MacroScope

All the talk of addressing the global imbalances throws a spotlight on contrasting demographic trends in the world's two most populous nations -- China and India.

Prior to the financial crisis, India's annual growth rate of about 9 percent seemed positively moribund next to China's double-digit economic expansion. But purely on demographics, the dimming power of the US consumer could give India an edge over its neighbour in the longer run.

That's what India's trade minister Anand Sharma seemed to suggest last week when he reminded the audience at a London conference that the country had "20 percent of the world's children":

We know that when we talk about emerging countries the consumption patterns are different. Most of China's production is meant for (markets) abroad. India consumes two-thirds of what India produces.

Indeed, Goldman Sachs projects that India's middle class will outstrip China's by 2045. This is some 15 years after half of China's population becomes either too old or too young to be part of the workforce.

Pope Benedict issued an ambitious call to reform the way the world works on Tuesday shortly before its most powerful leaders meet at the G8 summit in Italy. His latest encyclical, entitled "Charity in Truth," presents a long list of steps he thinks are needed to overcome the financial crisis and shift economic activity from the profit motive to a goal of solidarity of all people.

Following are some of his proposals. The italics are from the original text. Do you think they are realistic food for thought or idealistic notions with no hope of being put into practice?

"There is urgent need of a true world political authority. .. to manage the global economy; to revive economies hit by the crisis; to avoid any deterioration of the present crisis and the greater imbalances that would result; to bring about integral and timely disarmament, food security and peace; to guarantee the protection of the environment and to regulate migration... such an authority would need to be universally recognized and to be vested with the effective power to ensure security for all, regard for justice, and respect for rights." The economy needs ethics in order to function correctly - not any ethics whatsoever, but an ethics which is people-centred..." "Financiers must rediscover the genuinely ethical foundation of their activity, so as not to abuse the sophisticated instruments which can serve to betray the interests of savers. Right intention, transparency, and the search for positive results are mutually compatible and must never be detached from one another." "Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value... there is nevertheless a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference... What should be avoided is a speculative use of financial resources that yields to the temptation of seeking only short-term profit, without regard for the long-term sustainability of the enterprise, its benefit to the real economy and attention to the advancement, in suitable and appropriate ways, of further economic initiatives in countries in need of development." "One possible approach to development aid would be to apply effectively what is known as fiscal subsidiarity, allowing citizens to decide how to allocate a portion of the taxes they pay to the State."

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Robert Zoellick, President of the World Bank, and a man who believes that 2009 will be a "dangerous year", will be speaking on March 31st and has agreed to take questions from Reuters readers.

Zoellick has been outspoken during the current economic crisis predicting the first shrinking of the economy since the '30s, warning that increased government spending will simply create a 'sugar high' until banks' toxic assets are dealt with properly, and urging a tougher stand against protectionism.

But the World Bank's primary focus is on helping developing nations and alleviating  poverty. Earlier this month it published research showing that the spreading crisis will push 46 million more people into poverty in 2009 on top of 130-155 million pushed into poverty in 2008.

It seems like only yesterday that U.S. Treasury Secretary Henry Paulson was up on Capitol Hill, asking Congress for a mere $700 billion to buy bad assets that were clogging up lending. The so-called Troubled Asset Relief Program isn’t buying troubled assets, but the TARP acronym lives on.

Until now. Thanks to Stephen Stanley, chief economist at RBS Greenwich Capital,

“Given that TARP is no longer an appropriate acronym, I propose to start a contest to rename the program,” Stanley said. “My submission is BEAST. Bail out Everyone And Sink the Taxpayer. Unfortunately, there are no prizes in this contest, but feel free to play.”

Send us your best ideas and we’ll be glad to forward them along.

Singing the blues over your stock holdings? Tired of seeing your portfolio take a beating when company earnings come up short of analysts’ expectations? Societe Generale strategist James Montier has the perfect theme song for you: Pink Floyd’s Comfortably Numb.  Just when it seemed like the world’s central bankers were finally getting somewhere with their trillions of dollars in lending facilities and coordinated rate cuts, earnings season hits in full force and things like dreary. Weak profit forecasts from the likes of Texas Instruments and DuPont served as another reminder on Tuesday that corporate profits will likely suffer no matter how much money Fed Chairman Ben Bernanke and friends throw at the financial sector problems.Montier thinks stock analysts are still wildly optimistic about earnings prospects in the midst of what could be a global recession. ”Hello. Is there anybody in there?,” he writes in a note to clients channeling Pink Floyd. “This (song) gets my vote for analyst anthem of the year. Pretty much everyone is bracing for a recession, but analysts appear to be still predicting double-digit growth. Wake up and smell the coffee guys.”Montier sees this is a “clear and present danger to investors” because expectations are key to how investors judge a company’s performance.”Everyone says that no one listens to analysts, but when the stock misses expectations, it still craters,” he says.Something to keep in mind as Wall Street works through one of the busiest weeks of the earnings season.    

The financial system is in the grips of its most violent
upheaval since the 1930s. A staggering amount of wealth has been
destroyed this year — $11 trillion wiped out from world stock
markets in the past nine months. The damage already is spilling
into the real economy, and fears are spreading among investors
of a deep and damaging downturn.

Macroscope is a new blog where Reuters journalists from
around the world look behind the headlines, the speeches and the
economic reports to bring you a fresh look at the factors
driving the world economy, and the people making the decisions that affect
your household budget.

It will look at the policymakers who are ripping up the rule books
in a desperate search for ways to get cash pumping through the seized-up money markets,
stabilise banks, revive stock markets and prevent the credit
crisis from turning an economic downturn in the United States
and Europe into a deeply damaging global recession.