My comment: We are not just changing the economic system, we are not just changing the players, we are not changing where the power is, we are changing the way how we drive the global economy, the true power.
Of course, as Mrs. Arroyo sugested the G-20 is not enough. Africa must have a voice and speak loud. Africans are doing it extremely well in this crisis. Please, friends, enjoy it. Peace and best wishes. Xi http://www.bloomberg.com/apps/news?pid=20601109&sid=aVbu8QuF.k1g&refer=home Feb. 13 (Bloomberg) -- The Group of Seven, whose finance chiefs convene this weekend in Rome, is ceding its traditional power to rebuild the world economy to a broader body of governments that now wield greater sway over global growth. As U.S. Treasury Secretary Timothy Geithner and European Central Bank President Jean-Claude Trichet join their G-7 counterparts, it’s the Group of 20 that occupies the vanguard responding to the financial crisis. The shift in influence to the group, whose membership ranges from the U.S. to China to Saudi Arabia, reflects the fact that industrial nations lack the resources to fix the world’s economic woes alone. That curbs the G-7’s scope to deliver new initiatives this week, say economists and former officials. “The world has changed,” said Paul Martin, Canada’s former prime and finance minister who attended G-7 meetings and helped establish the G-20 a decade ago. “The G-20 reflects the realities of the global economy. Its finance ministers are becoming the dominant policy-making body.” The G-7’s finance ministers and central bankers meet tonight and tomorrow before releasing a statement and talking to reporters at about 2:30 p.m. local time. On the agenda: How to thwart protectionism, overhaul financial oversight and end what the International Monetary Fund calls a depression in advanced economies. Rebuilding World Economy Limiting the G-7’s scope to act is the fact that policy makers have given the task of rebuilding the world economy to the G-20, which was created after a spate of currency devaluations in emerging markets in the 1990s. The G-20’s increasing influence reflects how the current slump is being led by the major economies, forcing them to look beyond their ranks for help in ending it. That’s a reversal from previous crises when the G-7 was in the driver’s seat of the recovery effort. The IMF predicts advanced economies will shrink 2 percent in 2009. Still, the expansion of developing nations will keep the global economy growing at a 0.5 percent pace, it estimated last month. “The crisis has escalated the awareness of how irrelevant the G-7 is,” said Jim O’Neill, chief economist at Goldman Sachs Group Inc. in London. “It’s in the back seat, and the focus on the G-20 is growing.” China Rising China overtook Germany in 2007 to become the world’s third- largest economy, new data showed last month, and in September passed Japan as the biggest foreign investor in U.S. government debt. China, Russia, Brazil and India together hold about 41 percent of global foreign- exchange reserves. Together, the G-7 countries produce only slightly more oil a day than Saudi Arabia. The emergent power of the G-20 “is a recognition of new realities,” said Nobel laureate Joseph Stiglitz, a former economic adviser to President Bill Clinton. “It’s effectively recognition by the G-7 that they don’t have the money. The money is in Asia, the Middle East.” Leaders from the bigger group met for the first time in November in Washington and released a string of directives on strengthening accounting standards and oversight of derivatives, hedge funds and debt-rating companies. It’s that manifesto rather than anything the G-7 has produced that is now garnering international attention. G-20 heads will meet in London April 2 to seek ways to implement it. Bigger Than G-7 “The world economy is bigger than the G-7,” U.K. Prime Minister Gordon Brown said Feb. 9. “You cannot talk about the world economy and what you want to do without involving a whole range of countries.” John Taylor, a former U.S. Treasury official and now at Stanford University in California, says even as the G-20 gains in importance, the G-7 can “still get things done better” because it’s smaller, involves only major economies and is monitored closely by investors. Having this week pledged up to $2 trillion to spur new lending and address banks’ illiquid assets, Geithner will press his colleagues to take “exceptional and complementary measures,” the Treasury said in a statement. In turn, “there is a desire to have more particulars” of the U.S. plan outlined, said Canadian Finance Minister Jim Flaherty. Geithner is also likely to be questioned about a “Buy American” provision in a U.S. stimulus package. German Finance Minister Peer Steinbrueck mentioned the clause today in warning against pursuing protectionism as happened in the Great Depression. “We will have to do everything to ensure history doesn’t repeat itself,” he told the German parliament. Emergency Meeting The G-20’s role has grown as the current crisis festered. In November 2007, central bankers used its talks near Cape Town to hatch a plan to inject more dollars into markets. Last October, its finance ministers held an emergency meeting in Washington that President George W. Bush attended. Modern challenges also mean the G-7 is not the proper forum to set international policy, said Goldman’s O’Neill. Fighting protectionism, global imbalances, climate change, money laundering and terrorist financing as well as reforming agencies such as the IMF and World Bank all require the input of nations outside the group, he said. Even the G-20 may not be big enough. German Chancellor Angela Merkel wants a body akin to the United Nations Security Council to oversee the world economy. Philippine President Gloria Arroyo says the G-20 “must even go beyond” its membership to include African nations. Developing Countries “Developing countries’ economies are doing better than the developed countries and yet don’t have a say in how to restructure the world,” said Arroyo. Alastair Newton, political analyst at Nomura International and a former U.K. trade official, says the G-7 and G-20 will both remain for now and that the bigger group must prove it can carry out its pledges. “I wouldn’t suggest the G-7 has reached its sell-by date quite yet,” says Newton. “The G-20’s being pushed to the fore, which implies it’s becoming more important, but it has to deliver.” For Related News and Information: Stories on currencies: NI FRX <GO> Finance industry monitors: BANK <GO> and INS <GO> Stories on central banks: NI CEN <GO> Credit crunch page: WWCC <GO> Stories on finance: NI FIN <GO> Stories on the credit crisis: NI CRUNCH BN <GO> Government relief programs: GGRP <GO> Stories on rescue programs: {RESQ GO>} Credit crunch page: WWCC <GO> For G-7 news: NI G8 BN <GO> Distressed bonds: DIS <GO> Global statistics: STAT <GO> --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
