The doctor is in: Jim Kim at the World Bank

March 23, 2012 3:24 pm by Alan Beattie

Surprise choice for US nominee – and thus, let’s face it, immediate frontrunner - to be president of the World Bank. Jim Kim is a technocrat rather than a politico, so the White House has refreshingly eschewed partisan patronage if not nationality, and has deep (if somewhat narrow, being restricted to public health) development experience. Together with the traditional US lock on the position, those are very likely enough to carry him over the finishing line to the presidency.

Continue reading: “The doctor is in: Jim Kim at the World Bank”

The IMF, out on a limb in Greece

March 16, 2012 9:49 pm by Alan Beattie

So says, well, the IMF in the staff report produced as fodder for the executive board to OK a €28bn loan to Athens on Thursday.

Not only is the Greek programme itself on a knife-edge – super-sensitive to yet more growth shortfalls, doubts over political commitment to implementation, the usual – but the Fund is close to the limits of its own flexibility on how much it can lend to a single country, under its snappily-named “exceptional access” criteria.

Continue reading: “The IMF, out on a limb in Greece”

Tags: Greece, IMF
Posted in Foreign affairs, Greece | Permalink

Rare earths at the WTO: pointless but constructive

March 13, 2012 11:39 pm by Alan Beattie

Exaggeration and contradiction, fairly obviously, but hear me out. As various people have pointed out, the rare earths case threatened at the WTO comes at an odd time given what is happening in the real world. Rare earth mineral prices have plummeted (h/t FT colleague Ed Crooks) and supply is coming on stream from elsewhere – indeed, Molycorp, the big US producer, is gearing up to export to China.

The timing has more to do with domestic politics in the US and the fact that the US and EU just won a similar case to establish precedent. (Precedent isn’t legally binding in the WTO dispute settlement process, as it isn’t a common law-type system, but it is certainly helpful.)

Still, while it won’t have much impact on current trade, it’s good that governments are continuing to use the dispute settlement system in the WTO, especially since the negotiating function has seized up, and China’s record of adhering to the rulings of same is actually better than you might expect. Any suggestion that the White House is “starting a trade war” with an action like this is daft. Getting Beijing to adhere to WTO rules and stop restricting the free flow of trade, however belatedly and weakly, is a Good Thing.

Posted in Foreign affairs | Permalink

Another Yank at the Bank

February 16, 2012 7:03 pm by Alan Beattie

Bye bye Robert Zoellick! Photo: JOHANNES EISELE/AFP/Getty Images

Robert Zoellick goes from the World Bank, no doubt biding his time and eyeing up the possibility of a job as secretary of state or Treasury secretary in a future Republican administration (most likely Romney – he’s not really a Santorumite), and for the second summer in a row, the starting flag drops on the race to run one of the world’s top financial institutions.

Given that the quid of the Euro-American stitch-up worked to install Christine Lagarde at the IMF last summer, the pro, as it were, will most likely drop into place with an American appointment this year. To John Cassidy’s list of possibles I’d add John Kerry – international name recognition, interest in development, administrative experience – though that could depend on whether he has something else in mind.

Continue reading: “Another Yank at the Bank”

Tags: Robert Zoellick, World Bank
Posted in Global economy | Permalink

Americans: the heroes of zeroing

February 6, 2012 11:25 pm by Alan Beattie

Lest it be thought that I regard all global economic governance as a crock and don’t give credit where it’s due, congratulations to the US for accepting that “zeroing” – a way of blocking imports by disregarding evidence you don’t like – is dead. In theory Washington will try to negotiate its reacceptance in multilateral talks at the World Trade Organisation, but everyone knows those are going nowhere.

It’s another illustration of two general principles: 1) WTO rules might be patchy, but where they exist, they have held up pretty well, certainly a lot better than protectionism doomsters have been warning; 2) say what you like about the Americans but when they sign up to a trade treaty, eventually, even after a lot of bitching and moaning, they generally stick to it.

Posted in Foreign affairs, Global economy, US foreign policy | Permalink

You wanna take this outside? (Currency wars update)

February 1, 2012 11:21 pm by Alan Beattie

“Outside” being the WTO, in this case.

Dave Camp and Max Baucus, Congress’s two top dogs on trade, want the administration to try to make currency misalignment a WTO matter (originally Brazil’s idea). Good luck with that one. Since the WTO works by consensus, China can block this issue on its own. Regarding the renminbi, the consultancy fees for working out just how undervalued is undervalued would put international economists’ kids through college for decades to come.

