Thursday, January 12, 2006
G8 agenda for 2006
the G8 summit in St. Petersburg will take up such traditional topics as . . . topical issues of the global economy, finances and trade
The IMF is under pressure from some quarters to address the trade imbalance around the world. A few countries are regularly running huge trade deficits, and many others have big surpluses; should global trade be balanced? If so, what steps have the IMF been taking over the years to even out the imbalances?
Earlier this week the 'Economic Counselor' of the International Monetary Fund gave a speech:
"Let me start with the disclaimer that what follows are my personal views only. I will focus on a familiar issue, the U.S. current account deficit, or more broadly, global current account imbalances, and will describe how financial system reform can play a part in their resolution."
"The United States is running a current account deficit approaching 6 1/4 percent of its GDP this year and over 1.5 percent of world GDP. And to help finance it, the United States pulls in 70 percent of all global capital flows. Clearly, such a large deficit is unsustainable in the long run. . . . demand has to shift from countries running deficits to countries running surpluses".
"Some politicians claim that all it would take for the U.S. current account deficit to disappear is for China to revalue the yuan by a substantial amount. This is nonsense. Without a fundamental change in the factors driving savings and investment, a substantial revaluation could merely alter who the U.S. imports from rather than how much it imports."
The will to tackle the global imbalances is suspect. With the result that the author of 'Three Billion New Capitalists' writes: "several key central bankers are saying. . .that the United States may not be able, or may not intend, to make good on its international financial obligations. . . And since the United States is at present the world's only major net importer, all the exporters that depend on it for their economic stability would suffer severely as well."
Russia wants to address topical issues of the global economy? The serious instability in the global economy might therefore be discussed at this year's G8.
Plea for IMF action
"Let me enter a plea for the fund to take a bold initiative in [sorting out trade imbalances]," said Michel Camdessus, a former IMF managing director, in a lecture Sunday attended by many top economic policymakers. Recalling the coordinated agreements during the mid-1980s among the major industrial powers that helped deal with the global economic stresses of that era, Camdessus said: "Now is the time for a similar effort, led this time by the IMF . . . because there is no other -- I insist, no other -- legitimate, global forum to tackle such a systemic problem." Source
The IMF is under pressure from some quarters to address the trade imbalance around the world. A few countries are regularly running huge trade deficits, and many others have big surpluses; should global trade be balanced? If so, what steps have the IMF been taking over the years to even out the imbalances?
Earlier this week the 'Economic Counselor' of the International Monetary Fund gave a speech:
"Let me start with the disclaimer that what follows are my personal views only. I will focus on a familiar issue, the U.S. current account deficit, or more broadly, global current account imbalances, and will describe how financial system reform can play a part in their resolution."
"The United States is running a current account deficit approaching 6 1/4 percent of its GDP this year and over 1.5 percent of world GDP. And to help finance it, the United States pulls in 70 percent of all global capital flows. Clearly, such a large deficit is unsustainable in the long run. . . . demand has to shift from countries running deficits to countries running surpluses".
"Some politicians claim that all it would take for the U.S. current account deficit to disappear is for China to revalue the yuan by a substantial amount. This is nonsense. Without a fundamental change in the factors driving savings and investment, a substantial revaluation could merely alter who the U.S. imports from rather than how much it imports."
The will to tackle the global imbalances is suspect. With the result that the author of 'Three Billion New Capitalists' writes: "several key central bankers are saying. . .that the United States may not be able, or may not intend, to make good on its international financial obligations. . . And since the United States is at present the world's only major net importer, all the exporters that depend on it for their economic stability would suffer severely as well."
Russia wants to address topical issues of the global economy? The serious instability in the global economy might therefore be discussed at this year's G8.
Plea for IMF action
"Let me enter a plea for the fund to take a bold initiative in [sorting out trade imbalances]," said Michel Camdessus, a former IMF managing director, in a lecture Sunday attended by many top economic policymakers. Recalling the coordinated agreements during the mid-1980s among the major industrial powers that helped deal with the global economic stresses of that era, Camdessus said: "Now is the time for a similar effort, led this time by the IMF . . . because there is no other -- I insist, no other -- legitimate, global forum to tackle such a systemic problem." Source
# posted by IJ @ 1:57 AM 
