The G20 moves the world a step closer to a global currency

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5096524/The-G20-moves-the-world-a-step-closer-to-a-global-currency.html

The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.

By Ambrose Evans-PritchardLast Updated: 2:06PM BST 03 Apr 2009
Comments 23 Comment on this article
A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.
"We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

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In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.
It has been a good summit for the IMF. Its fighting fund for crises is to be tripled overnight to $750bn. This is real money.
Dominique Strauss-Kahn, the managing director, said in February that the world was "already in Depression" and risked a slide into social disorder and military conflict unless political leaders resorted to massive stimulus.
He has not won everything he wanted. The spending plan was fudged. While Gordon Brown talked of $5 trillion in global stimulus by 2010, this is mostly made up of packages already under way.
But Mr Strauss-Kahn at least has resources fit for his own task. He will need them. The IMF is already bailing out Pakistan, Iceland, Latvia, Hungary, Ukraine, Belarus, Serbia, Bosnia and Romania. This week Mexico became the first G20 state to ask for help. It has secured a precautionary credit line of $47bn.
Gordon Brown said it took 15 years for the world to grasp the nettle after Great Crash in 1929. "This time I think people will agree that it has been different," he said.
President Barack Obama was less dramatic. "I think we did OK," he said. Bretton Woods in 1944 was a simpler affair. "Just Roosevelt and Churchill sitting in a room with a brandy, that's an easy negotiation, but that's not the world we live in."
There will be $250bn in trade finance to kick-start shipping after lenders cut back on Letters of Credit after September's heart attack in the banking system. Global trade volumes fell at annual rate of 41pc from November to January, according to Holland's CPB institute – the steepest peacetime fall on record.
Euphoria swept emerging markets yesterday as the first reports of the IMF boost circulated. Investors now know that countries like Mexico can arrange a credit facility able to cope with major shocks – and do so on supportive terms, rather than the hair-shirt deflation policies of the old IMF. Fear is receding again.
The Russians had hoped their idea to develop SDRs as a full reserve currency to challenge the dollar would make its way on to the agenda, but at least they got a foot in the door.
There is now a world currency in waiting. In time, SDRs are likely evolve into a parking place for the foreign holdings of central banks, led by the People's Bank of China. Beijing's moves this week to offer $95bn in yuan currency swaps to developing economies show how fast China aims to break dollar dependence.
French President Nicolas Sarkozy said the summit had achieved more than he ever thought possible, and praised Gordon Brown for pursuing the collective interest as host rather than defending "Anglo-Saxon" interests. This has a double-edged ring, for it suggests that Mr Brown may have traded pockets of the British financial industry to satisfy Franco-German demands. The creation of a Financial Stability Board looks like the first step towards a global financial regulator. The devil is in the details.
Hedge funds deemed "systemically important" will come under draconian restraints. How this is enforced will determine whether Mayfair's hedge-fund industry – 80pc of all European funds are there – will continue to flourish.
It seems that hedge funds have been designated for ritual sacrifice, even though they played no more than a cameo role in the genesis of this crisis. It was not they who took on extreme debt leverage: it was the banks – up to 30 times in the US and nearer 60 times for some in Europe that used off-books "conduits" to increase their bets. The market process itself is sorting this out in any case – brutally – forcing banks to wind down their leverage. The problem right now is that this is happening too fast.
But to the extent that this G20 accord makes it impossible for the "shadow banking" to resurrect itself in the next inevitable cycle of risk appetite, it may prevent another disaster of this kind.
The key phrase is "new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times." This is more or less what the authorities agreed after the Depression. Complacency chipped away at the rules as the decades passed. It is the human condition, and we can't change that.

