Prince Charles is in Canada, the Queen is expected to go there next year and William is preparing to go to New Zealand and Australia -- but are there signs that the locals are revolting?

Polls published in advance of Charles' visit show support for Canada's constitutional monarchy is weak, even if the public's frosty opinion of the Prince of Wales himself has begun to warm just a bit.

Sixty percent of Canadians felt the constitutional monarchy was outdated, although 80 percent said it was an important part of Canadian history.

Polls in New Zealand show people generally in favour of the monarchy even if it seems to have little relevance to their lives but when William heads off afterwards to Australia he will find a much more developed republican movement.

Prime Minister Kevin Rudd is an avowed republican whose announcement of William's trip made it crystal clear that the young royal was coming because because he asked to, not because he was invited. Foreign Minister Stephen Smith says a split from the monarchy is inevitable in the next decade.

William, travelling without girlfriend Kate Middleton, can expect to bask in the lingering "Diana factor," but this enduring phenomenon may actually work against the older couple in Canada.

Do you believe such royal visits have any point?

Jonathan Morduch is Professor of Public Policy and Economics at the Wagner School of Public Service of New York University and managing director of the Financial Access Initiative. He is the co-author, with Daryl Collins, Stuart Rutherford and Orlanda Ruthven of Portfolios of the Poor: How the World's Poor Live on $2 a Day (Princeton University Press, 2009).

In New York City, $2 is what you spend for a ticket on the subway or to buy a coffee. But for billions of people around the world, $2 or less is the average amount of money you have to put food on the table every day, pay medical bills, keep children in school, and seize business opportunities. It seems impossible.

Foreign aid experts, policy makers, and even celebrities have a lot to say about the population living on $1 or $2 a day. The group we don’t often hear from is the poor themselves. As a result, most of us have little clue about how the poor manage to live on so little—so we fall back on our guesses and assumptions, and that then informs the way we think about foreign aid.

A few years ago, my colleagues Daryl Collins, Stuart Rutherford and Orlanda Ruthven set out to learn how poor families in Bangladesh, India and South Africa really manage to live on so little. Research teams spent a year getting to know families and recording their challenges, ambitions, strategies, failures, and successes.

Our new book, Portfolios of the Poor: How the World's Poor Live on $2 a Day, comes to conclusions that turn common assumptions upside down. Far from living hand-to-mouth, all of the families interviewed were borrowing, saving, and leading active financial lives because of their poverty, not in spite of it. One of the central conclusions is that when you live on so little and face a life of uncertainty, thinking about the future is an imperative, not a luxury. You can’t afford not to save.

Some of the families have access to formal bank accounts, but most make due with imperfect financial tools of their own creation that help them deal with irregular, unpredictable incomes. Some of the most interesting strategies involve ways to save. To overcome temptation, the families create tools with built-in self-discipline features, like rule-bound savings clubs involving a few friends that shift money into a “hands-off” account; deposit collectors who come around the village daily to collect a penny or two each day; and friends delegated to be “money guards” who act like beefed-up piggy banks by restricting access to cash.

"Portfolios of the Poor" highlights that the often-hidden challenge of living on $1 or $2 a day is that these figures are just averages—some days the families earned more and some days much less. Coping with the unpredictability of income is a fundamental challenge—and it’s missed in the articulation of the United Nations’ much-discussed “Millennium Development Goals”. A better picture of poverty is captured by what we call the “triple whammy” of poverty: (1) low incomes, (2) irregular and unpredictable incomes, and (3) a lack of financial tools. Better financial tools would allow poor families to squeeze the most out of what they have.

"Portfolios of the Poor" includes concrete ideas for moving forward. Getting there, though, requires us to first step back and listen.

— Neil Collins is a Reuters columnist. The views expressed are his own –

So you’d like to work for BP? A fine company, recognisably the same business as half a century ago, and likely to be around in half a century’s time — yup, it’s a fine choice for a career.

It’s going to be an even better one for the ambitious twenty-something, because no-one joining after next March will be able to join its final salary scheme.

These schemes are comfort blankets for pen-pushing civil servants (and, of course, snouts-in-trough British MPs) so if getting into one is the height of your ambition, then perhaps BP can manage better without you.

