During that long summer between the collapse of Bear Stearns and the collapse of Lehman Brothers, Hank Paulson held a secret meeting with the board of Goldman Sachs in Moscow.
…
Felix Salmon has the appropriate reaction:

How on earth did Paulson think this was OK? Goldman Sachs was a hugely powerful for-profit investment bank, and there he is, giving private chapter and verse on his opinions about the US and global economy, talking about internal Treasury matters, and previewing an upcoming (and surely market-moving) speech. All in secret, at a “social event” which somehow got kept off his official calendar. Oh, yes, and one other thing — the whole shebang took place in the Moscow Marriott Grand Hotel, in the context of Goldman directors joking about how all the Moscow hotels were surely bugged.

This is sleazy in the extreme, and will only serve to heighten suspicions that Paulson’s Treasury was rigging the game in favor of Goldman all along.

Source/Full Story: businessinsider.com
Technorati Tags: Hank Paulson, Goldman Sachs

Ben Bernanke said on Monday that it was “extraordinarily urgent” that the US and Asia adopt policies that prevent a revival of global economic imbalances as the financial crisis ebbs.

The Federal Reserve chairman warned that global imbalances – the big gaps between national saving, consumption and investment rates reflected in large trade deficits and surpluses – had helped cause the crisis and needed to be corrected.

Mr Bernanke said the US must establish “a sustainable fiscal trajectory anchored by a clear commitment to substantially reduce federal deficits over time”.

He said the US faced a “difficult fiscal situation” but insisted that US policymakers “recognise that we need to develop a fiscal exit strategy” that would put the US on a sustainable long-term fiscal path.

Linking the fiscal situation to the fate of the dollar, which slid further on Monday, he said the development of such a plan was “critically important to maintain confidence in our economy and confidence in our currency”.

Speaking at a conference on Asia and the world economy hosted by the San Francisco Fed, Mr Bernanke urged Asian nations not to slip back into export-led growth and called on them to build up domestic consumption instead.

He said that Asia, which is leading the rebound, risked seeing asset bubbles fuelled by capital inflows. He said one way to mitigate this risk would be “through some greater exchange rate flexibility” offset by fiscal consolidation.

“As the global economy recovers and trade volumes rebound . . . global imbalances may reassert themselves,” the Fed chief warned. “Policymakers around the world must guard against this outcome.”

Source/Full Story: FT.com
Technorati Tags: Bernanke

The wrenching financial crisis of the past two years will provide the catalyst for a profound change in the global economy – which, according to the man running the World Bank, will see China and India become established centres of power, the dollar eclipsed as the sole reserve currency, and Latin America, south-east Asia and Africa emerge as new sources of growth.

But as he surveys the wreckage caused by what the bank and its sister organisation, the International Monetary Fund, agree is the most severe crisis since the devastation caused by the second world war, Robert Zoellick is surprisingly upbeat about the future.

Asked by the Observer how he envisages the global economy in 20 years’ time, Zoellick says: “There will certainly be a larger role for the emerging powers, there will be multipolar sources of growth, there will be more south-south trade between developing countries.

“The crisis gives us the opportunity to hasten this process. If we are concerned about the past reliance for growth on the US consumer, we have to make sure consumers in developing countries have enough finance to buy.”

Zoellick says that, while this does not mean the end of the US as a big player on the world stage, it has brought the curtain down on the unipolar world that followed the collapse of communism 20 years ago.

Source/Full Story: The Observer
Technorati Tags: Robert Zoellick

U.S. Treasury Secretary Timothy Geithner on Tuesday called on the International Monetary Fund to provide rigorous surveillance to spot new investment bubbles and keep country foreign exchange policies in line with goals to rebalance the global economy.

In remarks prepared for delivery to the IMF and World Bank annual meetings here, Geithner said the IMF needed to help police economic and currency policies among the Group of 20 developed and emerging countries.

