The European debt crisis threatening the global economy with recession kept finance ministers and central bankers busy seeking ways to reduce the risk of events tumbling out of their control.
Under pressure from skeptical financial markets to produce results, the ministers sought to push forward with a program in which the Group of 20 major economies take steps to achieve their ambition of strong, stable balanced growth while wavering over helping Greece avoid a destabilizing default.
The focus of discussions Saturday shifts from the G-20 to the International Monetary Fund and its sister institution, the World Bank. Both have warned the global economy is entering dangerous waters.
For Christine Lagarde, who took over as head of the IMF in June, the crisis poses a tough first test. Lagarde has warned that without bold and collective action, the world's major economies risk slipping back into recession.
To avoid that, the G-20 ministers pledged to "take all necessary actions to preserve the stability of banking systems and financial markets." They also encouraged Europe to move quickly to carry out its promises to help Greece.
But private economists questioned whether their action plan went far enough to deal with market concerns that a Greek default is a virtual certainty that threatens to destabilize other highly indebted European countries.
Germany Finance Minister Wolfgang Schaeuble warned that a second massive bailout package for Greece _ tentatively agreed in July _ may have to be re-evaluated after the country's international debt inspectors discovered problems in implementing previous promises. This re-evaluation could include changing the terms of an agreed voluntary contribution from banks and other private investors to Greece's rescue, two European officials said.
One of the officials said that Germany and other rich eurozone nations including the Netherlands and Austria are now pushing for an "orderly default" by Greece, which would entail losses for investors that go beyond the 21 percent cut in the face value of government bonds foreseen under the voluntary contribution.
"The German attitude is particularly worrisome," said the official. Both officials were speaking on condition of anonymity because of the sensitivity of the issue.
The comments underline how confidence is eroding among core eurozone countries over whether they can actually save Greece, whose debt is close to 160 percent of gross domestic product and whose economy looks now set for a fourth straight year of recession.
Stock markets in Europe and the U.S. recouped some of their previous day's hefty losses Friday but investors remained skeptical about whether the world's leading economies can keep the global economy from going over the cliff.
Investors will be looking for more during the meetings of the IMF and World Bank.
"I think many in the markets are no longer reassured by platitudes, we want to see action and not just words _ more walking the walk and less talking the talk," said Louise Cooper, an analyst with BGC Partners. "The G20 communique was more eloquent on the problems facing the world than the solutions to be found."
In Europe, France's CAC-40 closed up 1 percent at 2,810.11 while the DAX in Germany rose 0.6 percent to 5,196.56. The FTSE 100 index of leading British shares ended 0.5 percent higher at 5,066.81.
Wall Street pushed higher too _ the Dow Jones industrial average was up 0.1 percent at 10,745 while the broader Standard & Poor's 500 index rose 0.5 percent to 1,134.
Despite the modest gains Friday, the worries are piling up for investors: a U.S. Federal Reserve warning earlier this week that the American economy is in significant difficulty, a raft of downbeat European and Asian economic indicators, and the continued concern over Greece's debt.
Sung Won Sohn, an economics professor at California State University's Martin Smith School of business said the great concern is that if Greece doesn't make further painful cuts in government spending and ends up defaulting on its debt, the shock waves will rock big banks in France and Europe who carry heavy Greek debts their books.
He said this would cause fearful investors to sell bonds of other heavily indebted countries such as Italy and Spain, countries with much bigger economies.
"The fear in markets is that the problem will spread to bigger economies such as Spain and Italy. Europe would not have the resources to handle a crisis of that magnitude," Sohn said.
The finance ministers at the Washington meeting said they believed that the 17 nations that use the common euro currency were getting the message they needed to move more quickly to reform their surveillance procedures and increase economic support.
"The leading lights of the eurozone are aware that time is running out," British treasury chief George Osborne said Friday. There is a far greater sense of urgency than there was thee weeks ago."
Canadian Finance Minister Jim Flaherty said he had stressed during the G-20 discussions that "Europe will need an exercise of political will. We will need decisiveness and clarity."
G-20 finance officials devoted part of their discussions Friday to the issue of providing more support to poor nations. French Cooperation Minister Henri de Raincourt said that one proposal being examined would be for the rich nations to establish an emergency food stockpile to help poor nations, particularly in Africa, deal with unexpected crises.
He said the stockpile could be tapped quickly during the 90 days it normally takes the international community to organize food shipments to disaster areas. The G-20 officials hope to develop an action plan on development aid to present at the G-20 leaders' summit in Cannes.