Schemes where the employer undertakes to pay a pension linked to your salary when you retire, whatever that is, are dying, and quite right too.

Imagine you had joined BP at 25, and at 45, stuck in a cul-de-sac inside this vast company, you got an attractive offer from a small competitor.

You’d love to do it, but matching the current value of your accrued pension rights would ruin the prospective employer. You must either walk away from your biggest asset outside your house, or resign yourself to 20 more years buried inside The Organisation.

These schemes damage the employer too. The cost of shedding our 45-year-old against his will is high, because he remains a deferred member of the scheme.

From next year, BP’s recruits will be invited into a defined contribution scheme, where employer’s and employee’s contributions are used to buy a growing pool of assets which belong to the employee. The employer has no future liability to fund, and the employee can consider a mid-life career change without penalty.

Of course, ensuring a comfortable old age is expensive, which is why BP expects to contribute 15 percent of salary into the scheme for new employees. Even that might not be enough, but it will put the individual, rather than the employer, in charge of his own financial future, and nobody ever claimed that freedom was cheap.

– Neil Collins is a Reuters columnist. The views expressed are his own –

This rather odd chart from Monument Securities says something curious — http://graphics.thomsonreuters.com/commentary/INDEX-LINKED-CURVES.pdf. — It shows that British investors (or at least the buyers of UK Government index-linked gilts) are much keener to buy protection against inflation than the holders of French and U.S. government bonds.

A yield curve plots the return on bonds against their longevity, and this one shows that in all three countries, the short-dated index-linkers promise to be pretty dull investments.

Since inflation is currently negative (on some measures) and it takes a while to get going, this is hardly surprising.

The obvious divergence is in the area of the chart covering stocks that have between 12 and 20 years to run. There is a reasonable supply around these dates, so liquidity is not an issue. All the U.S. dollar index-linked TIPS and all the French euro index-linkers yield between 2.1 and 2.2 percent, in each case protected against the relevant national inflation rate.

The British stocks are way out of line, returning around 1.2 percent on top of the UK Retail Prices Index, a full percentage less than is available elsewhere.

In an international marketplace, this is strange indeed. The calculations of inflation vary somewhat between the three countries, but they should even out over time.

In addition, the extra inflation to which the UK economy has been historically prone ought to be balanced by currency depreciation, if not in the short term, at least over the life of these bonds.
Something more than a generalised view of global inflation is at work here. The answer, almost certainly, lies at the door of the British pension fund actuaries. In their obsession with matching assets to liabilities, they insist that the funds put more and more into government bonds, and especially index-linkers.

These bonds do indeed provide the best match available, and allow the actuaries to do their baleful sums, but the prices have been driven to ruinous heights (with the correspondingly pitiful yields) as a result of their demands.

As a result, British companies must pour ever greater sums into their pension funds, and as prices go up, more capital is demanded to produce any given income.

The U.S. and French index-linkers offer much better value than the expensive UK versions, so a pension fund buying those instead could break this vicious circle.

The actuaries will moan about the currency risk, but that looks far less than the risk of bleeding the businesses which are liable for those pensions, a couple of decades hence.

— Wei Gu is a Reuters columnist. The opinions expressed are her own. —

When U.S. Treasury Secretary Timothy Geithner told students at Peking University that China’s holdings of U.S. Treasury bonds were safe, his answer drew loud laughter from the audience.

Even economist and columnist Paul Krugman, who is often critical of U.S. economic policy, found himself defending America when he was repeatedly asked the same questions in China recently: Will you (U.S.) underwrite the value of China’s holdings of U.S. government debt? Will you be prepared to pay a much higher rate of interest against the risk of high inflation and dollar depreciation?

This is a big change from two decades ago, when many Chinese felt the best way to preserve their savings was to convert yuan into dollars on the black market.

Dollars are still affectionately called “mei jin” in Chinese, which literally translates to “American gold”, but they are now also referred to as toxic assets by many in China.

Last week’s decline in U.S. bonds and the dollar after the sale of $100 billion in new U.S. Treasuries have made the Chinese even more concerned about the country’s estimated $1.4 trillion of reserves parked in dollar-denominated assets.

