Geithner: G20 must boost spending

Timothy Geithner, the U.S. Treasury Secretary, said on Wednesday some very important things about helping the global economy out of the financial and economical crisis. His main point is boosting the consumer’s spending, but also a lot of other things to prevent a next recession will be mentioned during the first coming G20 meeting.

Geithner said that is extremely important for the G20 nations to commit it selves to necessary actions for the period that matches the duration of the global crisis. The U.S. Treasury Secretary will explain everything during a weekend meeting in the southeast of Britain where all the finance ministers from G20 and developing nations will be present.

Geithner also explained to the press that it is necessary for all countries to decide to take actions in order to strengthen their financial regulatory system. He will also tell more details about actions that the United States will take. He is going to do this before another G20 meeting in April where all political leaders will try to put an end to the global recession.

There have been a lot of talks about reformations, but now it is time for action. While doing this, the G20 nations must work together to restore global growth. Geithner also mentioned that it’s important to build up a strong supervisory and financial regulatory framework at the same time. That is in order to prevent that a crisis like this would occur again.

Geithner ended his press meeting with probably the most important thing: healing the global economy by boosting consumer’s spending. In order to do that it’s vital for the G20 nations to invest in the International Monetary Fund (IMF). When the IMF has more resources it can invest much more in publics works and create a lot of jobs. This would be a perfect impulse for boosting consumer’s spending and helping the entire world out of its recession.

I totally agree with the U.S. Treasury Secretary. As I mentioned before in previous blogs; I find it very important to work on the demand side of a national economy. Geithner does a great job here by planning on telling to the G20 and developing nations that it’s important to give a lot of attention to this element. Give resources to the IMF is a good start.

With his other measures I also agree; it’s important for a national economy to go its own way but sometimes (and especially nowadays) it’s vital for the health of the countries economics to have some governmental guidance. Building up a strong supervisory and financial regulatory framework to prevent a future crisis are examples of this guidance.

Source: http://money.cnn.com

US unemployment rate surges to worst since 1983

The US Department of Labor announced a surging US unemployment rate of 8.1%.
Further, during the month February, 651,000 people lost their job.
Those two figures were bigger than expected and are really alarming…

In every area, people lose their job. Retail, construction, financial services and factories,… no area is safe from the high jobless rate. The only areas which are showing a little rise in employment are: health, the government and education. The unemployment rate is at the highest level since 1983.

Last week, the president of the US signed a $787bn economic recovery plan. First of all, with this plan Barack Obama hopes to realize a stabilization of the economic situation of today. Further, the plan includes tax cuts and money for public projects to create and save jobs. The administration of Obama tries to do all the possible to break the destructive cycle of job loss in the US and put Americans, who lost their job, back to work.

According to economist, this situation is very serious. Firstly, there weren’t that much jobs lost during the last three months as at the end of the second World War.
Secondly, the jobless rate may put further pressure on high-street commerce and could lead to more liabilities for banks due to the problems of the consumers to repay debts.

According to me, the $787bn economic recovery plan is a good initiative. This plan will certainly result in more jobs for the Americans. But I think, he’s a little bit over-enthusiastic . This plan, will make the situation better, but the real problem will not be solved. The plan doesn’t take on the consequences of the high jobless rate, just like the defaults on mortgages, the defaults on personal loans,…

Source: http://www.guardian.co.uk/business/2009/mar/06/us-unemployment-rate-jobs

US jobless rate highest in 25 years

The nation’s jobless problem is getting worse, the official figures showed these hard times. Layoffs are spreading to almost every sector of the economy and also businesses are faced with falling orders and rising losses. The economy has lost a great deal of million jobs, namely 4.4 million US jobs since the recession began in 2007, more than in any other postwar recession. Most economists say they don’t expect to see much progress over the short term.

US unemployment has reached the highest rate in a quarter of century, namely 8.1 per cent in February. This is the highest level since 1939, so more than 650,000 posts have been shed in three months time. Investors predicted these figures, the US job market is totally scourged in their view.

Economists and policymakers affirm that there isn’t absolutely any bright spot in this dismal news. The consumers in America are suffering severely, so isn’t there a note of optimism? Fortunately president Barack Obama reached a solution, 787 billion dollar stimulus, this bill would create lots of jobs and rescue the economy by this large fiscal boost. The White House predicted in its budget that the joblessness reached the average for 2009, but some claimed that this forecast was too sanguine.

The joblessness have surges very fast of late years as US companies have moved quickly to retrench their workforces. These movements in the labour market bring about problems in the rest of the economy, and so more job losses and the unemployment rises.

This article shows that the economy is indispensable in a country. Joblessness has a lot of consequences for the man in the street, so a solution of the government is absolutely necessary to rescue the US job market. The measures who were drew up by the president are a good option, joblessness doesn’t fit with economy.

Written by Marie Maes

Source: The Financial Times – 6 March 2009
Article: US jobless figure is worst for 25 years
By Alan Beattie in Washington and Alan Rappeport in New York

Is there need to nationalize?

The financial crisis grows weirder by the day. When philosophical conservatives like Alan Greenspan start talking about nationalizing banks, you know you’ve passed into some kind of parallel universe. Why are so many people entertaining an idea that sounds vaguely Marxian?

The answer, I think, is simple. There are some pretty sick banks in America right now, some of which may not be viable in the long run. But putting a giant bank through bankruptcy is unthinkable. (Remember Lehman Brothers). So why not just bite the proverbial bullet and nationalize them?

Mr. Blinder believes in biting the bullet, but it matters which bullet you bite. Like Ben Bernanke, the Federal Reserve chairman, and Timothy Geithner, the Treasury secretary, he is not convinced that nationalization is the only, or even the best, way out.

Because “nationalization” can mean many things, let’s first clarify what the current debate is about. Don’t think Hugo Chavez or even Clement Attlee. Imagine instead that the government acquires a majority interest in — or perhaps 100 percent of — a bank, wipes out the existing shareholders and installs new managers. Then, sometime later, a healthy bank is sold back into private hands, and we all live happily ever after. At least that’s the idea.

Further in the article, Alan Blinders wonders where they need to draw the line. This is a very interesting question in my opinion. First of all, how do you decide whether a bank ‘deserves’ to be overtaken by the government or not. Secondly where do you stop, once you start?

Supposing that we nationalize four banks, this could mean a severe disadvantage for bank five. But we simply cannot ignore the financial problems like the government did with Lehman Brothers. Imagine that more banks go bankrupt, this would mean a huge disaster both for the financial world as for the employees. Like I said in my previous blogs, there is also the fact that the Americans want to hold on to their traditions. They simply refuse to lower the price for gasoline for example. And that is why I fear that American politicians can not sell such a ‘communist action’ as a bank nationalization to the American population.

Source: http://www.nytimes.com/2009/03/08/business/08view.html?_r=1&ref=business