G20 Countries Face Split on Issue of Stimulus Spending Versus Tackling Soaring Deficits
TORONTO (AP) — World leaders who addressed a severe economic crisis with an unprecedented show of strength last year were gathering Thursday to again confront the state of their economies. But they were finding it harder to maintain solidarity with changed challenges and new faces.
Britain, Japan and, unexpectedly, Australia were sending new leaders to the G-20 summit of major industrial and developing economies. As leaders began arriving, Australia's ruling Labor Party ousted Prime Minister Kevin Rudd.
Julia Gillard was elected Thursday, becoming Australia's first female leader. Wayne Swan, her new deputy and the country's finance minister, was scheduled to replace Rudd for the Canadian meetings.
It will also be the first appearance at the international economic gatherings for British Prime Minister David Cameron and Japanese Prime Minister Naoto Kan.
Leaders were trickling into town throughout the day, causing traffic tie-ups around the airport. Chinese President Hu Jintao, who arrived on Wednesday, was to meet later Thursday with Canadian Prime Minister Stephen Harper, the summit host.
Toronto's downtown core resembled a fortress on Thursday with thousands of police. An extensive steel and concrete fence had been constructed as a security perimeter several blocks around the summit site. Police in boats and on jet-skis patrolled Lake Ontario.
The first session — a meeting of the eight leading industrial democracies — the U.S., Canada, Britain, Germany, France, Italy, Japan and Russia — was scheduled for Friday and parts of Saturday at a lakeside resort north of Toronto. The larger group of 20 nations, including such major developing powers as China, Brazil and India, was to meet here on Saturday and Sunday.
Despite U.S. appeals to refrain from removing stimulus measures too quickly, country after country is rushing to slash spending and raise taxes to avoid suffering the same fate as Greece, which found itself on the brink of bankruptcy last month.
German Chancellor Angela Merkel on Thursday defended her government's planned austerity, saying in an interview with public broadcaster ARD that "Germany has done much more to revive the global economy than most other nations."
That view was echoed by German Finance Minister Wolfgang Schaeble, who wrote in an editorial published in German daily Handelsblatt and the Financial Times, that "governments should not become addicted to borrowing as a quick fix to stimulate demand."
After maintaining remarkable unity at three previous summits, the leaders of the world's major economies will come to Canada facing a good deal of tension over the best approaches to take to make sure that the global economy continues to emerge from the worst recession in decades.
In addition to a split over stimulus spending versus deficit reduction, the leaders will also be facing differences over the best approach to take to overhauling regulation of the financial system to make sure that the banking meltdown that precipitated the global crisis in the fall of 2008 is not repeated. Many of those issues are unlikely to be resolved.
The discussions will start Friday among the Group of Eight — the world's wealthiest nations, plus Russia — at a lake resort north of Toronto. They will then expand into discussions among the G-20, which includes the wealthiest countries plus major emerging economies such as China, Brazil and India, on Saturday and Sunday in Toronto.
Senior White House officials said the G-8 talks would center on development issues, including support for maternal and child health care in poor nations. The officials said President Barack Obama and the other G-8 leaders would also focus on a range of foreign policy issues, such as escalating tensions between North and South Korea, Iran's nuclear program and the stalled Middle East peace process.
While the global economy is beginning to grow again, high unemployment and a European debt crisis this spring have served as reminders that the recovery remains fragile.
Seeing the crisis that enveloped Greece, other nations have grown concerned about their high debt levels and have been rushing to put into place deficit-reduction programs.
Britain's new Conservative government announced an emergency budget that includes the toughest cuts in public spending in decades and an array of tax increases. Britain's budget cuts and tax increases followed similar deficit-cutting plans announced in recent days by Germany, France and Japan.
Those cuts have raised worries in the United States that the world could be in danger of making the same mistakes leaders made back in the 1930s, when they withdrew government support too soon and prolonged the Great Depression.
Treasury Secretary Timothy Geithner and Lawrence Summers, head of the president's National Economic Council, emphasized Wednesday that "without growth now, deficits will rise further and undermine future growth."