The Chinese government wants to assuage rising domestic fury about the losses China faces on its $2 trillion foreign reserves, so the country’s economists have come up with various options for Washington to “guarantee” the value of China’s dollar holdings.

China craves such a guarantee because it has no choice but to keep buying U.S. debt. Were it to stop doing so, the value of its existing holdings would be imperiled.

LIFTING CAPITAL CONTROLS IS KEY

There is, however, something Beijing can do to rid itself of the shackles of its reliance on U.S. Treasury bills: allow its companies and citizens to invest more freely abroad, and loosen its grip on the capital account.

When the private sector buys dollars from the central bank to invest abroad, the pile of foreign currency the central bank has to manage will decrease over time.

Currently, Beijing enjoys a near-monopoly on investing externally (as well as domestically) as it is virtually the only holder of dollars in the country given the stringent controls on foreign exchange holdings.

Given the huge volume of funds Beijing handles, and the requirement to keep reserves in liquid securities, much of the cash has found its way by default into the U.S. Treasuries market.

The yuan has appreciated about 20 percent against the dollar in the past four years, while returns on U.S. Treasuries at most match that, meaning the reserves have made no money in yuan terms.

Private sector investors would be more likely to be interested in stocks and commodities than in “boring” Treasuries. Buying stakes in the world’s best companies and securing natural resources are also in China’s strategic interest. China’s sovereign wealth fund has progressively been doing that on behalf of its 1.3 billion people, but the fund only accounts for 10 percent of China’s reserves.

China has talked about “cang hui yu min”, meaning dividing some foreign currency holdings among its citizens. So far, it has put some dollars on state-owned banks’ balance sheets, partly in an effort to mask the rapid pile-up of its reserve holdings, and allowed Chinese investors limited access to foreign securities through certain funds.

For ordinary Chinese, there is growing interest in investing beyond Chinese assets. People do want to diversify their yuan holdings, buy property abroad for children studying overseas and invest in foreign bluechips. But under current rules they are not even allowed to buy stocks of Chinese companies traded in Hong Kong.

Beijing has also stressed a “going abroad” strategy in recent years, but Chinese companies with global ambitions still have to go through lengthy approval process. That partly explains why China’s outbound foreign direct investment accounts for about 3 percent of the global total, far below its share of world trade and economic output.

Now is a good time to loosen some control, since China’s economy is healthier than most others, the risk of big capital outflows is relatively lower.

Admittedly, even reform of this sort is fraught with short-term risk because the markets will punish the dollar as soon as it senses the effect of what the Chinese are doing.

But what is clear is that the key to preserving the value of China’s reserves lie in the hands of Beijing, not Washington — pursuing a U.S. guarantee for China’s current investment strategy is barking up the wrong tree.

– At the time of publication Wei Gu did not own any direct investments in securities mentioned in this article. She may be an owner indirectly as an investor in a fund –

- Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own. -

Is the crisis over yet?

In the last 3 months, the Dow and the FTSE have each risen by about 25 percent, the Standard & Poor's 500 by a third. House prices appear to be stabilising in the UK. Stress-tested and backed by seemingly unlimited government funding, the banks are lending again (if only to each other), so that 1-month libor is down to only 0.3 percent.

In the Far East, the Chinese economy may be growing again, and even Japan may have pulled out of its nosedive. The oil price has recovered from its lows.

Is there any reason to doubt that the worst is past?

No reason whatever, except the following (in ascending order of gravity):

1. As unemployment increases, defaults on credit card debt are certain to rise, reducing the banks’ ability and willingness to lend to consumers.

2. Even if the residential property market has stabilised, commercial property prices appear to be in free fall, leading to further contraction in the construction sector, more bad debts and knock-on effects on employment and investment in the broader economy.

3. The consensus view is that bank stress tests, in the U.S. at least, were based on optimistic assumptions about the depth and duration of the real estate slump.

4. In order to spare U.S. and UK taxpayers, the bailout burden has been piled on to the bond markets, which have so far proved willing to finance the massive increase in the national debt of the two countries at a cost of only 3.75 percent on 10-year Government debt in UK and 3.5 percent in U.S., which is remarkable considering that both countries appear to be heading for a debt-to-GDP ratio of 100 percent or more.

