UN Panel Welcomes Debate Over New Global Reserve Currency

Editors Note - For those keeping score… This makes it 3. Russia, China and now the UN have each announced  advocating a move to a global currency at the  upcoming  G20 conference.

The head of a United Nations expert panel discussing solutions to the financial crisis on Thursday welcomed the debate over a new global reserve currency and said it would be best managed by a brand new institution.

Just days ahead of the Group of 20 heads of state meeting in London, several key players have weighed in with solutions to resolve the current financial crisis and to prevent future recurrences. One of the most sensitive subjects is the creation of a new de facto global reserve currency to replace the U.S. dollar.

The debate has shot to the forefront as officials from Russia and China have spoken up, lending weight to the discussions. While the G20 meeting isn’t expected to address it directly, it’s a topic that will continue to be discussed over the longer term.

The U.N. panel’s report published last week said a new global reserve system would “contribute to economic stability and equity,” and would reduce the deflationary effects of the massive reserve accumulations that countries have found necessary to protect them against the high level of global instability.

The International Monetary Fund is often cited as the most obvious choice to run a global reserve system, as it already uses its own currency, known as special drawing rights, or SDRs, in its dealings with member countries.

Joseph Stiglitz, economist and head of the U.N. panel, said Thursday in a teleconference with journalists that, although the IMF might be the fastest route, there’s a stigma associated with it among some developing countries, and there’s also frustration with the way that SDRs are allocated.

“My own longer-term preference is to create a new institution to do this,” Stiglitz said. “That’s a trade-off. I would rather face up to these deeper questions and get the system right.”

via Article – WSJ.com.

Britain On The Edge of National Bankruptcy?

They don’t know what they’re doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious.

Yesterday marked a new low for all involved, even by the standards of this crisis. Britons woke to news of the enormity of the fresh horrors in store. Despite all the sophistry and outdated boom-era terminology from experts, I think a far greater number of people than is imagined grasp at root what is happening here.

The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic.

The political impact will be seismic; anger will rage. The haunted looks on the faces of those in supporting roles, such as the Chancellor, suggest they have worked out that a tragedy is unfolding here. Gordon Brown is engaged no longer in a standard battle for re-election; instead he is fighting to avoid going down in history disgraced completely.

This catastrophe happened on his watch, no matter how much he now opportunistically beats up on bankers. He turned on the fountain of cheap money and encouraged the country to swim in it. House prices rose, debt went through the roof and the illusion won elections. Throughout, Brown boasted of the beauty of his regulatory structure, when those in charge of it were failing to ask the most basic questions of financial institutions. The same bankers Brown now claims to be angry with, he once wooed, travelling to the City to give speeches praising their “financial innovation”.

Does the Prime Minister realise the likely implications when the country joins the dots? He has never been wild on shouldering blame, so I doubt it. But Brown is a historian. He should know that when a nation has put all its chips on red and the ball lands on black, the person who made the call is responsible. Neville Chamberlain discovered this in May 1940 with the German invasion of France.

via Source

US Rescue Averted Financial Collapse – Treasury

The question is, “averted for how long?”

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Massive rescue efforts by the US government and central bank in recent months helped avert a “financial collapse” and are working to stabilize the economy, a Treasury report said Wednesday.

The Treasury report to a congressional panel overseeing the 700-billion-dollar rescue plan passed in early October said the extraordinary actions probably averted deeper problems.

“Treasury, working with the Federal Reserve, the FDIC (Federal Deposit Insurance Corp.) and other regulators, has taken the necessary steps to prevent a financial collapse,” the report said.

“The most important evidence that our strategy is working is that Treasury’s actions, in combination with other actions, stemmed a series of financial institution failures. The financial system is fundamentally more stable than it was when Congress passed the legislation.”

The report said there are signs of an easing of the credit crisis since the legislation was enacted, including a lowering of the key LIBOR, or London interbank rate used for loans between banks.

But the report said a broader economic recovery will take time, but that the program including vast capital injections into commercial banks will help.

“It is important to note that nearly half the money allocated to the Capital Purchase Program has yet to be received by the banks,” the report said.

“Clearly this capital needs to get into the system before it can have the desired effect. In addition, we are still at a point of low confidence — both due to the financial crisis and the economic downturn. As long as confidence remains low, banks will remain cautious about extending credit, and consumers and businesses will remain cautious about taking on new loans.”

On December 10, Congress published an extremely critical report of the Treasury Department’s handling of the financial industry bailout to stabilize the US economy.

The 30-page report by the Congressional Oversight Panel — a commission specially created to monitor the bailout — raises several areas of concern over the government’s execution of the Troubled Asset Relief Program (TARP) that Congress passed on October 3.

The commission called for a clear line of action from the Treasury, after accusing the department of changing its action plan several times.

via US rescue averted ‘financial collapse’: Treasury.

London Advertising Campaign Says There Is No God

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