So what’s going on here? Possibly the creation of a distraction in an attempt to forestall currency legislation on the Hill. Camp doesn’t like it, and although Baucus voted for it last year, he would probably be secretly happy to see it stalled indefinitely, not being a confrontationist firebrand. If Congress decides to pass a bill to fix this awkward example of judicial meddling in the near future, it could provide a vehicle on which China-bashers can attach some more radical legislation.

The conventional wisdom is that when the economy picks up and unemployment comes down, trade and currency disputes generally abate. On the other hand, there is an election coming up, and POTUS gave a pretty clear indication in the State of the Union that he thinks that warming up the old protectionist rhetoric from four years ago might play well in the Midwestern swing states. Don’t hold your breath for a currency deal coming out of Geneva – Capitol Hill is the real battleground for this one.

Posted in China, Financial crisis, Foreign affairs, Global economy, Obama, US foreign policy, World affairs | Permalink

The horror of an over-regulated salmon

January 24, 2012 4:35 pm by Alan Beattie

A year ago, Barack Obama’s 2011 State of the Union address contained a laboured gag about salmon being regulated by a different US government agency when they were in the sea to when they swam into fresh water. This bureaucratic horror story was related to plug the idea of reorganising the agencies that regulate and promote trade. When that proposal finally saw the light of day this month, it managed a rare bipartisan achievement of uniting Republicans and Democrats on Capitol Hill in opposition.

Today, 85 separate business organisations also say it’s a bad idea. An appropriately sceptical take on the seriousness of the proposal is here. Thus it seems safe to file this one under “political posturing” unless something changes drastically.

Apart from
anything else, it’s hardly surprising that a fish which, unusually, divides its time between river and deep sea is going to pose a minor bureaucratic obstacle. Don’t most countries deal with marine and inland fisheries separately? The salmon is a fine creature, but re-engineering the US government around its inconvenient migratory habits seems to be overdoing it a bit.

Posted in Foreign affairs | Permalink

The falling euro and the crisis that wasn’t

January 11, 2012 6:00 pm by Alan Beattie

The euro has fallen to a 16-month low below $1.27 – run, run for your lives! Or recognise that it’s still around the trade-weighted average for the past decade and only slightly weaker in real terms than when it launched, that a weaker currency is just what a stricken economy needs and that there isn’t much sign that the fall is disorderly and hence generally hitting confidence in eurozone assets. (The eurozone authorities are doing that.)

Continue reading: “The falling euro and the crisis that wasn’t”

Tags: euro, IMF, inflation, South Korea
Posted in Europe, Foreign affairs, World affairs | Permalink

So, about that IMF €200bn…

December 14, 2011 11:28 pm by Alan Beattie

It is not for the first time that late-night eurozone summit announcements are looking ragged in the daylight.

The €200bn the EU was supposed to contribute to the IMF (€150bn eurozone, €50bn non-eurozone) turns out not to include certain contributors (for example the UK, until the initiative turns into a global funding round, and Estonia).

The global funding round won’t happen until the eurozone gets its act in gear, and the odd numbers that are dribbling out of capitals so far — maybe €10bn from Moscow, maybe €8bn-€10bn from Brasilia — are underwhelming.

Continue reading: “So, about that IMF €200bn…”

Posted in Foreign affairs | Permalink

A yet more cunning plan: IMF Italy bail-out part 327

November 30, 2011 12:20 am by Alan Beattie

So the ECB and the Bundesbank don’t want to bail-out Italy via the IMF. But could national eurozone central banks do it? They already lend to their own commercial banks through the Emergency Liquidity Assistance programmes and there is nothing to stop the IMF accepting loans from any central bank. Could this be behind Jean-Claude Juncker and Olli Rehn’s cryptic comments on Tuesday night?

Obvious huge snag: such lending would have to be OK’d by the ECB, since it ultimately stands behind all the national central banks. But if the ECB (and the Bundesbank) want to give way on their “No pasaran!” on lending to the IMF, letting the eurozone national central banks do it might be a convenient way of retreating with a shred or two of dignity intact.

(Hat tip for this idea for the redoubtable Lorcan Roche Kelly of Trend Macrolytics, who knows more about the ELA and central bank financing than anyone alive).

Posted in italy, World affairs | Permalink

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