But other countries have been urging greater fiscal discipline, saying a possible market meltdown — if the Greek debt crisis spreads — presents a bigger threat to the global economy at the moment.
Canada's Harper sent his own letter last week calling on the G-20 countries to set ambitious goals to cut their budget deficits in half by 2013.
Harper said that while countries had to be careful to support near-term growth, it was also important to produce credible deficit-cutting plans "to dispel the uncertainty and financial volatility that can impair our future growth prospects."
"A lot of countries are looking at what happened to Greece and saying it could happen to us, too," said David Wyss, chief economist at Standard & Poor's in New York. "The Europeans are much more worried now about debt and they are cutting back on stimulus spending."
Administration officials insist the differences between Obama and the other G-20 nations are not that great. They say Obama sees the need to set deficit-reduction goals but believes it would be wrong to implement those programs this year with unemployment still painfully high.
Many private economists agree, arguing that while the United States and other nations have returned to positive growth, those gains have not been enough to put much of a dent in unemployment.
"The global economy is still very fragile," said Mark Zandi, chief economist at Moody's Analytics. "Countries have to balance the need for continued support now while also putting together credible deficit cutting plans that can be implemented down the road."
Even before the talks began, the United States scored two victories with a move by European governments to shore up confidence in their banks by implementing a series of stress tests and an announcement by China that it will allow its currency to appreciate in value against the dollar.
The administration believes the stress tests the United States conducted a year ago marked a major turning point in the U.S. financial crisis, convincing investors that U.S. banks had the capital resources needed to withstand a severe recession.
In China, Hu's government began Monday to allow its currency to rise in value against the dollar after having fixed the yuan-dollar exchange rate for the past two years.
A more flexible yuan was seen as a critical development by the administration to fulfill one of the G-20 pledges to address dangerous imbalances, such as China's massive trade surpluses and the United States' huge trade and budget deficits.
Critics in Congress are still threatening China with sanctions unless the yuan moves significantly. Commerce Secretary Gary Locke told Congress on Wednesday that the administration still viewed the yuan as undervalued and a drag on U.S. exports. Obama will hold one-on-one talks with China's president Saturday.
Bonds Without Borders: Global Funds Can Take Your Portfolio Anywhere
The concept of the global stock fund is well accepted. If U.S. bank stocks scare fund managers, maybe they can find banks with better risk-return profiles in Brazil or India. There's not much to buy in Detroit, but perhaps managers spot value in Toyota or BMW. Coca-Cola, McDonald's and Philip Morris International are world leaders. Fund managers can pick and choose stocks in a borderless investment world.
Global bond funds are a less-developed idea. But Michael Hasenstab, who manages the $13.3 billion Templeton Global Bond Fund, says Americans are increasingly seeking to invest in foreign bonds and currencies. Hasenstab, who has a doctorate in economics, is compiling a record that even Bill Gross of Pimco would envy.
Since Hasenstab began managing this fund in December 2001, it has returned 11.8 percent annualized through July 13. That's an average of four percentage points a year better than the Citigroup World Government Bond Index, a relevant benchmark. In the past year the fund made 12.4 percent. This suggests that the fund has a low correlation with the U.S. stock market -- and in fact, that's true. In 2008, Templeton Global Bond returned 6.3 percent.
This is a fairly complicated fund. Hasenstab, who works with 40 people around the world, invests to address three concerns: interest-rate risk, currency movements and the financial health of governments. For example, earlier this year he spied opportunity in Korean and Mexican government debt. He figured that interest rates in those nations were due to fall, so the bonds would gain value in local terms. But he didn't have confidence in Korea's won and Mexico's peso. If they fell against the dollar, the fund's U.S. shareholders wouldn't benefit from rising bond prices. So he bought the bonds (all of his foreign bonds are issued by governments or government agencies) but hedged the Korean and Mexican currencies.
At any time, Hasenstab is invested in 20 to 30 countries, including Iraq, Venezuela and Russia, and 15 to 25 currencies. For instance, some of his largest currency exposures are to the Malaysian ringgit, Chinese renminbi, Chilean peso, Brazilian real and Swedish krona. But he's betting against the euro and New Zealand dollar. In the United States, all of the fund's bond holdings are in municipals.
