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from Breakingviews:

G20’s growth pledge is missing a demand booster

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The G20’s promise to add an extra 2 percentage points to global GDP is missing a crucial demand booster.

The growth target, adopted at a meeting of finance ministers and central bankers in Sydney over the weekend, was lifted from an International Monetary Fund paper which examined what might happen if the world’s biggest economies agree on a shared agenda.

The IMF researchers recommend shuffling consumption and investment between China, Germany, Brazil, India, Indonesia and the United States. They also advocate carefully fixing fiscal deficits, while changing regulations to boost employment and make both labour and capital more productive. Put it all together, and the researchers reckon the policies should add $2.25 trillion to the IMF’s recent estimate of real output in 2018.

from MacroScope:

A glimmer of hope in Kiev

A glimmer of hope in Ukraine?

Let’s not count our chickens after 75 people were killed over the past two days but President Viktor Yanukovich’s people are saying an agreement on resolving the crisis has been reached at all-night talks involving the president, opposition leaders and three visiting European Union ministers.
A deal is due to be signed at 1000 GMT apparently although no details are as yet forthcoming. There has been no word from the EU ministers or the opposition so far.

Even if the violence subsides and some sort of political agreement is reached (a huge if), there is potential financial chaos to deal with despite Russia’s only partially delivered pledge of $15 billion to bail its neighbour out.

from Breakingviews:

G20 can get past angry stares and platitudes

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The G20 risks becoming a particularly pompous talking shop. As finance ministers and central bankers from the world’s largest economies gather for their weekend summit in Sydney, Australia, they might plan to get out of a potentially dangerous rut.

from MacroScope:

ECB under pressure, March move more likely

The European Central Bank meets on Thursday with emerging market tumult bang at the top of its agenda.

It’s probably too early to force a policy move this week – particularly since the next set of ECB economic and inflation forecasts are due in March – but it's an unwelcome development at a time when inflation is already uncomfortably low, dropping further to just 0.7 percent in January.

from The Great Debate:

An unstable global economic system that is being ignored

Today, the International Monetary Fund announced yet another a reduction in its global growth projections for 2014, with its estimate of U.S. growth also reduced (citing reduced government spending, but not the present U.S. government shutdown -- or the heretofore unthinkable notion of the U.S. government defaulting on its obligations). Despite the seeming urgency of global economic slowdown, when world leaders attended their annual fall confabulation at the United Nations in New York last month, they focused on the diplomacy of physical security (Syria, Iran, etc.). Thus another year has passed in which global economic security issues were on no one’s reported agenda.

Policy makers continue to fail to appreciate that the most formidable economic challenge today lies in the area outside the borders of any one nation or region -- and that multilateral action to address this challenge is arguably more important than efforts at increasingly less-effective internal stimulus.

from MacroScope:

Greek turning point?

Greece will unveil its draft 2014 budget plan which is expected to forecast an end to six years of recession.

The draft will include key forecasts on unemployment, public debt and the size of the primary surplus Athens will aim for to show it is turning the corner. The government has said any further fiscal belt-tightening will not bring cuts in wages and pensions and that savings will be generated from structural measures.

from The Great Debate:

Forging ahead with free trade

The recent focus on what divides world leaders, from Syria to the euro zone, has obscured the significant agreements reached at the Group of 20 meeting in St. Petersburg earlier this month. One of the most important was support for free trade and opposition to protectionism.

We can now build on this momentum, as well as other trade liberalization efforts, to achieve meaningful progress at the World Trade Organization ministerial meeting in Bali in December.

from Hugo Dixon:

Still too big to fail

Lehman Brothers’ bankruptcy five years ago crushed the global economy, turfed millions of people out of their jobs and left governments groaning under hefty debt burdens. Since then, policymakers have been beavering away to make sure that a similar calamity never happens again. Measures to address many of the key problems have been taken or are in the works. But if a Lehman went bust today, there would still be havoc.

The main success has been in building up the capital cushions banks have to withstand shocks. Since the end of 2009, the big global banks have increased their shareholder capital by $500 billion – the equivalent of 3 percent of their so-called risk-weighted assets, according to the Financial Stability Board (FSB), the organisation tasked by the G20 countries to fix the financial system. They are also on track to meet tighter global standards nearly five years ahead of the deadline.

from MacroScope:

For markets, non-farms eclipse G20

The G20 will wrap up with entrenched positions on Syria and a little more entente over the emerging market turmoil prompted by the Federal Reserve’s impending move to slow the pace of its dollar creation programme.

The BRICS are plugging away with their plan for a $100 billion currency reserve pool to help calm forex volatility but officials admitted this is still a work in progress and won’t be deployable soon.

from The Great Debate:

Common ground for Obama and Putin is offshore

Low expectations surround the G20 meeting in St. Petersburg on September 5-6.

President Barack Obama’s decision to cancel the pre-G20 summit with Russian President Vladimir Putin means the big photo op will likely be the two leaders awkwardly trying to avoid each other. The other headline-making issues in U.S.-Russian relations -- Syria, nuclear weapons reduction, missile defense -- also appear off the table now. There is one timely matter, however, that resonates with Washington, Moscow, and the entire G20 -- the continuing fight against offshore tax havens.

The Cyprus financial collapse in March focused world attention on the outsized role played by offshore banking zones in international tax avoidance and money laundering. Though Russian depositors were the primary victims here, Moscow appeared indifferent to this unprecedented expropriation by Cyprus of the assets of Russian citizens. Putin proved unwilling to help those he viewed as tax-evading oligarchs and corrupt bureaucrats -- as well as a few legitimate businesses.

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