Credit Crisis Solutions

APEC leaders say no to trade barriers

Leaders from 21 nations accounting for half the world’s economy pledged not to implement protectionist measures for the next year — no matter how punishing the global downturn gets.

“We strongly support the Washington Declaration and will refrain within the next 12 months from raising new barriers to investment or to trade in goods and services (and from) imposing new export restrictions,” the APEC leaders said in a joint declaration.

“Companies will go bankrupt and countless jobs will be lost, and poor nations and poor people will suffer the most damage,” South Korean President Lee Myung-bak told business executives.

Bush scores wins on economy, N. Korea

President Bush snares international support on the economy and Northern Korea, emerging from his final world gathering with modest wins and growing nostalgia about his turbulent tenure.

LIMA, Peru - U.S. President George W. Bush snared fresh international support Saturday on the economy and North Korea, emerging from his final world gathering with modest wins and growing nostalgia about his turbulent tenure.

Dogged by a collapsing economy late in his presidency, George Bush came away with the commitment he wanted from Asia’s Pacific nations: a pledge to keep trade flowing and shun protectionism.

And Bush got a boost as the six nations involved in ridding N. Korea of its nuclear weapon arsenal agreed to meet in China in December, perhaps to finally lock in a disarmament deal.

General Motors says board of Directors doesn’t see bankruptcy as option

GM’s board of directors does not consider bankruptcy protection a viable option to solve the company’s financial troubles, but it has discussed Chapter 11 because it has a legal duty to do so according to a spokes woman saturday 22 november.

General Motors, which has slashed jobs and closed plants since early in the decade, has warned that it could run low on cash by the end of the year unless it gets a taxpayer-funded rescue from the government.

Instead, Cervone said the board supports Wagoner’s strategy to seek congressional approval of low-interest government loans, getting the company through its liquidity problems until the U.S. auto market recovers and it can be profitable again, Cervone said.

Wagoner, in testimony to the Senate Banking Committee on Tuesday, said that independent research shows 80 percent of consumers would not consider buying a car from GM if it were in bankruptcy.

Credit crisis: ‘The worst is over’. Emotions are your enemy!

Steve Forbes, the publisher of Forbes magazine, is one of the few people remaining optimistic despite gloomy predictions about the global economy.

He talked to Matt Frei about how an economic recovery could be underway.

See the video

China ‘can be engine of growth’

The economic crisis of 2008 is rooted in the so-called “global imbalances”, whereby the West borrowed too much, funded by Asian savings.

Globalised financial markets then transmitted the American led crisis around the world.

Resolving this crisis, in the least painful manner, will require rebalancing the global economy.

China is a significant source of global savings and certainly is not immune to the economic crisis which will slow its economic growth, though it is likely to weather it well.

With nearly $2 trillion in foreign exchange reserves, it is in a position to help with the credit crunch in the West as well as serve as an engine of growth as the other engine, the United States, slows to a halt.

Instead of selling debt to China and other emerging economies, the sovereign wealth funds of these countries could invest directly in western markets.

Belt tightening by western consumers is still necessary and will happen but a long period of austerity can be avoided.

China, and emerging economies, contributed to this crisis and are suffering the consequences as their financial markets and export sectors decline. They can also help resolve it.

Controversial UN artwork unveiled

An intricate ceiling painting worth 18m euros (£15m) has been unveiled at the United Nations offices in Geneva. The coloured dome took Spanish artist Miquel Barcelo more than a year to produce, using 100 tons of paint with pigments from all over the world.

The Spanish Foreign Ministry said the government and private donors helped pay for the artwork. Of the public money, 500,000 euros (£421,425) came from a budget for overseas development aid and international organizations like the United Nations.

The Popular Party said that meant money which should have been spent on alleviating poverty was instead used to pay Barcelo.

However, a news conference with Barcelo and Spain’s foreign minister was cancelled in Geneva on Tuesday.

GEITHNER LIKELY TO BE TREASURY SECRETARY

the president-elect is preparing to roll out his economic team on Monday — and will personally announce the team and answer questions — part of an effort to reassure markets.

‘Barring last minute changes, the nominee for Treasury Secretary will be NY Fed President Tim Geithner — a career Treasury official under both Bob Rubin and Larry Summers — who actually had worked at the Treasury in three administrations under five Secretaries — going back to 1988.

Also expected Monday — an announcement that former U.N. Ambassador and Energy Secretary in the Clinton administration, New Mexico Governor Bill Richardson, will be Commerce Secretary.

Obama’s weekly update: November 22

Obama outlines 2,5 million job-creation plan on infrastructure an Eco

American workers will rebuild the nation’s roads and bridges, modernize its schools and create more sources of alternative energy, creating 2.5 million jobs by 2011, Obama said in the weekly Democratic address, posted on his Web site.

“These aren’t just steps to pull ourselves out of this immediate crisis,” he said. “These are the long-term investments in our economic future that have been ignored for far too long.”

The plan will be aimed at jump-starting job creation, Obama said, and laying the foundation for a stronger economy.

Falling prices raise worries about deflation in the crisis

If price declines continue and become more widespread, there’s a risk the downward trend could feed on itself in a spiral that can take on a ruinous momentum. It’s called deflation. And some economists are warning the threat is increasing.

“A benign decline in prices amidst a sluggish but recovering economy would be unwelcome but tolerable,” Merrill Lynch economist David Rosenberg wrote in a note to clients this week. “But the price slashing now under way as the consumer beats a hasty retreat could allow that corrosive deflationary spiral to take hold — something the Fed wants to avoid at all costs.”

While deflation might sound welcome, in fact it can be devastating to borrowers, banks and businesses. The Great Depression in the 1930s was accompanied by deflation of 10 percent per year, reflecting the widespread lack of demand. Falling prices in the 1890s made it impossible for farmers to keep up with mortgage payments, as Fed Chairman Ben Bernanke noted in a 2002 speech on the topic.