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from The Great Debate:
G20: Vows to act but few specifics
-- Kenichi Kawasaki is managing director and senior analyst at Nomura Securities’ Financial and Economic Research Center. The views expressed are his own --
The G20 leaders failed to come up with any concrete policy steps to pull the global economy out of recession at the London summit. The leaders vowed to restore growth and jobs, but lacked specifics about fiscal measures by each country and there were no binding promises.
There were expectations that the summit would tackle the issue of rising protectionism, but the summit is not an appropriate place to discuss international trade and investment. We saw a measure of results in expanding assistance to emerging economies, but it made the summit look as if it were a mere international conference on aid to emerging economies.
Since the collapse of Lehman Brothers last September, G20 countries have been trying to stabilize the financial markets with central banks taking exceptional action and cutting interest rates aggressively. The governments’ focus now appears to have shifted to restoring growth and protecting jobs from reacting to contingencies arising from the financial crisis.
The G20 leaders vowed fiscal stimulus totalling $5 trillion and to raise output by 4 percent by the end of next year. However, it failed to break down how much spending each country would bear. There is no indication that there are any binding targets. Since the financial crisis erupted, it has become increasingly difficult to coordinate policy given differences in the economic, fiscal and financial situations of the member countries.
Japan fleshed out its own $150 billion economic stimulus package on April 10, but the impact on boosting gross domestic product remains to be seen. The Japanese government had previously dished out economic packages with spending totalling 12 trillion yen ($120 billion). Government spending in the last fiscal year ended in March, however, only increased by 2.6 trillion yen (equivalent to about 0.5 percent of GDP). The “real water” spending will likely be limited even with the new stimulus package.
On the concern that world trade is falling for the first time in 25 years, the G20 leaders promised to extend the pledge made last year to “refrain from raising new barriers to investment or to trade” by one year to the end of 2010. Certainly, protectionist measures in any country will not protect jobs, but rather hinder economic growth. Moreover, economic model analysis on the economic effects of liberalizing trade and investment shows that “free-rider” gains from other countries’ free-trade policy would be limited. The analysis also indicates that it is important to liberalize the domestic market to maximize the benefits of global trade and investment.
from The Great Debate:
Mobile industry stimulus, strings attached
-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --
Some of the world's biggest mobile operators say they can stimulate the global economy by luring $550 billion in new investment, but only with the implied trade-off that they retain their monopoly market powers.
AT&T, Deutsche Telekom, NTT DoCoMo, Telefonica and Vodafone are among the carriers who have called on national regulators to provide a "minimally intrusive" regulatory environment to encourage new investment.
In a letter to world leaders gathered at the G20 Summit in London, the industry is looking to showcase its power to create jobs and stoke business activity by arguing for rule-making that would ensure their ability to make decent monopoly profits on new networks.
A group of executives representing 24 of the world's biggest carriers and phone equipment makers such as Alcatel-Lucent, Ericsson and Nokia also say regulators should free up more radio airwaves for their services.
The mobile industry is suggesting a lighter regulatory touch that would effectively end efforts to promote greater competition among smaller players and new market entrants.
It's a self-serving argument, but they make strong points, worth considering.
JL: “This $550bn they say they can attract would be of much more benefit if we created a program to, say, put a photovoltaic system on the roof of every building in the US and Europe,”
Let’s not mix apples and oranges, or industries. Telephony is telephony and energy is energy.
Rather than robbing Peter to pay Paul, let’s find the right policy for each industry. Half a trillion dollars for a 13 trillion dollar economy (as is that of the EU-27), especially over a 5 year period, is not Mission Impossible inter of Direct Investment. (Don’t be mesmerized by the either the number, or the fact that the cellphone business generates damn good profits that more than justify the investments necessary.)
We need cellphones, in all their frivolous 3G arrays, perhaps as much a photo-voltaic generated energy.
We can have both, if we pick well out of the thicket applicable policy options.
from Shop Talk:
Check Out Line: More jobs down the (Whirlpool) drain
Check out the Whirlpool of woe. Five thousand. That's the number of jobs Whirlpool plans to cut by the end of next year as it faces falling sales in North America and a potential global recession. Appliance makers have already been hammered by the U.S. housing collapse. Now the credit crunch is likely to keep demand down, the world's largest appliance maker said. "The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy," Whirlpool Chief Executive Jeff Fettig (pictured left) said in a statement. Some of the job cuts had already been announced. Others were new. They all add to a slew of job cuts announced by corporate America in recent weeks. That creates a spiral of people not being able to buy the goods the manufacturers make, which could cause manufacturers to cut more jobs as the economy keeps swirling down the drain. Also in the basket: Sam's Club opening new store called Mas Club Retailers slash Blu-ray player prices (WSJ)
Pershing to unveil suggested Target "transaction"
Wal-Mart cutting US store openings further
Wal-Mart says 'relentlessly' non-partisan in US election
(Photo: Reuters)
from UK News:
Brown needs Darling in these troubled times
One thing looks certain after Alistair Darling's speech to***the Labour Party conference on Monday -- he'll be Chancellor of***the Exchequer for a while yet.****** Prime Minister Gordon Brown is expected to reshuffle his***ministerial team next week and there's been a lot of speculation***that Darling could lose his job and be moved to another***department.****** The silver-haired finance minister has had a rough ride***lately. The economy is on the brink of recession and his***comments in a magazine interview saying the economic challenges***were the greatest in 60 years caused a furore and were blamed***for sinking the pound.****** But delegates at the Labour conference today just loved him.***They stood and clapped and then they clapped some more after***Darling hit out at unfettered capitalism and the huge payouts***given to bankers that he said helped cause the credit crunch.****** Darling looked genuinely embarrassed. He called for them to***stop but the delegates just went on. Besides modesty, the***finance minister had another reason for wanting them to stop.****** He had another type of conference call to attend to. A G7***one. The finance ministers and central bankers of the rich***nations club were having a hastily-arranged telephone chat at***1230 London time to discuss the latest bout of market turmoil.****** Given London's position as one of the world's top financial***centres, Darling could hardly miss out and he rushed off the***stage to get on with his G7 buddies.****** The crisis also looks to have cemented Darling's position.***It would seem odd to remove the finance minister when the whole***world financial system is in the middle of the biggest upheaval***in a generation.****** With Brown making his economic experience a key selling***point, he needs Darling on side.
from Shop Talk:
Check Out Line: Global view of bleak economy
Check out the bleak view of the global economy. Expectations for the global economy have fallen to their lowest level in almost 18 years, according to the Ifo economic research institute, a Munich-based think tank. Based on a survey of 1,025 economic experts in 92 countries, the expectations component of the group's latest survey was 61.4 percent, the lowest reading since the final quarter of 1990. The overall economic climate index also fell, hitting it lowest level in almost seven years. The good news is that the the economic climate has not gotten worse in North America. The bad news is that it has gotten worse in Western Europe and Asia, areas where U.S. based companies have done well while the U.S. economy sputtered. Also in the basket: BJ's Wholesale profit up, raises full-year view Nike launches new format (WWD, subscription required) Nike brand head very pleased with Beijing effort Wal-Mart shoppers favor McCain (WWD)
(Photo: Reuters)