you tube video of G20 Protests

http://www.youtube.com/watch?v=Adi2i8qyerU

G20: Protesters storm bank, smash windows

http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10564767

LONDON - G20 protesters clashed with riot police in central London overnight, breaking into the heavily guarded Royal Bank of Scotland and smashing its windows.
Nearly two dozen people were arrested. Some 4,000 anarchists, anti-capitalists, environmentalists and others clogged the streets of London's financial district for what demonstrators branded "Financial Fool's Day."
The protests were called ahead of Thursday's Group of 20 summit of world leaders, who hope to take concrete steps to resolve the global financial crisis that has lashed nations and workers worldwide.
Protesters also tried to storm the Bank of England and pelted police with eggs and fruit.
A battered effigy of a banker in a bowler's hat hung on a traffic light near the Bank of England.
While most of the protesters were peaceful, a violent mob wearing balaclavas broke into the RBS building and stole keyboards that were used to break windows.
Other protesters spray-painted graffiti on the RBS building, writing "class war" and "thieves." Riot police batted back protesters carrying banners that read "Abolish Money." Protesters focused the Royal Bank of Scotland because it was bailed out by the British government after a series of disastrous deals brought it to the brink of bankruptcy.
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Still, its former chief executive Fred Goodwin - aged 50 - managed to walk off with a tidy annual pension of 703,000 pounds ($1.2 million) - just as unemployment in Britain is at 2 million and rising.
"Every job I apply for there's already 150 people who have also applied," said protester Nathan Dean, 35, who lost his information technology job three weeks ago.
"I have had to sign on to the dole (welfare) for the first time in my life.
You end up having to pay your mortgage on your credit card and you fall into debt twice over."
The protests in London's financial district - known as "The City" - came as Prime Minister Gordon Brown and President Barack Obama held a news conference at Britain's Foreign Office elsewhere in the capital.
"Clearly, everybody has the right to protest and to make their views known, but people also have the right to go about their daily lives without fear of violence or unnecessary disruption," said Michael Ellam, Brown's spokesman.
At least one police officer was injured when a printer and other office equipment was thrown out of the RBS window.
Hundreds cheered as a blue office chair was used to smash one of the blacked-out branch windows.
Two men - one was wearing a suit - exchanged punches in the financial district before police intervened. Of the nearly two dozen people arrested, offences included disorderly behaviour, illegally wearing a police uniform, carrying knives and assault

Even The Daily Show Sees Similarity Between Imperialistic Bush and “Change” Minded Obama

A great segment on the Daily Show about the similarities between Bush and Obama. Is this really change?


http://www.thedailyshow.com/video/index.jhtml?videoId=220241&title=mess-opotamia-the-iraq-war-is

To Celebrate the 6th year of American occupation Iraq's burn American Flags

Protesters marched through the streets, burning American flags and chanting “no, no for occupation.” It was yet another reminder of just how much resentment remains in Iraq over the American military presence.
The supporters of Shi’ite cleric Moqtada al-Sadr took to the streets in numerous Iraqi cities after Friday prayers, calling on US and Iraqi forces to release detained members of their faction who “were not involved in acts of violence against Iraqis in accordance with the directives of Sayyid Moqtada al-Sadr.”
The protests come in the wake of the six-year anniversary of the American invasion of Iraq, at a time when many are wondering how much longer the American presence will continue and how much longer the Iraqi populace will have to wait for a return to normalcy.

The Fed is essentially printing money to try and prop up the economy

By JON HILSENRATH and BRIAN BLACKSTONE
The Federal Reserve ramped up its efforts to resuscitate the sagging economy, saying it would purchase up to $300 billion of long-term U.S. Treasury securities in the next few months and hundreds of billions of dollars more in mortgage-backed securities.
By buying long-term government bonds and mortgage-backed securities, officials hope to push up their prices and bring down their yields, and thereby energize the economy. Interest rates on many corporate bonds and consumer loans are benchmarked to U.S. Treasury debt. (Read the Fed's statement.)
MORE
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The move was a bold statement of force from the central bank, which during months of internal debate on the issue had been hesitant to begin buying long-term government bonds as the Bank of England recent began to do.
The Fed action underscores the central bank's ability to move aggressively to combat the financial crisis without any action by Congress, an important attribute at a time when the political firestorm ignited by bonuses made to employees of American International Group Inc. Other rescue efforts have made Congress hostile to approved any more taxpayer money.
Prices on U.S. Treasury bonds soared on the news and the yield fell sharply. Yields on 10year treasury notes dropped. Stock prices also rose sharply and the dollar sank.
The Fed's steps came against a gloomy economic backdrop. "Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending," the Fed said in a statement after its two-day meeting. "Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession"
The Federal Open Market Committee, the Fed's policy making arm, voted 10-0 to hold the target federal-funds rate for interbank lending in a range between zero and 0.25% and to continue using credit programs financed by an expansion of the Fed's balance sheet to stabilize markets. Richmond Fed President Jeffrey Lacker, who dissented in January, went along this time. He had wanted the Fed to focus on buying Treasury purchases as opposed to targeting its lending on various corners of the credit markets. The discount rate that the Fed charges on direct loans to banks was unchanged at 0.5%.
With rates near zero, the Fed is now essentially printing money to increase the supply of credit in the economy.
The Fed said will buy up to $300 billion in long-term Treasurys over next six months. The purchases of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac will push the maximum to as $1.25 trillion, up from the previous $750 billion. The Fed also said it would increase the size of its potential purchases of the mortgage giants' debt to $200 billion from $100 billion.
The Fed's strategy appears to be to double down on the programs that it thinks work. In addition to commercial paper and money market mutual fund facilities, which appear to have stabilized those sectors, Mr. Bernanke has repeatedly highlighted the decline in mortgage rates in response to the agency and mortgage-backed securities facilities, calling it one of the "green shoots" evident in some markets.
By expanding its securities purchase programs, the Fed also is effectively ramping up efforts they can control. The commercial paper program and a new consumer lending program that commences Thursday are driven by how much demand there is in the markets.
Demand has waned for the commercial paper program in recent weeks, a sign that market is returning to health. Meantime, the new consumer lending program the Term Asset Backed Securities Loan Facility, or TALF, has gotten off to a slow start.
The U.S. economy is expected by economists to decline at an annual rate of 5% or more in the current quarter. It plunged at a 6.2% rate in the fourth quarter of 2008, the steepest in a quarter century. The economy is now shedding more than 650,000 jobs per month, pushing the unemployment rate to 25-year highs. One nugget of good news is that consumer spending figures signaled some stabilization since the start of the year.

