The Great Debate UK
-Jane Foley is research director at Forex.com. The opinions expressed are her own.-
What began at the start of the year with an acknowledgement from Greece that it had been living way beyond its means soon turned into a more universal re-appraisal of the risks of sovereign default.
After Greece, the bond markets of Spain and Portugal were next to be re-examined. More recently even the yields spreads of French and Dutch bonds vs German Bunds widened. Investors have shown themselves less inclined to finance the debt of countries which are not prepared to exercise budgetary prudence and governments have been forced to sit up and listen.
The rhetoric of this month’s G-20 meeting made clear that expansionary fiscal policies are off the agenda and that fiscal consolidation has become the new watchword of the majority of G-20 governments. Fiscal austerity clearly has an impact on growth potential and consequently on the market’s attitude towards risky assets.
from The Great Debate:
Stocks and other risky assets are rallying around the world this week because the Group of 20 nations said on the weekend they would keep the economic stimulus flowing, a state of events which illustrates where we are and what a very strange place it is.
The G20, the only group of big hitters that matters because it is the only group which includes the Chinese, met in Scotland over the weekend and, as is the way of these things, did very little with immediate consequences for anybody.
So keen is the British prime minister to airbrush out his decade as a "light touch" finance minister that he embraced the heretical idea of a levy on financial transactions as one way to make banks pay for future bail-outs -- the so-called Tobin tax.
Climate change was initially billed in a leading role at the G20 meeting in Pittsburgh. Now it looks set to make the briefest of cameo appearances.
Nonetheless, the gathering offers a crucial chance to recast the talks. The United Nations carbon process is in deep trouble and desperately needs help from the top. If the G20 heads of government want to avoid embarrassment at the Copenhagen Summit, they need to start to steer the talks in a new direction.
from The Great Debate:
The effort to rein in banking bonuses, outrageous as they may be, is akin to banning glue sniffing because you are worried about the effects of intoxication.
There are, as the kids in the alley behind the high school can tell you, other ways of getting high.
Could the European Union be among the big losers of the global financial crisis?
Despite signs that recession in Europe may be bottoming out, the 27-nation bloc risks emerging from the turmoil with its economic growth potential stunted, its public finances shackled by mountains of debt, and its international influence weakened.
That is the backdrop to Jose Manuel Barroso's campaign for a second term as president of the executive European Commission. In a manifesto sent to EU lawmakers last week, he warns that unless Europeans shape up to the challenge together, "Europe will become irrelevant".
Having wrapped up the two-day get-together in London, G20 central bankers moved down to the Swiss city of Basel (I counted central bank governors and officials from at least 9 countries onboard the same flight) to discuss more about the global economy for a two-day meeting.
The focus here again is the global economic recovery, which seems to be gathering momentum, and the timing of exit policy -- which is essential in the future to avoid inflationary pressure.
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
As the G20 ministers gather for their meeting this week, there should be no doubt about the item at the top of the agenda: the re-entry problem. At what point should the expansionary monetary and fiscal policy of the past year be reversed? And, if the answer is “not yet”, how soon does the re-entry plan need to be announced?
from The Great Debate:
- Jorge Maia is head of Research and Information for Industrial Development Corporation of South Africa, established in 1940 to promote economic growth and industrial development. The opinions expressed are his own -
Serious shockwaves are hitting Africa's shores as the global economic crisis unfolds.
from UK News:
From the cosy fireside chats and walks in the woods of 30 years ago, world summitry has expanded beyond all recognition, with this week's G20 meeting in London being billed in some quarters as the biggest gathering of leaders since 1945.
But the problems now are of course much bigger too. Long gone are the days when a few soothing words about co-operation on currencies would be enough to declare a summit a success.