Global economy stepping in ' new danger zone': World Bank President Robert Zoellick

Source :ET:3 SEP, 2011, 10.34AM IST, REUTERS 


BEIJING: The world economy is stepping into a "new danger zone," World Bank President Robert Zoellicksaid on Saturday, as growth slows and investor confidence weakens. 

Speaking in Beijing, Zoellick urged Europe and theUnited States to tackle their debt problems, and noted that near record-high food prices and volatile commodity markets are threatening the most world's vulnerable people. 

"The financial crisis in Europe has become a sovereign debt crisis, with serious implications for the Monetary Union, banks, and competitiveness of some countries," he said. 

"My country, the United States, must address the issues of debt, spending, tax reform to boost private sector growth, and a stalled trade policy." 

Turning to China, where he is leading a World Bank study on how the nation can improve its economic growth model, Zoellick was upbeat. 

China is "well positioned" to become a "high-income" nation in the next 15 to 20 years, from its status as an "upper-middle income" country now, he said. 

The question is whether China can avoid the "middle income trap", where national productivity and income growth stalls after per capita income hits $3,000 to $6,000, Zoellick said. 

"If China were to continue on its current growth path, by 2030 it would have an economy equivalent to 15 of today's South Koreas, using market prices," he said. 

"It's hard to see how that expansion could be accommodated with an export and investment-led growth model." 

Although China is the world's second-largest economy, its per capita gross national income stands at just $4,260, World Bank data showed, less than a tenth of the $47,140 seen in the United States. 

Critics have long said China relies too much on heavy investment and exports to drive its economy, and should encourage domestic consumption. 

For Chinese consumption to take off, analysts say China needs to cut income taxes, improve healthcare services and labour mobility, and reduce Beijing's share of national income by raising dividend payouts from state firms, among other measures.

US sees 141 bank failures in just 11 months

Source:NEW YORK:

PTI, Nov 7, 2010, 12.42pm IST

 In signs of continuing financial woes, a staggering 141 American banks have gone belly up so far this year, surpassing the total count of bank failures in 2009. 

The world's largest economy saw the collapse of 140 banks last year, at a time when the country exited one of the worst recessions. 

Four banks -- Western Commercial Bank, Pierce Commercial Bank, First Vietnamese American Bank and K Bank -- were shut down by the authorities on November 5. 

According to the Federal Deposit Insurance Corporation ( FDIC), which insures deposits at over 8,000 American banks, the latest failures would cost more than $254 million. 

In October alone, 12 banks went out of business. Seven banks were closed down in September, while August saw the failure of ten entities. The maximum number of failures this year happened in April, when 23 entities went belly up. 

Official data showed that the count of 'problem' banks -- those at risk of failure -- climbed to a 17-year-high of 829 in the June quarter. 

Small and medium banks are facing the brunt due to rising defaults, triggered by high number of unemployed people. 

Notwithstanding massive stimulus measures, the jobless rate continues to hover near ten per cent. 

Last week, the US Federal Reserve announced that it would purchase government securities worth $600 billion in coming months, a move aimed at bolstering the national economy, which expanded at just two per cent in the September quarter.

BoJ cuts rate to near zero

Source : TOI:mumbai:5th oct 2010

TOKYO: Japan's central bank has reduced key interest rate to virtually zero in a surprise move on Tuesday and is looking to set up a $60 billion fund to buy government bonds and other assets as it tries to inject life into a faltering economy.

The Bank of Japan's ninemember policy board voted unanimously to set its overnight call rate target to a range of zero to 0.1%, returning to zero rates for the first time in more than four years.

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India third most powerful nation: US report

SOURCE : TOI :WASHINGTON:IANS, Sep 21, 2010, 12.01pm IST






India is listed as the third most powerful country in the world after the US and China and the fourth most powerful bloc after the US, China and the European Union in a new official US report.

The new global power line-up for 2010 also predicted that New Delhi's clout in the world will further rise by 2025, according to "Global Governance 2025" jointly issued by the National Intelligence Council (NIC) of the US and the European Union's Institute for Security Studies (EUISS).

Using the insights of a host of experts from Brazil, Russia, India and China, among others, and fictionalised scenarios, the report illustrates what could happen over the next 25 years in terms of global governance.

In 2010, the US tops the list of powerful countries/regions, accounting for nearly 22 percent of the global power.

The US is followed by China with European Union at 16 percent and India at eight percent. India is followed by Japan, Russia and Brazil with less than five percent each.

According to this international futures model, by 2025 the power of the US, EU, Japan and Russia will decline while that of China, India and Brazil will increase, even though there will be no change in this listing.

By 2025, the US will still be the most powerful country of the world, but it will have a little over 18 percent of the global power.

The US will be closely followed by China with 16 percent, European Union with 14 percent and India with 10 per cent.

"The growing number of issues on the international agenda, and their complexity, is outpacing the ability of international organisations and national governments to cope," the report warns.

This critical turning point includes issues of climate change, ethnic and regional conflicts, new technology, and the managing of natural resources.

The report also highlights the challenges proponents of effective global governance face.

On one hand, rapid globalization, economic and otherwise, has led to an intertwining of domestic politics and international issues and fuelled the need for more cooperation and more effective leadership.

But on the other hand, an increasingly multipolar world, often dominated by non-state actors, has put a snag in progress toward effectual global governance, it said.

India, China likely to grow at a high rate: Geithner

Treasury Secretary Timothy Geithner in Washington on Thursday.

Source :PTI:The Hindu:WASHINGTON, September 17, 2010

India, China and other countries from the emerging markets are likely to grow at a high rate for sustained period of time as they have a long way to go to bring their people from agriculture into industry, U.S. Treasury Secretary Timothy Geithner told lawmakers.

“I think most economists would say that China is likely to be able to grow at a rate like 8 per cent for a sustained period of time because they have a long way to go to bring those people from agriculture into industry and to take advantage of the huge gap they still face between how people produce stuff in China and the frontier of technology,” Mr. Geithner said at a Congressional hearing on China.

“So that process of catching up would for China -- it’s true for India too, for many emerging markets -- justify some confidence of quite high levels of growth rate for a long period of time,” he said in response to a question.

He said that what matters to the U.S. and the world economy was the shape of growth, the pattern of growth, the growth strategy.

“To work for them over China it’s going to have to come from a rising middle class and from stronger domestic demand. It can’t come from the export-intensive model of the past. It’s just not a tenable strategy for them and they’re beginning that shift but they’re just at the beginning of that shift,” Mr. Geithner said.

The Treasury Secretary said the U.S. has been living through not just the devastating scars caused by the worst financial crisis, worse economic recession since the Great Depression, but a crisis that’s followed a large period of damaging underinvestment in the middle class, in education and public infrastructure, and terrible erosion in the basic fiscal position of the country.

“This is because we borrowed hundreds of billions of dollars to finance programs we weren’t prepared to pay for -- tax cuts for the rich. Those sets of policies have been terribly damaging to our country and they are going to take time for us to fix,” he said.

“The only credible long-term growth strategy for us as a country -- it’s going to have to rely on stronger investment in the U.S. and stronger export performance over time.

“And that’s not going to happen unless we restore what has been the great strength of the American economy over time, which is that -- the best place to innovate, the best place to come and build a company, the easiest place to come raise capital to finance some idea, and best universities, highest levels of sustained investment in basic science, research and development. Those are absolutely essential things for us to do,” Mr. Geithner said