Hasenstab is bearish on the U.S. dollar in the medium and long term. He thinks the government is creating a good recipe for a depreciating currency as it prints and spends money and nationalizes financial institutions. Also, as U.S. consumers borrow less and repay debts, he expects the strongest economies and currencies to be large countries with fast-growing domestic markets, such as China, India, Indonesia and Brazil.
Global Anesthesia and Respiratory Devices Market Analysis and Forecasts to 2015
Summary
This report is an essential source for key information and data relating to the Global anesthesia & respiratory devices market. The report provides overview of key trends, drivers and restraints, future outlook, pipeline products, news, financial deals and competitive landscape and key developments in the Global anesthesia & respiratory devices market. It also offers global and country level, detailed and comprehensive coverage of market revenue, volume, distribution and company share information.
Scope
- This report provides detailed global, regional countries (United States, Germany, United Kingdom, France, Italy, Spain, Japan, Canada, China, India, Australia, Brazil) data on market size by volume and value for categories in anesthesia & respiratory devices market. The categories covered in the report include Anesthesia Disposables, Anesthesia Machines, Respiratory Devices, Respiratory Disposables, Respiratory Measurement Devices and Sleep Apnea Diagnostic Systems
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- It also provides overview of the market structure, key trends, drivers and restraints, future outlook, competitive landscape and key developments.
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The push to reinvent the International Monetary Fund took a significant step forward this week, with nations agreeing to a rough timetable to come up with plans to reform its governance and expand its role in the global economy.
The agreements, reached during the IMF's semiannual meeting in Istanbul that ends Wednesday, come as the mission of the 65-year-old Washington-based institution is re-examined in the wake of the global financial crisis. The fund's 186 member nations agreed to draft a new and broader mandate for the fund before its meeting in Washington next spring. The nations also preliminarily agreed to reshape the fund's voting structure, promising a blueprint for giving more clout to emerging giants like Brazil and China by January 2011.
Yet if the past few days in Turkey were any gauge, the IMF's road to change may also be a rocky one.
Since the meetings opened Saturday, nations have clashed over the scope of change at the fund, with some, like Germany, warning against the creation of a kind of global central bank armed with massive assets and influence over world economic affairs. It has set the stage for a tug of war of ideas and a battle for influence within the organization as it seeks to reinvent itself in the months and years ahead.
Dominique Strauss-Kahn, the IMF's managing director, urged countries in Istanbul on Tuesday to "seize this opportunity to shape the post-crisis world," adding that all nations "need to adapt and change."
"In this modern globalized world, it no longer makes sense for global economic policy to be the concern of just a small group of countries," he said.
A Power Shift
At a major summit in Pittsburgh last month, leaders from the Group of 20 major economies, including President Obama, reiterated calls for an enhanced global role for the IMF. One fundamental change would be in the ranks of nations that call the shots there.
The world economy remains vulnerable to downside risks stemming from tighter credit, a deterioration of the US housing market, higher oil prices and rising inflation, according to G7 finance ministers gathering in Tokyo on Saturday.
Although "long-term fundamentals remain sound" and recession in the US and elsewhere could be avoided, according to the final communiqué, the world's richest nations said they stood ready to "take appropriate actions, individually and collectively, in order to secure stability and growth".
LONDON (Reuters) - Chinese stocks have hit bear market territory, falling more than 20 percent from their most recent peak, and sent shivers across many global financial markets -- but remember, it's August.
So before investors read too much into the fall, or try to extrapolate new trends in anything financial from Shanghai to Wall Street, take a look at the volumes.
While plenty of things can -- and do -- happen in what is supposed to be the height of the northern hemisphere's summer, they are often skewed by the fact that it is holiday time for many of the world's investors.
In much of Europe, for example, you are probably more likely to get an answering machine announcing an absence until September as you are to get a strategist, trader or analyst on the line.
"It's the holiday season and the Weekly Strategy Report will also be taking a break and will return on 7 September," one regular market note announced on Monday, not, it must be said, without a tone of elation.
This has a number of impacts on markets.
