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Obama returns fire after China slams Fed’s move

November 8, 2010 1 comment

p>By Patricia Zengerle and Krittivas Mukherjee Patricia Zengerle And Krittivas Mukherjee Mon Nov 8, 8:59 am ET

NEW DELHI (Reuters) – President Barack Obama defended the Federal Reserve’s policy of printing dollars on Monday after China and Russia stepped up criticism ahead of this week’s Group of 20 meeting.

The G20 summit has been pitched as a chance for leaders of the countries that account for 85 percent of world output to prevent a currency row escalating into a rush to protectionism that could imperil the global recovery.

But there is little sign of consensus.

The summit has been overshadowed by disagreements over the U.S. Federal Reserve‘s quantitative easing (QE) policy under which it will print money to buy $600 billion of government bonds, a move that could depress the dollar and cause a potentially destabilizing flow of money into emerging economies.

“I will say that the Fed’s mandate, my mandate, is to grow our economy. And that’s not just good for the United States, that’s good for the world as a whole,” Obama said during a trip to India.

“And the worst thing that could happen to the world economy, not just ours, is if we end up being stuck with no growth or very limited growth,” he said.

European Central Bank President Jean-Claude Trichet said all participants at a meeting of the world’s central bankers in Basel, Switzerland had insisted they were not pursuing weak currency policies.

“We’re attached to avoiding excessive volatility. It’s very counterproductive for global growth and global stability,” he told a news conference.

CHINA, RUSSIA ATTACK FED MOVE

Washington has frequently criticized China, saying it deliberately undervalues its currency to boost exports.

China says the United States, via the Fed, is engaged in the same thing that it stands accused of, and some emerging nations have already acted to curb their currencies’ rise.

Resentment abroad stems from worry that Fed pump-priming will hasten the U.S. dollar’s slide and cause their currencies to shoot up in value, setting the stage for asset bubbles and making a future burst of inflation more likely.

“As a major reserve currency issuer, for the United States to launch a second round of quantitative easing at this time, we feel that it did not recognize its responsibility to stabilize global markets and did not think about the impact of excessive liquidity on emerging markets,” Chinese Finance Vice Minister Zhu Guangyao said on Monday.

The Fed’s quantitative easing policy was unveiled last week to jeers from emerging market powerhouses from Latin America to Asia. Russia renewed its assault on Monday.

“Russia’s president will insist …. that such actions are taken with preliminary consultations with other members of the global economy,” said Arkady Dvorkovich, a Russian official who is preparing the country’s position in Seoul.

Bank of Japan Deputy Governor Hirohide Yamaguchi said on Monday that it too was ready to boost its asset-buying scheme if it saw clear signs of a downturn. Worth 5 trillion yen ($62 billion), it is so far just a tenth the size of the Fed’s.

U.S. DROPS KEY DEMAND

India is Obama’s first stop in a 10-day trip to Asia that will include Indonesia and Japan.

He will arrive in Seoul for the November 11-12 summit weakened by a crushing congressional election defeat for his Democratic Party and under fire from all sides. Germany described U.S. economic policy as “clueless” last week.

The U.S. has already all but dropped its centerpiece proposal for the G20 — a measure that would cap current account balances at 4 percent of gross domestic product, something economists said was clearly aimed at China.

At the weekend, U.S. Treasury Secretary Timothy Geithner backed away from the numerical target that had been rejected by China, Germany, Japan and others in a sign that global financial power had slipped from U.S. hands.

On Monday, he was putting on a brave face, saying China was supportive of the G20’s framework for rebalancing the global economy, and that he expected broad consensus on it at the summit.

The risk of a negative outcome in Seoul appears to be increasing, or at the very least, an agreement that merely papers over the huge gaps and allows countries to pursue their own economic policies whether it be intervening in currency markets like South Korea and Japan or printing dollars.

“Judging by the critical response of emerging market governments to QE, the likelihood of a ceasefire in the currency war is slim,” RBC Capital markets said in a report published on Monday.

(Writing by David Chance and Mike Peacock; editing by Stephen Nisbet)

Obama’s Pick For Summers’ Replacement Will Signal His Direction

September 22, 2010 Leave a comment

Rob Kall
by Rob Kall

 

Will Obama pick another Goldman Sachs, Bankster, member of the team of econoterrorists economists who caused the economic meltdown? Or will he appoint someone who has credentials which indicate he or she’s been a stalwart supporter of main street families and workers?

Lawrence Summers, it appears, is leaving, because his two year pass at Harvard is about to run out, and he’d lose his tenure and have to re-apply. So much for the “ask not what my country can do for me, ask what I can do for my country” attitude. That’s a joke. Summers is all about what’s good for him and his.

Summers, known for his brains, is credited with being one of the chief architects of Obama’s failed top down, save the too-big to fail banks and pretend to throw money at infrastructure economic recovery program, signed into law in February.

He’s one of those smart people who do very stupid things– making negative remarks about women when he was Harvard president was a previous big one. Amazing how really smart people can do the big stupid so horrendously.