However, in addition to the recent threat by S&P to downgrade UK gilts, the spread on credit default swaps is an even clearer warning: it costs 86 b.p. to insure against a British government default, and 44 b.p. for the U.S. (compared to only about 40 b.p. for France, Germany or Japan). Outright default by Britain or the U.S. is, in my view, highly improbable.

By far the most likely outcome in the medium term is inflation, or default by stealth. This is how Britain paid the bill for World War Two and the U.S. for Vietnam. So far, however, the bond markets appear to trust the politicians to come up with a plan to pay off these debts. But they will not wait forever.

At some point, they could well take fright and try to dump UK or U.S. government debt, forcing yields up to cripplingly high levels, with disastrous consequences for the real economy.

5. Who are these bondholders anyway? A significant proportion are institutions or governments of countries which, unlike Britain and the U.S., save rather than consume, and hence have balance of payments surpluses, notably the Gulf States, Japan and, most important, China. How long will their patience last? They are locked into their massive accumulation of dollar assets, unable to exit without realising enormous capital losses. But if they decide to stop throwing good money after bad, the outcome could be a dramatic rise in interest rates and a calamitous fall in the value of the Dollar, a final convulsion in this long devastating crisis.

None of these disasters is inevitable. But if you think the worst is over, ask yourself: why is the price of gold - traditionally seen as a safe haven in times of economic turmoil - rising again?

- Professor David Bailey works at the Coventry University Business School and has written extensively on globalisation, economic restructuring and industrial policy, with particular reference to the auto industry. The opinions expressed are his own. -

GM declared itself bankrupt on Monday in one of the largest bankruptcies in U.S. history, in an attempt to seek protection from creditors.

The firm has stacked up over $80 billion of losses in the last four years, also swallowing some $20 billion in cash from the Obama administration. It is likely to need another $30 billion before emerging from Chapter 11 substantially slimmed down and free of debts.

A bankruptcy judge will decide who gets what assets. It's not clear whether during Chapter 11 the firm will continue to function and assemble cars.

It used to be said that "whatever's good for GM is good for the U.S. economy". Whilst GM is no longer the world's biggest carmaker, by some estimates it still accounts for 1 percent of the U.S. economy. The bankruptcy is not only hugely symbolic of the fate of the ailing U.S. car industry, but is of huge importance for all the workers, suppliers, dealers and creditors caught up in its travails.

Republicans have begun to criticise the U.S. president's handling of the GM affair, but it is difficult to see what else the U.S. president could have done.

Obama had to give GM time to come up with a credible plan, and I have always thought that the firm would need up to $50 billion of government support to get through the downturn and restructuring.

Under the proposed plan, the U.S. government would get a stake of over 70 percent in GM in return for another $30 billion of state cash, with the United Auto Workers union taking 17.5 percent initially, with the union accepting shares in GM instead of cash owed by the firm for retired employees healthcare cover.

A majority of GM's bondholders have accepted the offer to swap their $27 billion in debt for an initial stake of 10 percent with the option of buying 15 percent more later. Their agreement to do this should help in speeding GM's progress through Chapter 11 and avoid expensive legal battles.

Whilst a minority group of bondholders are holding out for a better deal, in reality this restructuring is the only game in town.

Hopefully, the new GM that emerges from Chapter 11 will be leaner, fitter and free of debts. It will include the firm's best models and R&D and will scrap brands like Pontiac, Hummer and Saturn.

By 2012, the new GM will comprise the Chevrolet, Cadillac and Buick brands, plus its GMC truck brand. Of particular importance, its forthcoming electric Chevvy Volt car will be part of the new firm.

"GM-Lite" will cut the number of assembly sites across North America, including Canada, to 33 within three years, from 47 at the end of last year.

Eventually, the goal is to float the new firm on the New York Stock Exchange. It will shed some 20,000 or more workers in the U.S., and has also told over a thousand dealers in the U.S. that they are at risk of losing their franchise. GM plans to lose 2,300 from its 6,000-strong network.