Source: www.taiwannews.com.tw
Under pressure from skeptical financial markets to produce results, the ministers sought to push forward with a program in which the Group of 20 major economies take steps to achieve their ambition of strong, stable balanced growth while wavering over helping Greece avoid a destabilizing default.
The focus of discussions Saturday shifts from the G-20 to the International Monetary Fund and its sister institution, the World Bank. Both have warned the global economy is entering dangerous waters.
For Christine Lagarde, who took over as head of the IMF in June, the crisis poses a tough first test. Lagarde has warned that without bold and collective action, the world's major economies risk slipping back into recession.
To avoid that, the G-20 ministers pledged to "take all necessary actions to preserve the stability of banking systems and financial markets." They also encouraged Europe to move quickly to carry out its promises to help Greece.
But private economists questioned whether their action plan went far enough to deal with market concerns that a Greek default is a virtual certainty that threatens to destabilize other highly indebted European countries.
Germany Finance Minister Wolfgang Schaeuble warned that a second massive bailout package for Greece _ tentatively agreed in July _ may have to be re-evaluated after the country's international debt inspectors discovered problems in implementing previous promises. This re-evaluation could include changing the terms of an agreed voluntary contribution from banks and other private investors to Greece's rescue, two European officials said.
One of the officials said that Germany and other rich eurozone nations including the Netherlands and Austria are now pushing for an "orderly default" by Greece, which would entail losses for investors that go beyond the 21 percent cut in the face value of government bonds foreseen under the voluntary contribution.
"The German attitude is particularly worrisome," said the official. Both officials were speaking on condition of anonymity because of the sensitivity of the issue.
The comments underline how confidence is eroding among core eurozone countries over whether they can actually save Greece, whose debt is close to 160 percent of gross domestic product and whose economy looks now set for a fourth straight year of recession.
Stock markets in Europe and the U.S. recouped some of their previous day's hefty losses Friday but investors remained skeptical about whether the world's leading economies can keep the global economy from going over the cliff.
Investors will be looking for more during the meetings of the IMF and World Bank.
"I think many in the markets are no longer reassured by platitudes, we want to see action and not just words _ more walking the walk and less talking the talk," said Louise Cooper, an analyst with BGC Partners. "The G20 communique was more eloquent on the problems facing the world than the solutions to be found."
In Europe, France's CAC-40 closed up 1 percent at 2,810.11 while the DAX in Germany rose 0.6 percent to 5,196.56. The FTSE 100 index of leading British shares ended 0.5 percent higher at 5,066.81.
Wall Street pushed higher too _ the Dow Jones industrial average was up 0.1 percent at 10,745 while the broader Standard & Poor's 500 index rose 0.5 percent to 1,134.
Despite the modest gains Friday, the worries are piling up for investors: a U.S. Federal Reserve warning earlier this week that the American economy is in significant difficulty, a raft of downbeat European and Asian economic indicators, and the continued concern over Greece's debt.
Sung Won Sohn, an economics professor at California State University's Martin Smith School of business said the great concern is that if Greece doesn't make further painful cuts in government spending and ends up defaulting on its debt, the shock waves will rock big banks in France and Europe who carry heavy Greek debts their books.
He said this would cause fearful investors to sell bonds of other heavily indebted countries such as Italy and Spain, countries with much bigger economies.
"The fear in markets is that the problem will spread to bigger economies such as Spain and Italy. Europe would not have the resources to handle a crisis of that magnitude," Sohn said.
The finance ministers at the Washington meeting said they believed that the 17 nations that use the common euro currency were getting the message they needed to move more quickly to reform their surveillance procedures and increase economic support.
"The leading lights of the eurozone are aware that time is running out," British treasury chief George Osborne said Friday. There is a far greater sense of urgency than there was thee weeks ago."
Canadian Finance Minister Jim Flaherty said he had stressed during the G-20 discussions that "Europe will need an exercise of political will. We will need decisiveness and clarity."
G-20 finance officials devoted part of their discussions Friday to the issue of providing more support to poor nations. French Cooperation Minister Henri de Raincourt said that one proposal being examined would be for the rich nations to establish an emergency food stockpile to help poor nations, particularly in Africa, deal with unexpected crises.
He said the stockpile could be tapped quickly during the 90 days it normally takes the international community to organize food shipments to disaster areas. The G-20 officials hope to develop an action plan on development aid to present at the G-20 leaders' summit in Cannes.
Source: www.taiwannews.com.tw
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