The good news could be that Summers and his approach, which helped lead to the economic disaster we’re living through, will soon be gone. The bad news is that he will probably be replaced by someone worse. Obama is getting better at picking people whose bios don’t scream of “fox in the hen house” syndrome.

Rupert Murdoch‘s Wall Street Journal reports, or, one might even say, ebulliently gloats, that Obama is looking to replace Summers with a more corporate pedigree– apparently, a number of female executives. The article reports,

Two people familiar with the matter said the president is considering a senior corporate executive as a successor to lead the National Economic Council, answering criticism that the Obama administration lacks private-sector experience and is aloof from corporate America.

The WSJ mentions Anne Mulcahy, former CEO of Xerox corporation as a prime candidate, and lists some other possibilities,

Other candidates include Deputy National Economic Council Director Diana Farrell, who came to the White House from McKinsey & Company, and Laura Tyson, an economist at the University of California, Berkeley, who served in the Clinton administration as chair of the Council of Economic Advisers.

Are they kidding? Obama’s not corporate friendly enough? Well, he still has Geithner, another bankster.
Progressive Change Campaign Committee co-founder Stephanie Taylor commented on Summers’ prospective departure.

“This is a big victory for anyone who voted for change in 2008 only to see Summers work from the inside to water down Wall Street reform, block President Obama’s promise to protect Net Neutrality, and urge other pro-corporate positions. While we feel bad for Harvard students and faculty who have to deal with Summers again, Harvard’s loss is America’s gain. When President Obama fills this important economic position, Americans need him to appoint a champion for regular working folks, not Wall Street tycoons — someone in the mold of Elizabeth Warren, Byron Dorgan, Robert Reich, Joseph Stiglitz, Paul Krugman, and Sheila Bair.”

This kind of response would make progressives and liberals and most Democrats happy. But then, we have to consider what Summers, under Obama’s direction, actually DID, as the Progressive Change Committee reports,

But, as the Progressive Change Campaign Committee documents,

Summers consistently tried to water down Wall Street reform. Newsweek’s Michael Hirsch: “chief economic adviser Larry Summers still questioned whether Volcker’s proposals were feasible…Obama hadn’t acted much like FDR in the ensuing months. Instead he had faithfully channeled Summers and Geithner and their conservative approach to stimulus and reform.” Summers also opposed breaking up the big banks — see Huff Post and Simon Johnson.

blocked Susan Crawford, a big Internet freedom advocate, from advancing Net Neutrality within the White House — eventually forcing her out. (Net Neutrality prohibits Internet providers from picking which websites work fast or slow for their customers based on the financial interests or political views of the Internet providers. This non-discrimination rule has been a crucial part of the Internet’s level playing field, until challenged in recent years by big cable and phone companies.)

When President Obama entered office, he did a Clinton administration transplant, filling a plethora of appointments with former Clinton staffers and people who worked for them. Summers, Geithner and former OMB director Orszag worked former Clinton Treasury Secretary economic disaster creator Robert Rubin, who made over $50 million (possible over $100 million) working for Citibank, including helping to block regulation of derivatives trading and repeal Glass Steagall. Of course, Rubin, before working as treasury secretary, was, for 20 years at Goldman Sachs, including as co-chairman.
Tim Geithner, Wikipedia reports, was Under Secretary of the Treasury for International Affairs (1998-2001) under Treasury Secretaries Robert Rubin and Lawrence Summers. Summers was his mentor, but other sources call him a Rubin protégé Geithner was also president of the Federal Reserve Bank of New York, director of Policy Development and Review Department at the International Monetary Fund and was a senior fellow at the COuncil on Foreign Relations (CFR.) Rubin is now co-Chair of the Council on Foreign Relations as well.

Summers has a history of supporting de-regulation and prevention of supervision of trading in derivatives and the like. Another globalist, he was also chieff economist for the world Bank. It’s hard to imagine Summers not being invited by Rubin to have some role in the Council on Foreign Relations, and, of course, Summers will surely go back to collecting big speaking fees.

The Council on Foreign Relations is considered the most influential think tank in the US. Of course, Xerox, which Anne Mulcahy, the number one mentioned candidate by the Wall Street Journal, to replace Summers, is a member.

Realistically, we can expect Obama to select someone who will continue the policies of Summers, who can work well Geithner or his replacement. That means they will be strong supporters of globalization, opponents to strong corporate oversight and regulation and friendly to the interests of global corporations. This would be inconsistent with Obama’s professed interests, on the campaign trail, in reining in transnational tax avoidance.

But I could be wrong. Summers departure does offer president Obama an opportunity to throw progressives, main street and mainstream Democrats a bone– some positive action that would actually help Democrats at the polls. So far, while he’s helped with fund-raising, it doesn’t seem like the White House team has been willing to actually make appointments or take substantive action to help main street. Even his latest infrastructure funding proposal will have a very limited and long term effect on the endangered middle class.

Follow Rob Kall on Twitter: www.twitter.com/robkall


Rob Kall, Host, Bottom-up Radio Show WNJC 1360, publisher, OpEdNews.com and Futurehealth.org
Posted: September 22, 2010 04:21 PM

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