10. marts 2009

Germany: No more stimulus packages, EU: IMF in a stronger role with more means, US: More Global Stimulus and Public Loans

Extract from:  Wall Street Journal, Economy, 10 Mars 2009



BRUSSELS — European Union finance ministers on Tuesday will ask countries with large financial reserves to help double International Monetary Fund resources to $500 billion, and will seek a stronger IMF role in economic surveillance, according to a draft statement. The draft document, which the EU will present to finance ministers and central bankers from the Group of 20 countries at a meeting near London this weekend, doesn’t name the countries to contribute. China and Saudi Arabia appear likely candidates. Japan has already offered $100 billion.

The draft seems to put the EU at odds with the U.S. Washington plans to emphasize the need for bigger economic stimulus packages at the G-20 summit on April 2, while playing down proposals to strengthen international financial regulation.

The statement says the 27-nation EU “is doing its part to support demand,” and makes clear the EU wants better international coordination of financial-market authorities, with the IMF playing a key role. The bloc also seeks “the rapid establishment of colleges of supervisors for all major cross-border financial institutions,” according to the draft.

Yet European leaders aren’t unanimous about increasing regulation. Vaclav Klaus, president of the Czech Republic, said in an interview with The Wall Street Journal on Monday that increased regulation is likely to be “the biggest, biggest cost of the recession.” Mr. Klaus, a well known skeptic of regulation who holds the rotating presidency of the European Union through June, said the cost of regulatory changes would likely be “more important than two years’ loss in GDP.”

German Finance Minister Peer Steinbrück, heading to a meeting of euro-zone finance ministers, told reporters Monday there would be “no more additional money” for economic stimulus in Germany. The country has criticized sweeping stimulus packages, saying a credit crisis can’t be fixed by more massive borrowing. Germany’s stimulus package, at around €80 billion (about $101.3 billion), is the largest in the EU, which agreed in December to spend roughly €200 billion on stimulus packages.

The U.S. — an economy only slightly larger than the EU — last month launched a $797 billion stimulus package on top of the $168 billion plan created a year ago.

EU leaders said before that they want to boost IMF lending capacity. The draft statement, which is likely to be approved at a regular meeting of EU finance ministers here Tuesday, says the EU would be ready to contribute to the $250 billion boost, but gave no idea how big the contribution would be.

“EU member states support a doubling of IMF resources and are ready to contribute to a temporary increase, if needed,” the finance ministers’ draft statement says. The draft invites “countries that over the last years have accumulated significant foreign reserves to participate.”

The IMF has provided about $48 billion in emergency funds to countries battered by the financial crisis. Latvia, Hungary, Ukraine, Belarus and Serbia have received help, as well as Iceland and Pakistan. With the IMF warning that developing nations could need a lot more help, there is concern that the organization’s current $250 billion facility could evaporate quickly.

The EU recently rebuffed a call from Hungary, one of the hardest-hit EU economies, for the bloc to set up a special bailout fund for Eastern Europe. EU leaders, including Eastern Europeans wary of being tarred with Hungary’s economic weakness, said they would instead help individual countries as they get into trouble, and only after the IMF has stepped in.

The draft offered a possible carrot for emerging economies with surpluses to contribute more to the IMF. The IMF should be reformed to “more adequately reflect relative economic weights in the world economy,” the statement said.

—Peppi Kiviniemi contributed to this article.

Printed in The Wall Street Journal, page A6


Extract from: http://online.wsj.com/public/page/news-economy.html


Hungary to Support the Forint

Hungary’s plan to intervene in foreign-exchange markets helped to boost the forint against the euro.

Latvia to Seek Revision of IMF Deal

Less than three months after securing a $10.5 billion lifeline, Latvia is backtracking on a deal the IMF hoped would lower economic risk region-wide.

U.S. to Push for Global Stimulus

The U.S. will press world leaders to boost emergency spending to lift the global economy, risking a rift with Europeans more concerned with revamping financial regulation.

China Prices Fell 1.6% in February

A drop in China’s consumer Prices in February further darkened the country’s economic outlook and reinforced worries of deflationary pressures.

New Fears as Credit Markets Tighten Up

The credit markets are seizing up again amid new anxieties about the global financial system.

Deals: In Bond Sales, Which Banks Work Hardest?

China Warns of Severe Fiscal Conditions

China’s industry minister said economic conditions remain “very severe.” Data this week could show the first signs of deflation and a further slump in trade.

U.S. Firms in China See Downturn

Taiwan Exports Fall 28%

Stimulus Watchdog Toes Delicate Line

China Urges G-20 Teamwork

No Lifeline Promise for Russian Tycoons


Todays’s Key words: More artificial impacts on demand make evil worse, and the capital seeks for safe harbors.

Dagens Nøgle ord:  Mere påvirkning af efterspørgslen gør ondt værre, og kapitalen søger mod sikre afkast-havne.