the 100 women in hedge funds peer advisory group.

A World Bank Perspective

With regards to the European debt crisis,my guess is,the International Monetary Fund and the European Union will muddle through,says World Bank President Robert Zoellick.The developed markets have obviously been stumbling along.China does seem to be slowing a little bit,but I think it's appropriate so as to avoid a bubble situation.
People are gonna be moving at different speeds with different issues.That's the nature of the new global market we are in.
Food prices are about 50% higher,but the risk is,the stocks for wheat and grain are very,very low,making them vulnerable to price shocks.The low income countries and big wheat importers in the Middle East are hurt the most.We've launched a pilot with JP Morgan Chase providing some additional credit support and access to commodities markets derivatives to insure some of these players.
The European Union is pretty slow,with its low population growth.As they muddle through,the question is whether they will make the necessary structural changes,Mr.Zoellick wonders.
The World Bank offers financial and technical assistance to developing countries worldwide.It provides resources,shares knowledge,builds capacity and forges partnerships in the public and private sectors.Founded in 1944,it has more than 10,000 workers in over 100 offices around the globe.
JP Morgan Chase(JPM)

IMF Addresses Today's Concerns

The International Monetary Fund,an autonomous UN agency,has been addressing the issues of the day recently.On the topic of trade imbalances,Managing Director Dominique Strauss-Kahn said not even full appreciation of the Chinese currency,the Yuan,will solve the total imbalances.Other measures are also necessary to achieve that:
1.Improve domestic demand in Asia.Asia is a global economic powerhouse.A country shouldn't hide behind its currency.
2.Maintain a strong focus on foreign investment.
3.Manage currency reserves.
4.Institute capital controls,if necesssary.
China has been bitterly criticized of late by German businessmen for hindering foreign companies,as well as by General Electric CEO Jeff Immelt.In response,China insisted foreign businesses were being treated fairly.
With regard to Friday's release of Euro-zone bank stress test results,IMF First Deputy Managing Director Joseph Lipsky hoped for broad coverage by the tests,transparency and remedial action as needed.We need a realistic scenario that provides stress and gives some good insight into the strength of the banking system.All the preconditions for the test that were needed are being fulfilled.
Mr.Lipsky wouldn't assume that any central bank is out of ammunition for dealing with the financial crisis.He doesn't fear for the political independence of the central banks,either.

Lagarde Confident In Euro

Christine Lagarde,the French finance minister,thinks political leaders will have to take a helicopter view of things for the good of our economies.The Greek population and government are really demonstrating a commitment to deliver.They are doing it.The work is being done.The Greeks are taking it much more seriously than the markets feared.
Solving the debt crisis is a joint effort of the International Monetary Fund,the Euro-zone and the European Central Bank.The Euro can absolutely survive.This whole thing was built on the back of wars.In the 1960s,Europe decided they had to build something better,Ms.Lagarde said in her excellent English.
At least a minority of citizens are not going along with the new fiscal regime. Protests have erupted this week in Spain and Greece,with rioting in Athens and a rail strike in Madrid.

IMF Helps Stabilize Greece

John Lipsky,First Deputy Managing Director of the International Monetary Fund,says the 110 billion Euro aid package to Greece will restore financial stability and set the stage for renewed growth in the Greek economy.The European Union authorities have agreed to create a stabilization mechanism in conjunction with an IMF program where help is asked for and needed.
There's no question that the Greek adjustment program is a difficult one,Mr.Lipsky admitted,but it was designed by the Greek government and approved by Parliament,and the majority of Greeks support it.A combination of high debt,high deficits and a lack of competitiveness had reached a big proportion in Greece.
The IMF constitutes a revolving fund from its 186 member countries.The U.S. pays about 17% of the fund.It is replenished whenever it is used.There are no program negotiations with Spain or Portugal at this time,John Lipsky stated.
The IMF is an autonomous UN agency which promotes international monetary cooperation,currency stabilization and international trade.

Greek Crisis Looking Better

At least for the moment,the Greek debt problem seems to be closer to resolution.German Chancellor Angela Merkel praised Greece for reigning in spending in a remarkably short time.If necessary,she said,they will defend their euro together.Dominique Struass-Kahn,Managing Director of the International Monetary Fund,believes the problem is unlikely to spread.Half of Greece's outlay had been for public sector wages and benefits.Big cuts to that spending have led to rioting,to which police responded with tear gas and batons.
Greek finance minister George Papaconstantinou said they took some difficult measures to show their determination.There is absolutely no question that they will meet this year's target.It's not just a Greek problem;it's a bigger problem.The unrest is normal and expected when they have such difficult reforms.It is encouraging that opinion polls are broadly supportive of the government.The biggest deficit they face is a credibility deficit,in Mr.Papaconstantinou's opinion.

A Complex Recovery

Europe accounts for 29% of U.S. exports and 8% of U.S. revenues.That is why the Eurozone debt crisis is such a concern across the Atlantic.The domino effect is much on the minds of financial leaders in America.
Spain contributes 12% to the Eurozone economy,while Greece yields 3%.The fiscal problems in Spain are not as bad as in Greece,says Nariman Behravesh,Chief Economist at IHS Global Insight.Spain is in the second year of a recession,with 20% unemployment.The big question is,what are they reasonably gonna do?None of the countries has come up with a credible debt reduction program.A Greek default has to some extent been priced in the market,but a Spanish default could split up the Eurozone.That has not been priced in.We're talking about a multi-speed recovery,a "LUV" recovery,with Europe being the L;the U.S. being the U;and Asia being the V,in Mr.Behravesh's opinion.
Greek Prime Minister George Papandreou announced a second round of budget cuts yesterday.The first round prompted rioting.Without the promise of cuts,Greece would not receive aid from its neighbors or the International Monetary Fund.