For one thing, when trading is thin, moves can be highly exaggerated. The fewer buyers or sellers, the less competition for assets.
But even if they are not exaggerated, what you can glean from August moves is often not that useful.
"The prices contain less information because there are fewer people expressing views," said Andrew Clare, professor of asset management at London's Cass Business School.
THIN VOLUMES
So how thin is trading at the moment?
Reuters data shows volumes for the Dow Jones industrial average .DJI for the full day on Tuesday were only 56 percent of the index's 90-day average daily volume. They were higher for the Nasdaq .IXIX, but still only 73 percent of the norm.
In Europe, the FTSEurofirst 300 .FTEU3 volume was 69 percent of its daily average on Tuesday, while on Wednesday it looked likely to be even thinner -- it was at less than 40 percent with a little more than two hours to go.
As for China, where the Shanghai Composite Index .SSEC has fallen more than 18 percent this month, volumes have mostly been less than half what they were in July, especially in the past eight trading sessions.
It is harder to gauge volumes for other assets -- foreign exchange trading data, for example, tends to come with a lag, from central banks -- but anecdotally, participants say it has also been thin.
"When I talk to my support traders, they say it is very quiet, very thin," said Simon Smollett, an options specialist at Calyon.
He said some short-term currency options prices had been falling over the summer in a manner that suggested "reduced volumes and reduced activity."
Given this, investors might be better off waiting until September to see what is really happening to financial assets.
But Cass's Clare suggests that early September may also be too soon.
"Even then it takes time to ramp up, people coming back to their desks to think about strategies," he said. "Late September."
All the papers lead with news that the battered global economy could finally be on the mend. The Washington Post and the New York Times both top their front page with yesterday's declaration from Federal Reserve Chairman Ben Bernanke that the economy appears to be "leveling off" – his most upbeat assessment since the global meltdown began. "Prospects for a return to growth in the near term appear good," he told a gathering of economists and central bankers, adding that aggressive action by governments and central bankers around the world appeared to have successfully staved off the worst of the downturn.
The Wall Street Journal leads with news that sales of existing homes expanded by more than 7 percent last month, the fastest rate in more than ten years, driving up global stock prices and prompting hopes that the US housing market could be stabilizing after years of decline. The Los Angeles Times puts a glass-half-empty spin on the news, noting that California's jobless rate reached a post-World War II high last month, climbing to almost 12 percent; even if the national recovery pans out as expected, the Golden State could be hurting for years to come.
The world's central bankers struck a positive and slightly self-congratulatory tone at a retreat in Grand Tetons yesterday, on the back of strong reports from major European and Asian economies and signs that the US housing market could finally be recovering from its lengthy swoon. Adding to the sense of optimism, the WSJ reports, stocks and oil prices rallied to their highest levels of the year yesterday, while European stocks posted their biggest gain for a month; the Post notes that even credit-card charge-off rates – a measure of hopelessly delinquent balances – fell last month for the first time since September, providing a glimmer of hope for the struggling industry.
Still, it's not all good news. Banks will continue to take credit-card hits until employment rates improve, and the Post notes that while things are looking up in DC and Virginia, unemployment rates are continuing to rise in 26 states. That means many banks will remain on the ropes; another bank collapsed yesterday, bringing the year's total failures to 81, and analysts predict that hundreds more institutions will fail in coming months. To make matters worse, the bust banks have flooded the market: with few domestic buyers available, the federal government is now selling off defunct banks to foreign investors.
The Post fronts word, via a late-breaking Newsweek scoop, of a long-concealed CIA report that found that agency interrogators staged mock executions using a handgun and an electric drill in an attempt to frighten a captured al-Qaeda commander into giving up information. A redacted version of the report is due to be published on Monday, following a lawsuit brought by the ACLU; the report is also believed to list a number of other incidents in which CIA and contracted interrogators overstepped their authority, in some cases violating international bans on cruel and inhumane treatment.
