World Bank lowers China forecast

BBC Wednesday, 18 March 2009
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The World Bank has cut its prediction for China’s economic growth in 2009 from 7.5% to 6.5%, saying it could not “escape the impact of global weakness”.

Chinese government think tank this month forecast first-quarter growth would slow to 6.5%, from a 6.8% pace in the fourth quarter last year.

China is heavily dependent on the global economy that buys its imports. But as recession grips the US and Europe – which are among its largest customers – demand has fallen, resulting in factories closing and millions of people losing their jobs.
The World Bank warned that the drop in trade was set to hurt investment and job creation in China.

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The dangers of trade protectionism

BBC Wednesday, 4 February 2009

By James Melik
Business reporter, BBC World Service

A clause in the US economic package which President Barack Obama hopes to get approved by the Senate has raised fears that the world will revert to protectionist measures witnessed during the Great Depression of the 1930s.

“I don’t think they want to take a protectionist route but the domestic pressures are so overwhelming that they are caught in kind of a Greek tragedy”
Professor Jeffrey Garten, Yale School of Managment

At times of global economic crisis, enemy number one is isolationism

Protectionism can only exacerbate the situation, as it did after the Great Wall Street Crash of 1929, says Pascal Lamy, director-general of the World Trade Organisation (WTO).

President Obama is not the only world leader who has expressed a need to protect workers at home – although he has since made it clear that he wants to avoid a trade war. “An eye for an eye makes the whole world blind Mahatma Gandhi”

Britain’s Prime Minister Gordon Brown recently warned against the US bailing out its struggling automakers, arguing that global competition has made their decline irreversible.

Global view on unemployment


I found this report from BBC that is considering the Grobal view on Unemployment that might be of any interest
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BBC correspondents from across the globe paint a picture of how different economies are dealing with high unemployment during the credit crunch in Sacramento, Madrid and Delhi.
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Fed Chief Says Insurance Giant Acted Irresponsibly

New York times.
Published: March 3, 2009
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The Federal Reserve Chairman, Ben S. Bernanke,

“A.I.G. exploited a huge gap in the regulatory system,” Mr. Bernanke said. “There was no oversight of the financial products division. This was a hedge fund, basically, that was attached to a large and stable insurance company.” And this quasi-hedge fund, Mr. Bernanke went on, to nobody’s surprise, made irresponsible bets and took huge losses.

“We had no choice but to try to stabilize the system because of the implications that the failure would have had for the broad economic system,” he said.

Mr. Bernanke’s testimony came as Congress began the long process of considering President Obama’s spending plan, which envisions a deficit of $1.8 trillion this year and trillion-dollar deficits only slowly coming under control.

Senator Patty Murray, Democrat of Washington, pressed Mr. Bernanke on whether A.I.G.’s fate is really linked to the welfare of “just average everyday families.”

Definitely, Mr. Bernanke said, talking about the “potential for contagion.”

“In this case, we’re dealing with the largest insurance company in the world,” Mr. Bernanke said. “Its failure would have sent shockwaves through the entire insurance industry” and likely beyond.

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Comment: I perfectly agree on the fact that A.I.G acted irresponsibly but who was expecting it?
No doubt about the huge gap in the regulatory system.
In my mind it is also correct the comment about the needs to stabilize the system.

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La UE rechaza adoptar planes de rescate económicos para los nuevos socios


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Source El Pais
AGENCIAS – Bruselas – 01/03/2009

Los líderes europeos se han comprometido hoy a no adoptar medidas de apoyo a sus fabricantes de automóviles o bancos que puedan perjudicar a los países de Europa central y oriental menos desarrollados.

El jefe del Ejecutivo comunitario ha destacado “el alto nivel de convergencia” en torno a la necesidad de cumplir las reglas del mercado interior, perseguir a toda costa la estabilidad financiera y luchar contra el desempleo.

Los gobernantes europeos no respaldaron la idea, sin embargo, de un plan especial de rescate para las economías de los nuevos estados miembros, como pedía especialmente Hungría

Vamos a pasar un tiempo de dificultades, pero la Unión Europea nos va a ayudar extraordinariamente a que este tiempo sea lo menos duro posible y salgamos antes de la crisis”, ha manifestado Zapatero en la rueda de prensa posterior al almuerzo, en la que insistió. El jefe del Ejecutivo español ha insistido en que gracias al “gobierno común” creado por los países de la UE tiene la “garantía de seguridad” de que los problemas económicas se superarán más rápidamente.

Los países de Europa central y oriental (República Checa, Eslovaquia, Eslovenia, Rumania, Bulgaria, Lituania, Letonia y Estonia) mantuvieron antes de este almuerzo una reunión convocados por Polonia, en la que estos países han pedido solidaridad a sus socios de la Unión Europea ante la crisis económica, en lo que supone un rechazo absoluto a las medidas proteccionistas. “Hemos reafirmado que en tiempos de crisis es importante mantener la solidaridad paneuropea”, resaltó sobre el encuentro Donald Tusk, primer ministro polaco, anfitrión de la reunión. “Todos deseamos que Europa evite tentaciones proteccionistas y egoístas” y que el mercado único funcione tal y como prevén los tratados comunitarios, añadió.

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I believe that a Recovery plan would be needed.
It is also important to me not to be protectionist and not look to the predominat intrest of a single State.
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EU leaders in emergency economic summit

Source Cnn
March 1, 2009 — Updated 1101 GMT (1901 HKT)<a

European Union leaders were meeting Sunday for an emergency summit in Brussels amid growing fears that national protectionism will sabotage coordinated efforts to reverse the current economic decline.

Statement posted on the Czech EU Presidency’s says:
At a time when there is strong pressure to adopt protectionist measures, it is necessary to make sure that the rules of the internal market and fair competition are observed.

Europe will only overcome the crisis if we act together in a coordinated way and if we abide by the Community rules.

We do not want any new dividing lines; we do not want a Europe divided along a North-South or an East-West line; pursuing a beggar-thy-neighbor policy is unacceptable. That the internal market remains united is of vital importance. We must make the most of the opportunities offered by the internal market — we must make it the driving force of recovery, promoting economic growth and employment.

La Eurocámara celebra el X aniversario del euro

Euro – 13-01-2009 – 13:17
Source European Parliament – Press release

La Eurocámara acogió hoy en Estrasburgo la ceremonia de celebración del X aniversario de la creación del euro, en la que han participado el presidente del Banco Central Europeo, Jean-Claude Trichet, el presidente del Eurogrupo, Jean-Claude Juncker, el comisario europeo de Economía, Joaquín Almunia y el ex-presidente francés, Valéry Giscard d’Estaing. El presidente del PE, Hans-Gert Pöttering, subrayó en la apertura de la ceremonia el papel del euro como “factor de estabilidad”.