In a deal with the UAW which saves the firm $1 billion a year, rules on breaks, vacation and overtime have been changed, retiree benefits have been cut, and the UAW has agreed not to strike until September 2015 at the earliest.

GM will never be the biggest manufacturer again, but Chapter 11 is anyway about restructuring the firm, erasing the debts, cutting costs and reorienting the firm towards more environmentally friendly cars.

A viable car company may yet emerge from the ashes of the old GM, thanks to an interventionist U.S. government which is investing heavily in new green technologies.

The situation here in the UK is rather different. An efficient and world class car industry is struggling given the impact of recession and credit crunch, and the British government has largely been a spectator as GM Europe has been sold off.

That in turn could have a very significant impact on jobs at Vauxhall here in the UK.

-- Neil Collins is a Reuters columnist. The views expressed are his own --

Standard & Poor's could have chosen a better day to kick the British economy, by placing the UK onto "negative outlook", the usual precursor to a downgrade of S&P's rating of an issuer's debt.

The move came minutes before the Debt Management Office closed its massive auction of 5 billion pounds of 2014 stock, and minutes after the release of figures showing the Public Sector Net Borrowing Requirement leaping to 8.5 billion pounds in April, a sum which not long ago would have been considered high for a whole year.

Economist Howard Archer at Global Insight immediately called the figure "dire, starting the new fiscal year off as it is highly likely to continue."

S&P, meanwhile, now fears that the net general government debt burden "could approach 100 percent of GDP and remain near that level in the medium term."

It's hard to describe the UK public finances as anything other than a disaster area. The forecasts made in last month's Budget looked optimistic within days, and even these require the DMO to borrow 220 billion pounds this financial year, or almost a billion pounds every working day.

Yet while the DMO soaks up cash, the Bank of England is desperately creating it. Its "quantitative easing" programme has been in full swing this week, buying in 1.326 billion pounds of a stock which looks very like the one that the DMO was issuing just one day later.

The experts will tell you that because the life of the new stock is not quite five years, it falls outside the Bank's five to 25-year target zone for QE, and is therefore qualitatively different. This is pure mumbo-jumbo. Essentially what is happening is one arm of the government is creating money for another arm of the government to borrow.

The traders can hardly believe their luck, selling expensively to the Bank and buying cheaply from the DMO.

This waste of taxpayers' money would be bad enough, but the real damage is the false sense of security this round-tripping produces. Britain is in real danger of falling into a debt trap, where the cost of borrowing spirals up with the amount the government has to raise.

As the rating agency's reality check concludes: "A government debt burden [of nearly 100 percent of GDP] if sustained, would in S&P's view be incompatible with an AAA rating."

Loss of that rating would lead to a higher cost of government borrowing, damaging the chances of avoiding the trap.

Were the Labour administration not in total funk, it might seize on this report to admit that its spending plans are not sustainable. Capital projects, like the NHS IT scheme, ID cards, Crossrail, aircraft carriers, the Eurofighter and much else will have to go, and the next government will have to impose real cuts in the core spending of education, health and welfare.

S&P's warning shot shows that the phony war is over, and the real pain lies ahead.

- Cori Crider represents 30 Guantánamo prisoners as an attorney with legal charity Reprieve. The opinions expressed are her own. -

You would be hard-pressed to find a kid more thrilled on Barack Obama’s first day in office than Mohammed el Gharani. On January 21, had you been standing at the right corner of Guantanamo Bay, you could have heard him whoop for joy when the U.S. President made history—so we thought—by closing the prison where el Gharani grew up.

It is four months since that decision. The president gave a speech, "clarifying" his plans for Guantanamo on Thursday. But I fear we will all look back on May 21, 2009, as the day real history was made—The Day President Obama Un-Closed Guantanamo.

In many ways the die seems already cast. The President revived the military commissions last week, a move that risks stretching the prison’s life out for months. Just two prisoners have left Guantanamo since January. One, Binyam Mohamed, had humiliated the U.S. and the UK over his torture; the other, Lakhdar Boumediene, had been ordered released by a federal judge.