“The IMF will need to be a truth-teller,” Geithner said in the remarks, which were to be delivered by Treasury Acting Assistant Secretary Mark Sobel.

“For the IMF, this means that rigorous surveillance must help us shed light on trends that could lead to the next unsustainable boom,” Geithner said. “Under the new G20 framework for strong, sustainable and balanced growth, the IMF must provide forward-looking analysis of whether the world’s major countries are implementing economic policies, including exchange rate policies, which are collectively consistent with G20 objectives.”

Geithner said the global economy was stabilizing and showing initial signs of recovery but conditions remained fragile. He said the international community had recognized that “the world cannot return to a pattern of uneven growth, characterized by an excessive reliance on a single engine of consumption-led growth, while others relied heavily on external demand.”

“First and foremost, the responsibility for tackling these problems rests with sovereign governments, including my own,” he said.

Source/Full Story: ABC News
Technorati Tags: IMF

The crisis is redrawing the world map of economic power as the influence of US consumer spending declines and major emerging markets like China and India take the lead, finance chiefs said.

“One of the legacies of this crisis may be a recognition of changed economic power relations,” World Bank president Robert Zoellick said Friday in Istanbul ahead of annual meetings of the World Bank and the International Monetary Fund.

“Recent forecasts show that China and India are helping to pull the global economy out of recession…. A multipolar economy less reliant on the US consumer will be a more stable world economy,” he added.

Consumer spending accounts for around two-thirds of economic activity in the United States — by far the world’s biggest economy — and experts say lower spending could have radical effects on the US’s world standing.

The IMF on Thursday forecast emerging and developing economies would grow 5.1 percent in 2010 — in contrast with just 1.3 percent in advanced economies.

China’s economy was projected to grow by 9.0 percent next year and India’s by 6.4 percent — far ahead of 1.5 percent expansion in the US economy.

“The American engine is not as strong as it was before,” IMF managing director Dominique Strauss-Kahn said in a speech in which he called for emerging markets to be given more say in the IMF’s decisions.

“Emerging economies are becoming more and more the real partners,” he said.

Source/Full Story:  MSN
Technorati Tags: New World Order

China unexpectedly increased pressure Sunday on the United States in a widening trade dispute, taking the first steps toward imposing tariffs on American exports of automotive products and chicken meat in retaliation for President Obama’s decision late Friday to levy tariffs on tires from China.

The Chinese government’s strong countermove followed a weekend of nationalistic vitriol against the United States on Chinese Web sites in response to the tire tariff. “The U.S. is shameless!” said one posting, while another called on the Chinese government to sell all of its huge holdings of Treasury bonds.

The impact of the dispute extends well beyond tires, chickens and cars. Both governments are facing domestic pressure to take a tougher stand against the other on economic issues. But the trade battle increases political tensions between the two nations even as they try to work together to revive the global economy and combat mutual security threats, like the nuclear ambitions of Iran and North Korea.

Mr. Obama’s decision to impose a tariff of up to 35 percent on Chinese tires is a signal that he plans to deliver on his promise to labor unions that he would more strictly enforce trade laws, especially against China, which has become the world’s factory while the United States has lost millions of manufacturing jobs. The trade deficit with China was a record $268 billion in 2008.

China had initially issued a fairly formulaic criticism of the tire dispute Saturday. But rising nationalism in China is making it harder for Chinese officials to gloss over American criticism.

“All kinds of policymaking, not just trade policy, is increasingly reactive to Internet opinion,” said Victor Shih, a Northwestern University specialist in economic policy formulation.

Eswar Prasad, a former China division chief at the International Monetary Fund, said that rising trade tensions between the United States and China could become hard to control. They could cloud the Group of 20 meeting of leaders of industrialized and fast-growing emerging nations in Pittsburgh on Sept. 24 and 25, and perhaps affect Mr. Obama’s visit to Beijing in November.

“This spat about tires and chickens could turn ugly very quickly,” Mr. Prasad said.