The CIA also remained under scrutiny yesterday for its reliance on private contractors, following the disclosure that the agency had used hirelings from Blackwater USA for elements of an assassination program; the Post notes that lawmakers this week criticized the use of private companies for "inherently governmental" activities like intelligence work. The NYT reports that despite publicly breaking with Blackwater, the State Department continues to pay the company more than $400 million to transport and guard diplomats in war zones and to train security forces at its base in North Carolina; the WSJ focuses on Afghanistan, where contractors now significantly outnumber military personnel despite the Obama administration's efforts to reduce the Pentagon's reliance on hired help.
In Kabul, meanwhile, the WSJ reports that President Hamid Karzai and former foreign minister Abdullah Abdullah both claimed significant leads as the vote count continued following Thursday's election. Each candidate claimed to have garnered more than 50 percent of the total vote, the threshold for avoiding a run-off contest, raising concerns that their supporters impossibly high expectations might undermine the final result or even lead to ethnic clashes, potentially impeding international efforts to stabilize the country.
Members of America's largest Lutheran denomination yesterday voted to allow the appointment of non-celibate gays to the clergy, reports the NYT, in what religious scholars called a watershed moment in American Christianity. "Today I am proud to be a Lutheran," said one gay-rights leader after the vote; still, many conservative members of the Evangelical Lutheran Church in America were dismayed by the result, with some calling for "faithful" ministries to break away from the national church.
The WSJ reports on the Scottish government's attempts to contain the fallout from its decision to release terminally ill Lockerbie bomber Abdel Basset Ali al-Megrahi, after TV images of the terrorist receiving a hero's welcome in Tripoli sparked outrage on both sides of the Atlantic. The NYT notes that questions remain over the extent to which the decision to release Megrahi was influenced by efforts to clear the way for British companies to pursue lucrative oil contracts in Libya. In an editorial, the Post calls for the US to impose sanctions against Libya unless Megrahi is placed under house arrest until his death. "To bestow freedom and the comforts of home on a man serving a life sentence for one of the most horrific acts of terrorism in modern times is a breathtaking abuse of power," the Post declares. "There was only one appropriate way for Mr. Megrahi to have returned home: in a box."
With Obama's healthcare reforms teetering, the LAT runs a preemptive autopsy of his strategic blunders: Democratic strategists say he wheeled out too many messages, and failed to give the public a clear sense of why reforms were necessary. Perhaps it's just as well that the President is about to take a breather, notes the WSJ,leaving surrogates to continue the debate while he spends the week resting up at Martha's Vineyard. The Post reports that former Senate majority leader Tom Daschle visited the White House yesterday, and reportedly asked Obama to "get off the airwaves" while lawmakers attempted to reach a deal; the paper also eyes Senate negotiators' efforts to build consensus behind a slimmed-down compromise bill, but notes that it's not clear that a smaller bill would be any easier to write or to pass.
And finally, the NYT reports from state fairs across the country, where officials are grappling with a new health threat: bug-ridden sightseers are infecting pigs with swine flu. "The whole idea of the animals getting sick from people is a foreign concept," says one state veterinarian. "But that's what we're looking at here." It's no laughing matter: officials say that if the H1N1 flu strain is allowed to recirculate in pig populations, it could mutate into more virulent and deadly forms. In an attempt to insulate the prize porkers, officials at many fairs now bar visitors from petting the animals, and are asking people to wash their hands before approaching the pig pens.
World stocks hit 9-month peak; dollar posts 2009 low
LONDON (Reuters) - World stocks extended gains to fresh 9-month peaks on Tuesday while the dollar fell to a 2009 low after upbeat U.S. data and optimism over corporate earnings prompted investors to add risky assets.
U.S. stocks rose on Monday after data showed home sales surged in June, a sign that the domestic housing market -- which led the world's biggest economy into recession -- may have hit bottom and is starting to rebound. More housing data is due later.
"After yesterday's much better new home sales data and continued theme of better-than-expected news, we may well see traders taking the opinion that this rally has a few more legs to run yet," Jimmy Yates, head of equities at CMC markets, noted. MSCI world equity index rose 0.7 percent to its highest since October. The index is up 7.6 percent this month and has risen nearly 16 percent since January.
"The rally witnessed over the last two weeks could, in fact, imply that the market is getting ahead of itself and discounting a profit rebound, but we believe the underlying cyclical rally ultimately will be durable," Bob Doll, global chief investment officer at BlackRock, said in a note to clients.
