Storm clouds gather as G20 leaders meet

first_img Storm clouds gather as G20 leaders meet Tags: NULL Show Comments ▼ whatsapp Group of Twenty in Seoul clash on growth, currencies and tradeIreland moves ever closer to the brink as bailout fears mountOil price hits a fresh 25-month high of $88 a barrel on China demandIRISH ten-year bond yields shot to their highest level since the founding of the euro yesterday, closing at 8.6 per cent, as German chancellor Angela Merkel used a speech at the G20 summit to suggest that bondholders should be on the hook for losses rather than taxpayers if the country defaults.“We cannot keep constantly explaining to our voters and our citizens why the taxpayer should bear the cost of certain risks and not those people who have earned a lot of money from taking those risks,” she said to the gathering of world leaders in Seoul.Ireland’s debt is fully covered until the middle of next year, meaning it will not have to borrow from the bond market at the current high rates. But Merkel’s insistence that the new EU bailout agreement should force private investors to shoulder more of the costs has spooked the market.The International Monetary Fund (IMF) said yesterday that Ireland had not yet asked for help with its debt, but the prospect of a bailout looms if the republic cannot convince markets of its credit-worthiness. “The most likely outcome now is that Ireland will need to receive assistance from the EU/IMF,” said Gary Jenkins at Evolution, who estimated a funding requirement of around €43bn (£36.4bn) over two years.Escalating fears over Ireland came as the price of oil soared to levels not seen since 2008, with US crude topping $88 (£55) a barrel this week.Oil continued to hover close to its two-year high yesterday after rising 10 per cent since the end of October. The Organization of the Petroleum-Exporting Countries (Opec) forecast strong demand from fast-growing emerging markets. But rising energy costs are likely to provide an additional headwind for advanced economies still struggling with the ongoing fall-out from the financial crisis. Global growth was high on the agenda as talks entered their second day in Seoul but hopes for a resolution to global capital imbalances and currency disputes were already fading. Prime Minister David Cameron used a speech at Peking University this week to warn of a “dangerous tidal wave of money” crossing the world from indebted nations to those with huge surpluses. But there was little sign of a response. Yesterday saw the US’s proposal for current account surplus limits removed from draft documents and a Chinese ministry of commerce official declare that America “should not force others to take medicine for its own disease”.Advanced and developing economies have locked horns over currency policy at the summit, with China critical of the Federal Reserve’s recent re-launch of its quantitative easing (QE) programme. The Fed has committed to buy $600bn worth of treasuries in an attempt to stimulate the sluggish US economy, a move that former Fed chair Alan Greenspan claims amounts to an attempt to devalue the dollar. The US wants the G20 resolution to include a clause condemning the “competitive undervaluation” of currencies, in a clear reference to China’s longstanding policy of holding down the yuan to boost exports. In an open letter to G20 leaders just before the start of the summit, President Barack Obama wrote: “Just as the United States must change, so too must those economies that have previously relied on exports to offset weaknesses in their own demand.” He added that measures were needed to “reverse significant undervaluation” in certain currencies.But America’s position, coming so quick on the heels of its QE announcement, has prompted claims of hypocrisy from developing nations.The currency row threatened to overshadow other pressing issues on the G20 agenda, such as how to tackle the issue of sovereign default. More From Our Partners Native American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgFans call out hypocrisy as Tebow returns to NFL while Kaepernick is still outthegrio.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgLA news reporter doesn’t seem to recognize actor Mark Currythegrio.comRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comMan on bail for murder arrested after pet tiger escapes Houston homethegrio.comPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgFort Bragg soldier accused of killing another servicewoman over exthegrio.comPorsha Williams engaged to ex-husband of ‘RHOA’ co-star Falynn Guobadiathegrio.comFlorida woman allegedly crashes children’s birthday party, rapes teennypost.comKansas coach fired for using N-word toward Black playerthegrio.comBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comMark Eaton, former NBA All-Star, dead at 64nypost.comColin Kaepernick to publish book on abolishing the policethegrio.comSupermodel Anne Vyalitsyna claims income drop, pushes for child supportnypost.comAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgInside Ashton Kutcher and Mila Kunis’ not-so-average farmhouse Share KCS-content whatsapp Thursday 11 November 2010 8:55 pmlast_img

Leave a Reply

Your email address will not be published. Required fields are marked *