China exported $1.3 billion in tires to the United States in the first seven months of 2009, while the United States shipped about $800 million in automotive products and $376 million in chicken meat to China, according to data from Global Trade Information Services in Columbia, S.C.

Source/Full Story @: NYTimes.com

Source/Full Story: MarketWatch

Finance ministers and central bankers from the world’s most powerful industrialized and developing countries agreed Saturday to deliver the remainder of a $5 trillion global fiscal stimulus while outlining a compromise on efforts to rein in pay for bankers and toughen oversight of the financial sector.

“Financial markets are stabilizing and the global economy is improving, but we remain cautious about the outlook for growth and jobs,” the officials said in a joint statement following a two-day meeting called to lay the groundwork for a summit meeting of leaders of the Group of 20 nations later this month.

Ahead of the meeting, French and German officials had called for a more in-depth discussion of strategies for unwinding stimulus measures. U.S. and British officials argued that the fragility of the recovery made it more necessary to focus on ensuring emergency support measures remain in place until growth solidly returns.

In the end, G20 officials said the need remained for the “swift and full implementation” of pledges on fiscal and monetary stimulus delivered by G20 leaders earlier this year. But they also said they recognized the need to draw up a “transparent and credible process” for withdrawing the stimulus once a recovery is secured. Read the G20 economic statement.

In a separate statement, G20 ministers offered a broad framework to rein in the banking sector seen at the heart of the global financial crisis that exacerbated the deepest global economic downturn since World War II. Read the G20 banking statement.

Technorati Tags: G20

Co-author of:  Ecoscience: Population, Resources, Environment

Forced abortions. Mass sterilization. A “Planetary Regime” with the power of life and death over American citizens.

The tyrannical fantasies of a madman? Or merely the opinions of the person now in control of science policy in the United States? Or both?

These ideas (among many other equally horrifying recommendations) were put forth by John Holdren, whom Barack Obama has recently appointed Director of the White House Office of Science and Technology Policy, Assistant to the President for Science and Technology, and Co-Chair of the President’s Council of Advisors on Science and Technology — informally known as the United States’ Science Czar. In a book Holdren co-authored in 1977, the man now firmly in control of science policy in this country wrote that:

• Women could be forced to abort their pregnancies, whether they wanted to or not;
• The population at large could be sterilized by infertility drugs intentionally put into the nation’s drinking water or in food;
• Single mothers and teen mothers should have their babies seized from them against their will and given away to other couples to raise;
• People who “contribute to social deterioration” (i.e. undesirables) “can be required by law to exercise reproductive responsibility” — in other words, be compelled to have abortions or be sterilized.
• A transnational “Planetary Regime” should assume control of the global economy and also dictate the most intimate details of Americans’ lives — using an armed international police force.

Impossible, you say? That must be an exaggeration or a hoax. No one in their right mind would say such things.

Well, I hate to break the news to you, but it is no hoax, no exaggeration. John Holdren really did say those things, and this report contains the proof. Below you will find photographs, scans, and transcriptions of pages in the book Ecoscience, co-authored in 1977 by John Holdren and his close colleagues Paul Ehrlich and Anne Ehrlich. The scans and photos are provided to supply conclusive evidence that the words attributed to Holdren are unaltered and accurately transcribed.

Must read the entire piece at zombietime.com

The declining US dollar could not play the long term role as the world’s single reserve currency and a more diversified global currency system should be formed, prominent experts said Saturday at a global think tank summit in Beijing, days ahead of the G8 meeting this week.

The US dollar has been under pressure since the US adopted a quantitative easing policy and let its currency devalue significantly to help fight recession. Quantitative easing is a monetary policy tool in which a central bank – like the Federal Reserve – floods the market with cash in an attempt to stimulate an economy in recession and to stave off deflation.

