Posted by: samhenry | September 25, 2009

US Declines not Shines at UN and G20

The architecurally significant Second Bank of the United States, Philadelphia, PA. Is US leadership in banking and finance in the past?

The architecturally significant Second Bank of the United States, Philadelphia, PA. Is US leadership in banking and finance in the past?

In every sector of our international economic and political life, President Obama has pulled us out of a position of leadership either by design or default.

In a single week he killed a protective missile shield intended to defend allies in Eastern Europe; asked nations at the UN General assembly to step up to the plate and not let the US go it alone in determining how international crises should be handled. To underscore a helpless United States, as many as 6 terror plots across the US were uncovered.

Little wonder then that when he left the international political gathering, President Obama took the spillover of US declining power to the G20 economic summit with him as well as Little wonder then that when he left the international political gathering, President Obama took the spillover of US declining power to the G20 economic summit with him as well as the heavy burdens of his slow defeat in Health Care Reform and in the War in Afghanistan.  He arrived in Pittsburgh with his plan to curb trade surpluses only to run up against it from many of the member nations.  The German leader with whom he has not been able to create a working relationship labeled his plan a “distraction” from the summit’s agreed upon goals to radically reform the global financial system to prevent a repeat of last year’s financial crisis.

Washington Times

With the financial ground shifting , it was the United States that provided the worst economic news in manufacturing and finance. Below, evidence that the US is most assuredly in decline and that the world has moved on without us and our leadership.

US fiscal problems resurface in non-banking sector. Annually, the Federal Reserve and the FDIC conduct a review of loans larger than $20m shared by three or more federally regulated institutions. They compare large loans made by banks and non-banks to ensure that they are being made the same way. These loans are known as “shared national credits,” and they are written by financial groups outside the traditional banking sector (hedge funds, securitization vehicles and pension funds). The findings this year were mind-numbing: these “institutions,” part of what is called “the shadow” banking system, held 47 percent of problem loans but accounted for only 21.2 percent of the total loan pool.  The impact of losses in this area of the economy can drag other financial sectors down with it.

Ominous signs that the banking and financial centers are moving to Asia and China.  Europe and America may see themselves void of international banking centers in London and New York sooner rather than later. HSBC today announced the move of its Ceo from London to Hong Kong admittedly because the center for international banking has moved to focus on Asia and China.

HSBC to move chief executive to Hong Kong

An unexpected drop in US manufacture of hard goods for August. Orders for durable goods like aircraft and electronics fell unexpectedly in August, while sales of new homes rose less than expected. The weak reports renewed concerns about whether the economy can sustain a recovery with consumer spending held back by job losses, tight credit and falling home values.

Durable goods orders, new home sales disappoint

The G2 0 will have an expanded role and will be at the center of future international fiscal policy making.  Other “G” gatherings – G7 and G8 would deal primarily with international relations and foreign policy.

the new framework – also termed a global compact in the communiqué to be issued on Friday – will involve:

  • the G20 will help build a durable recovery while avoiding the financial fragilities that led to the crisis.”
  • G20 leaders will set the economic agenda, receiving reports from all members detailing how their individual policies meet those ambitions.
  • G20t will be monitored by the International Monetary Fund.
  • There will not be formal sanctions for non-compliance and the ambitions will be enforced by a system of peer review.

Initial actions include:

  • Agreement to have rich countries  give up 5 per cent of the total voting shares to be distributed to under-represented countries, including rapidly growing emerging economies such as China. The aim is to increase the legitimacy of these institutions. The leaders have agreed to put aside disagreements over the representation in the governing bodies of these institutions
  • Endorsement of a report from the Financial Stability Board that calls for bonuses to be linked to the long-term success of financial companies and not excessive risk taking. It will outlaw multi-year bonuses, call for bonus payments to be deferred and establish mechanisms for clawing back bonuses paid if a company subsequently fails. There will not, however, be a formal cap on individual bankers’ bonuses.

World leaders to expand G20 powers

hotair.com

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