"The risks are that inflation expectations put Treasury yields and borrowing rates higher before the recovery gains traction, and that improving consumer spending contracts again next year after the impact of fiscal stimulus."
The FTSEurofirst 300 index rose 0.7 percent, hitting its highest since November.
Deutsche Bank fell more than 5 percent after reporting a significant rise in loan provisions despite better-than-expected quarterly net profit.
According to Thomson Reuters data, out of 202 firms on the S&P 500 index, 156 -- or 77 percent -- beat earnings expectations.
Emerging stocks rose 1.1 percent.
U.S. crude oil rose 0.6 percent to $68.79 a barrel, supported by general flows into risky assets.
The September bund futures fell 17 ticks.
The dollar fell to its weakest level since December against a basket of major currencies while it hit eight-week lows of $1.4303 per euro.
The Australian dollar hit a 2009 high against the dollar and government bonds fell after the country's central bank governor Glenn Stevens said risks to the economy were now more balanced and warned that low interest rates could merely inflate a new housing bubble.
U.S. prosecutors are accusing Swiss giant UBS of helping thousands of American clients evade taxes through offshore bank accounts
Nothing less than the future of secret bank accounts is at stake. In a Miami courtroom starting on July 13, federal prosecutors will present their case that Swiss financial giant UBS (UBS) systematically and deliberately violated U.S. law by helping thousands of U.S. clients dodge U.S. taxes via offshore bank accounts. If prosecutors win, UBS could face multibillion-dollar fines—and even confiscation of its U.S. assets. The bank denies any wrongdoing.
The case revolves around some 52,000 U.S. private banking clients who had parked a combined total of $14.8 billion in assets with UBS. The U.S. is demanding that UBS hand over the identities of the clients and their account details, presumably so the government can pursue tax-evasion cases against them. It's unprecedented in the history of Swiss banking for a foreign government to make such an outright demand.
UBS—backed by the Swiss government—has refused to comply. The bank says disclosing the information would violate Swiss law and devastate the country's world-famous reputation for banking privacy. (Not just that, if UBS were to hand over the data, it could also face prosecution from Swiss authorities for doing so.) Earlier this year, UBS agreed to pay $780 million to settle criminal charges in the U.S. that it abetted tax evasion, but the civil case coming to trial in Miami ups the ante.
Even after federal judge Alan Gold starts the proceedings on July 13, UBS and U.S. prosecutors could hammer out a settlement. But the assertiveness of American authorities marks a dramatically more aggressive global stance taken by the U.S. and other countries in recent years against tax evasion and offshore havens such as the Cayman Islands and Liechtenstein. The trial will also put pressure on high-net-worth individuals (and the banks that service them), who could be forced to come clean over where they're putting their assets.
"Cracking Down"
"In the past, governments weren't very aggressive [about offshore accounts]," says Clemens Fuest, research director at Oxford University's Centre for Business Taxation in Britain. "Now, the Obama Administration and others are cracking down on tax evasion and are enforcing laws globally."
At last April's G-20 summit in London, the leaders of the world's largest economies issued specific demands in their communiqué for tax havens to adopt international financial standards. The G-20 turned to a "name-and-shame" list prepared by the Paris-based Organization for Economic Cooperation & Development (OECD) that identified nations failing to sign on to its tax haven standards. On the OECD's so-called blacklist were countries such as Andorra and Monaco. Switzerland reluctantly agreed to the global standards earlier this year.
Still, the U.S. case isn't a sure win—and could backfire if prosecutors lose badly. For one thing, in its demand for account information, the U.S. has used a "John Doe" summons that doesn't implicate specific individuals suspected of tax evasion. Critics say that amounts to a "fishing expedition," which could cause the case to be thrown out of court.
What's more, the U.S.'s actions raise fundamental issues of state sovereignty. After all, the government is trying to enforce U.S. laws on a financial institution headquartered in another country. "The U.S. wants to turn the world's banks into agents of the IRS," complains James Nason, spokesman for the Swiss Bankers Assn., a trade body.