“The US dollar cannot and should not take all the responsibility for the world monetary system. We need a stable and serious transition to new international monetary regime,” argued Jeffrey D. Sachs, director of the Earth Institute of Columbia University in the US.

After the transition, “the dollar will gradually depreciate by 20 or 25 percent to rebalance the world system overtime,” Sachs believed.

Sachs explained the reason for the transition is that the US size “relative to China and other countries will diminish” and the US “is just simply not big enough”to dominate the global economy any more.

President of the Chinese University of Hong Kong, Lawrence J. Lau, believed that in the future, there may be no single reserve currency in the world and alternatives included, for example, in East Asia, establishing an East Asian bank for international settlement or issuing bonds denominated in local currencies.

A proposal for a new global currency to replace the dollar is likely to be raised at the July 8-10 summit of G8 nations, comprising Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

“If this issue is raised by leaders during the meeting, it is natural, because we are all discussing how to respond to the international financial crisis and promote recovery,” a deputy Chinese foreign minister, He Yafei, said at a briefing last week. 

However, China has no plans to raise this issue but is willing to discuss it, said He.

China is attending the meeting in the Italian city of L’Aquila as part of a group of five large developing countries, including Brazil, Mexico, South Africa and India.

Beijing called in March for the creation of a new currency, possibly based on the IMF’s Special Drawing Rights, created in the 1960s and used as the monetary standard for dealings between the fund and member governments.

According to Sachs, the SDR “should be remade to include more currencies including the yuan … SDR should include a broader base of international currencies.”

And there is increasing calls for the creation of an Asian currency.

Sachs believed that Asia should “move forward the Asian monetary basket or the Asian monetary currency overtime”.

It was also a trend for the Chinese mainland currency to replace the US dollar in East Asia, said Lau.

The Chinese mainland signed a long-awaited agreement with Hong Kong on June 29 to allow bilateral trade to be settled using the yuan, rather than Hong Kong or US currencies. China is also looking at allowing yuan trade settlement with other trading partners.

Source/Full Story: chinadaily.com.cn

Equities, commodities and emerging market currencies suffered hefty losses on Monday as risk averse investors shifted to the perceived safety of the dollar, the yen and government bonds.

“Risk aversion has resurfaced as market participants take profits on riskier exposures amid the World Bank’s downward revision of its global growth forecast for 2009,” said Samarjit Shankar, director of global strategy at Bank of New York Mellon.

“Renewed concerns about the extent of the ongoing global recession and the sustainability of the green shoots of recovery have combined with the instability unfolding in Iran and North Korea to lend an air of pessimism to investor sentiment.”

The World Bank said it expected the global economy to shrink by 2.9 per cent this year, compared with a previous estimate of a 1.7 per cent contraction.

The cautious mood among investors was intensified by uncertainty ahead of this week’s Federal Reserve policy meeting.

Source/Full Story: FT.com

San Francisco’s average hit $3.09 on Monday, according to AAA. Oakland reached $3.01, the same as the state average, and San Jose, $3.02.

Gasoline prices usually rise through the spring and peak in the summer, as Americans take to the road on vacation. Last year’s historic price spike reached its pinnacle on June 19, when California’s average price for regular hit $4.61, a record. Then, prices crashed along with the global economy.

They have now rebounded.

Since late April, traders have bid up the price of crude oil, gasoline’s raw material. They’re betting that the economy has hit bottom and will start improving this year, driving up the demand for fuel. And with the dollar struggling against other currencies, big institutional investors have used oil as a relatively safe place to park their money.

As a result, gasoline prices are climbing just as families prepare for summer trips. So far, prices haven’t climbed high enough to keep vacationers at home.

Source/Full Story: sfgate.com

The head of the IMF questioned on Monday any debate about when to roll back stimulus spending, saying the world economy had yet to weather the worst of a recession that claimed a record number of European jobs.

The 16-country euro zone lost a record 1.22 million jobs in the first quarter, official data showed. Employment during the first quarter fell 1.2 percent year-on-year, the deepest annual drop since measurements started in 1995.