Beneficiary Builds $500 000 property portfolio

http://www.stuff.co.nz/national/2079935/Beneficiary-builds-500-000-property-portfolio

Christchurch company director and owner of three houses Lindsay Ralph Cox was spotted by Sunday News popping into a real estate agency on Thursday and checking out its latest catalogue.
The 64-year-old has been able to build up his own property portfolio while on an invalid's benefit "for more years" than he can remember.
Cox told Sunday News the reason for the visit was "just to check the market and talk about a few things".
Any income he receives from selling his houses could affect his invalid's benefit but he is just months away from receiving government superannuation which is not income-tested.
If he were to sell now, any income he received from a sale could jeopardise his eligibility for the invalid's benefit.
Sunday News spoke to Cox after being told he had built up the property portfolio, worth nearly $500,000, while being on various benefits for 30 years.
Cox had also previously owned an additional house but had transferred it into his mother's name.
She lives in a rest home.
Cox said he couldn't remember exactly how long he'd been on the benefit.
"More years than I can remember," he said.
Inquiries have confirmed the 64-year-old who lives with his girlfriend Sandra Hilleard in the Christchurch suburb of Linwood is entitled to a benefit of around $200 a week because he suffers from deep-vein thrombosis, caused by the formation of blood clots in major veins.
His three houses are empty and have not been maintained one had shrubbery overgrowing it.
Neighbours said Cox and Hilleard visited every few weeks to check on the houses.
Asked by Sunday News why he didn't sell any of his three properties and stop receiving taxpayer-funded handouts, Cox said: "Why should I?"
"It's a depressed market out there at the moment and it would be hard to get a buyer," he said. "I'm not a bloody criminal. I'm not doing anything wrong."
Unlike Australia, New Zealand does not asset-test beneficiaries.
If Cox lived across the Tasman he would probaby not be eligible for their invalid's benefit equivalent, the disability support pension.
The total value of property a beneficiary living with a partner can own in Australia is $243,500.
But our government has no plans to introduce asset-testing for benefits.
"I have to be honest with you, this is not a priority of ours at the moment," Social Development Minister Paula Bennett told Sunday News.
"We are focused on keeping people in the job market at the moment."
Bennett described the issue as "tough and complex" but hoped people only used benefit assistance "when they really needed it".
"Benefits are supposed to be there for those who can't help themselves," the minister said.
Bennett said asset-testing benefits could prove difficult.
"Would we then be telling people they need to sell their car?" she asked.
Ministry of Social Development deputy chief executive Patricia Reade said Cox was presently the subject of an investigation but she would not elaborate.
"Until this investigation is completed it would be wrong for us to discuss details of it in the media," Reade said.
But Hilleard said the investigation was likely to relate to Cox receiving the accommodation supplement while he was living with her.
"And I was working at the time," Hilleard said.
Cox is listed as a director of Milroy Courts Ltd. Sunday News has been unable to establish what the company does.