It is unclear what the administration is waiting for in Mohammed el Gharani’s case. He was found innocent in court, just like Boumediene, and he has a country to go to. He could climb on a plane to Chad tomorrow, were the administration simply to wake up and do what it has been ordered to do.

In this, el Gharani is luckier than many—namely, Guantanamo’s sixty refugees, who require the U.S. or a goodwilled third country to save them from torture at home. For these men, the administration’s dithering spells disaster. For while the government frittered away the global goodwill that would have helped them house refugees in January, the right regrouped.

Now, talking heads and demagogues have found a new target in Gitmo for scaremongering— a group of innocent Muslim refugees from China called the Uighurs. After rumors swirled that a couple of Uighurs might be released into the U.S., members of the right published libellous statements saying they were tied to al Qaeda. (Even the Bush administration conceded the Uighurs were not the enemy.)

Republicans in Congress have vowed to fight “putting terrorists in American towns” to the bitter end. On the heels of this panic, even the Democrats yanked from a bill funding to close Guantanamo. Yet nearly every country in Europe has made clear: if the US takes no refugees, Europe will take no refugees.

Up to now, the Obama administration has kept silent before this storm of falsehoods, though it well knows it could doom the closure of Guantanamo. We know of no other options the US has pursued for the refugees, aside from Europe and the US. Rumors of Middle Eastern havens have not, apparently, been pursued. Those options closed by inaction, what is left? Filling cells in Bagram, perhaps, or worse still, returning men to Tunisia, China, or Uzbekistan. These no longer seem beyond possibility.

The xenophobia we have seen on the U.S. airwaves and on the Hill this week reflect the worst of America. El Gharani knows a lot about such racism; as a black boy in Medina, local schools shut him out; and as a teen in Guantanamo, he bore the brunt of abuse because he was both dark-skinned and Muslim.

We at Reprieve have watched Mohammed el Gharani grow up in prison. It is high time he left. And while it is not too late for President Obama to let him go, and take a strong stand on these issues, he has lost precious time. Today we heard moral equivocation from the lips of the very man who lambasted Guantanamo repeatedly on the campaign trail.

*This post was updated after the speech President Obama made on Thursday.

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

India’s voters have just given stalled world trade talks their biggest potential boost since the financial crisis spurred fears of rising protectionism.

By handing the governing Congress party a decisive victory, unshackled from the Communist party, Indians have created a chance to break a deadlock in negotiations on global commerce that foundered last year on a U.S.-Indian spat over farm trade.

Trade Minister Kamal Nath, whose dogged defence of India’s small farmers helped sink the talks, told Reuters on Sunday: “We believe that it is even more important to conclude the Doha round as one of the measures to extricate the global economic from going into a tailspin, and India is willing to play a leadership role in this.”

The unexpectedly clear Indian vote coincides with signs that U.S. President Barack Obama’s administration, after striking a protectionist tone to appease blue-collar voters, is warming to completing a World Trade Organisation accord. In recent speeches Obama has rightly identified trade as key to pulling the world out of recession.

U.S. Trade Representative Ron Kirk made positive noises on a visit to Geneva last week. He revealed nothing new but said Washington was committed to seeing the trade round launched in Doha in 2001 succeed and he did not want talks to start from scratch or throw away work already done.

He restated U.S. demands that major emerging economies — China, India, Brazil and South Africa — must open their markets more to American exports to achieve a deal. Without tangible benefits for business, it would be hard for Obama to push a WTO agreement through a trade-sceptical Democratic Senate.

The prospect of holding a decisive WTO ministerial before the summer break still seems remote. Before it is worth convening ministers, the United States, India and probably China must thrash out the complex dispute over ways to shield developing nations from a surge in agricultural imports.

This and the equally sensitive issue of cotton, where U.S. subsidies are a big obstacle, were the last two points to be resolved when last year’s WTO talks collapsed. Eighteen other areas had been provisionally settled.

With hindsight, it is extraordinary that the pro-trade Bush administration clinched an agreement on nuclear cooperation with India last year without linking it to a Doha accord. Obama has not set a date for concluding a U.S. trade policy review, but Washington should not squander the opportunity for an early understanding with a more market-friendly Indian government.