Even if some form of economic recovery is not far off, analysts say unemployment will climb for many months to come.

Underlining the fragile state of the global economy, an influential economist said China would not see a rapid rebound and South Korea’s finance minister said its economy was still sliding, although the pace had slowed.

But in southern Italy, Group of Eight finance ministers meeting at the weekend described their economies in the most positive terms since the collapse of U.S. bank Lehman Brothers nine months ago heightened the world’s worst financial crisis since the Great Depression of the 1930s.

“Their (G8) stance is that we are beginning to see some green shoots but nevertheless we have to be cautious,” International Monetary Fund chief Dominique Strauss-Kahn said during a visit to Kazakhstan. “The large part of the worst is not yet behind us.”

Source/Full Story: Reuters

Underscoring the risk that hopes for a quick turnaround may be premature, the World Bank said Thursday that it expected the global economy to shrink nearly 3 percent in 2009, far deeper than the 1.7 percent contraction it predicted slightly more than two months ago.

Although the bank said that it expected growth in developed countries to resume next year, emerging-market countries could feel the effects of “aftershocks” for several years, as the full impact of the worst downturn since World War II became apparent.

“It’s quite clear that even if the developed world starts on a path of recovery, for many developing countries, it will take longer,” the World Bank’s president, Robert B. Zoellick, said Thursday. “Financial markets seem to have broken the fall but there are clear fragilities and risks remain.”

“Some of these fragile developing economies don’t have any cushion,” he added.

The gloomy outlook is likely to top the agenda this weekend as finance ministers gather for a Group of 8 meeting in Lecce, Italy, and assess progress since the broader G-20 summit meeting with President Obama and other world leaders in London in early April.

Source/Full Story: NYTimes.com

Airline losses worldwide this year will be wider than expected as the global recession saps demand for travel and business-class fares, the International Air Transport Association said.

The group’s new industry forecast for 2009, to be announced on June 8, will be “substantially worse” than the March estimate of losses of $4.7 billion, IATA Chief Executive Officer Giovanni Bisignani said in Kuala Lumpur today.

“The economy isn’t moving forward despite some optimism in the financial market,” he told reporters in the Malaysian capital, where IATA will hold its annual meeting next week. “The industry is still in a difficult situation. Premium traffic hasn’t improved.”

Airlines, which IATA says lost as much as $8.5 billion in 2008, are shedding jobs, cutting routes and grounding planes to survive a global slowdown that has pushed British Airways Plc, Hong Kong’s Cathay Pacific Airways Ltd. and Japan Airlines Corp. to losses. Cargo demand, the clearest way to gauge the effect of a slowing economy, hasn’t improved either, Bisignani said today.

“The global economy hasn’t started to recover, while more bad things like swine flu are spreading,” said Jack Xu, an analyst at Sinopac Securities Co. in Shanghai. “Meanwhile, oil has started to rise again.” Airlines “are already very weak.”

Source/Full Story: Bloomberg.com

Sounds great, but personally I am tapped out.  I’m already “on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises.”  So, where’s the money coming from?

President Obama today announced over $467 million from the American Reinvestment and Recovery Act to expand and accelerate the development, deployment, and use of geothermal and solar energy throughout the United States.  The funding announced today represents a substantial down payment that will help the solar and geothermal industries overcome technical barriers, demonstrate new technologies, and provide support for clean energy jobs for years to come. Today’s announcement supports the Obama Administration’s strategy to increase American economic competiveness, while supporting jobs and moving toward a clean energy economy.

“We have a choice.  We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy,” said President Obama. “We can hand over the jobs of the future to our competitors, or we can confront what they have already recognized as the great opportunity of our time:  the nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy.  That’s the nation I want America to be.”