China's Growth

The latest figures show that China's Gross Domestic Product rose 10.7%.Apartment sales in Beijing support this data,with people signing up to reserve unbuilt units.China's 580 billion dollar stimulus program is judged to have been the most effective in the world,with the spending concentrated on advanced infrastructure.China is on track to overtake Japan as the world's second-largest economy,behind the United States.Nonetheless,Chinese earnings are only a fraction of the West's.More than 150 million Chinese earn a dollar a day.
The International Monetary Fund has just raised its global growth forecast for 2010 by 0.8% to 3.9%.The U.S. is projected to grow 2.7%.The IMF says that the global financial system remains fragile.Fiscal policies need to remain supportive.

IMF Leader Is Heartened

Dominique Strauss-Kahn,Managing Director of the International Monetary Fund,says the global economy is recovering,but unemployment usually lags by 10 months or more,and we shouldn't be too optimistic.Moreover,there are some possibilities of a double dip.It's not the main scenario in which we believe,but it may happen,Mr.Strauss-Kahn cautioned.
When the good news started in April,he was initially concerned countries would start unwinding stimulus packages too early.He's now heartened,the IMF executive said.I know that we will go on pushing the public support to demand until private demand will take over.I'm reasonably confident that growth will resume,but countries are exiting stimulus strategies on their own,without coordinating for an international response,pose a big risk.Exit strategies must be coordinated as much as possible,Mr.Strauss-Kahn insisted.
The IMF is an autonomous UN agency that works to further global monetary cooperation,currency stability and international trade.It's headquarters are in Washington,D.C.

IMF Takes Helpful Steps

The International Monetary Fund is providing special assistance to poor countries struggling through the financial crisis.Interest payments on outstanding loans will be waived through 2011.As well,up to 17 billion dollars in emergency aid will be granted through 2014.About half of that will be paid out through 2011.IMF gold sales will generate some of the funding.The IMF,based in Washington,D.C.,is an autonomous U.N. agency that is prominently involved in development issues along with The World Bank.

Ministers Agree on Framework

The G8 finance ministers,meeting in Lecce,Italy over the weekend,have produced the Lecce Framework,a strategy for obtaining a set of common principles and standards governing the conduct of international business and finance,according to their communique.Their goal is to identify and resolve regulatory problems that contributed to the financial crisis.U.S. Treasury Secretary Timothy Geithner said the U.S. would propose more conservative standards,including several international proposals to help raise global standards of oversight of cross-border financial firms and global derivatives markets.
The G8 ministers,representing the U.S.,France,Italy,Germany,Russia,Canada,the U.K. and Japan,noted recent improvements in global financial markets and economic data,although significant risks remain.They asked the International Monetary Fund to help devise a plan for winding down fiscal and monetary interventions,while agreeing to maintain the programs as needed.

Colombia Applies For Credit

Colombia has applied to the International Monetary Fund for a 10.4 billion dollar line of credit.Colombian central bank head Jose Dario Uribe said the line is for emergency use only.IMF Managing Director Dominique Strauss-Kahn described Colombia as having strong economic fundamentals.It is the kind of nation the IMF would relax loan conditions for.Indeed,the credit line Colombia applied for has no conditions attached at all.It would only be used in the event the financial crisis deepens.The IMF promotes international monetary cooperation,currency stabilization and international trade.It is an autonomous UN agency based in Washington,D.C.

IMF Sees Further Losses

The International Monetary Fund says that losses to financial institutions are likely to climb.Losses from toxic assets will be a potential four trillion dollars.More capital will have to be raised-up to 1.7 billion dollars of it.The banking system is still not stabilized.The global financial system will be damaged for years to come.In the IMF's view,the current outlook is exceptionally bleak.The U.S. economy will drop 2.8% in 2009;Japan's will decline 6.2%;and trade volume will slip by 11%.China will grow 6.5%,which is less than half of its growth rate of two years ago.Recovery is unlikely to begin until 2010.Unemployment will rise until late 201o,the IMF projects.

IMF Aids East Europe

The International Monetary Fund has played a major role in rescuing East Europe from the financial crisis.Since Q4 of 2008,the IMF has parceled out 50 billion dollars of its 250 billion reserves to East European and other countries,as they deal with cratering exports,investment and currencies.Social unrest has occurred in Bulgaria,Latvia and Lithuania because of the worsening downturn.Among recent IMF loans were 18.8 billion to Hungary,2.46 billion to Belarus,2.35 billion to Latvia and 16.4 billion to Ukraine.Pakistan has received 7.6 billion,while Iceland has gotten 2.1 billion.British Prime Minister Gordon Brown has called for an increase in IMF reserves,fearing a lenghthier crisis could deprive nations of aid,leaving them in economic winter.IMF officials say 500 billion would be enough for the crisis,but others aren't so sure.

Brown Calls For Unity

Gordon Brown,the British Prime Minister,said that the economic downturn can only be ended by international cooperation.Individual countries can do a great deal to help their own economies,but only global efforts can provide a long term solution,through better regulation and coordinated intervention.The International Monetary Fund and World Bank must play a larger role in crisis prevention and resolution.Only a truly international response of policy and governance can be effective,Mr.Brown stated.If we all coordinate our response,there will be a quicker global,and therefore British,recovery,he maintained.Mr.Brown plans to meet with CEOs of the largest international banks in April to discuss dealing with global financial problems.