“We have an ambitious agenda to put millions of people to work by investing in clean energy technology like solar and geothermal energy,” Energy Secretary Steven Chu said.  “These technologies represent two pieces of a broad energy portfolio that will help us aggressively fight climate change and renew our position as a global leader in clean energy jobs.”

Geothermal Energy
Geothermal energy is a clean source of renewable energy that harnesses heat from the Earth for heating applications and electricity generation; geothermal plants can operate around the clock to provide significant uninterrupted “base load” electricity, or the minimum amount a power utility must provide to its customers.

The Recovery Act makes a $350 million new investment in this technology, dwarfing previous government commitments. Recovery Act funding will support projects in four crucial areas: geothermal demonstration projects; Enhanced Geothermal Systems (EGS) research and development; innovative exploration techniques; and a National Geothermal Data System, Resource Assessment and Classification System.

• Geothermal Demonstration Projects ($140 Million)
  Funding will support demonstrations of cutting-edge technologies to advance geothermal energy in new geographic areas, as well as geothermal energy production from oil and natural gas fields, geopressured fields, and low to moderate temperature geothermal resources.
• Enhanced Geothermal Systems Technology Research and Development ($80 Million)
  Funding will support research of EGS technology to allow geothermal power generation across the country. Conventional geothermal energy systems must be located near easily-accessible geothermal water resources, limiting its nationwide use.  EGS makes use of available heat resources through engineered reservoirs, which can then be tapped to produce electricity. While the long-term goal of EGS is to generate cost competitive clean electricity, enabling research and development is needed to demonstrate the technology’s readiness in the near-term.
• Innovative Exploration Techniques ($100 Million)
  Funding will support projects that include exploration, siting, drilling, and characterization of a series of exploration wells utilizing innovative exploration techniques. Exploration of geothermal energy resources can carry a high upfront risk.  By investing in and validating innovative exploration technologies and methods, DOE can help reduce the level of upfront risk for the private sector, allowing for increased investment and discovery of new geothermal resources.
• National Geothermal Data System, Resource Assessment, and Classification System ($30 Million)
  The long-term success of geothermal energy technologies depends upon a detailed characterization of geothermal energy resources nationwide.  In 2008, the United States Geological Survey (USGS) conducted an assessment of high temperature resource potential in the Western United States.  To fully leverage new low-temperature, geopressured, co-production, and EGS technologies, DOE will support a nationwide assessment of geothermal resources, working through the USGS and other partners.  Second, DOE will support the development of a nationwide data system to make resource data available to academia, researchers, and the private sector.  Finally, DOE will support the development of a geothermal resource classification system for use in determining site potential.

Solar Energy
Solar energy is a rapidly expanding industry with a double-digit annual growth rate in the United States. DOE is focused on supporting the U.S. industry’s scaling up of manufacturing, production, and distribution so the technology can become cost competitive with conventional sources of energy.  DOE will provide $117.6 million in Recovery Act funding to accelerate widespread commercialization of clean solar energy technologies across America.  These activities will leverage partnerships that include DOE’s national laboratories, universities, local government, and the private sector, to strengthen the U.S. solar industry and make it a leader in international markets.

• Photovoltaic Technology Development ($51.5 Million)
  DOE will expand investment in advanced photovoltaic concepts and high impact technologies, with the aim of making solar energy cost-competitive with conventional sources of electricity and to strengthen the competitiveness and capabilities of domestic manufacturers.
• Solar Energy Deployment ($40.5 Million)
  Projects in this area will focus on non-technical barriers to solar energy deployment, including grid connection, market barriers to solar energy adoption in cities, and the shortage of trained solar energy installers.  Combined with new technology development, these deployment activities will help clear the path for wider adoption of solar energy in residential, commercial, and municipal environments.
• Concentrating Solar Power Research and Development ($25.6 Million)
  This work will focus on improving the reliability of concentrating solar power technologies and enhancing the capabilities of DOE National Laboratories to provide test and evaluation support to the solar industry.

Source/Full Story: energy.gov