Asia may struggle to meet G20 derivative deadline-ISDA

(Reuters) - Asian countries may struggle to implement rules on derivative clearing and trade data warehouses by the deadline set by the world's top 20 economies (G20), according to the International Swaps and Derivatives Association (ISDA).

Asian members of the G20 have committed to establish central clearing services for over-the-counter (OTC) derivatives and systems to store trading data by the end of 2012.

Six months after G20 - was it worth it?

With graphic scenes of burning police cruisers and corralled protesters combating peace officers, June’s G20 summit caused a global commotion. Yet, with so many residual effects, was this meeting of government and financial leaders worth it?

No, said Kezio Mauronik, a downtown resident who calls himself a non-confrontational opponent to what many feel was a wasteful weekend.

“With the aftermath overshadowing the actual meetings, I don’t think many people who weren’t directly involved even know what the summit was about anymore,” he said. “Toronto citizens should not have been subjected to such a blatant disruption.”

Mauronik said he sees both sides of how the weekend erupted into disarray.

“Contrary to the popular line put forth by the police and the media, anarchy isn’t about breaking things,” he asserts. “What happened to police cars and shop windows was vandalism. To describe those acts as anarchism is pure ignorance.

“Still, it was disturbing to see the use of police force first-hand, something you’d expect in dictatorial countries, not Canada. As a normal citizen prompted to peacefully protest by our then-mayor, I shouldn’t have been subjected to that.”

Mauronik said he holds political leaders accountable for allowing Hogtown to be subjected to the debacle while “disowning the entire thing.”

A report by Ontario Ombudsman André Marin found that police were hastily granted greater powers by the Ministry of Community Safety and Correctional Services via an amendment to the Public Works Protection Act.

Marin said the revision created “martial law ... in the city of Toronto, leading to the most massive compromise of civil liberties in Canadian history.” His report calls for revision of the PWPA and a review of what powers police may receive under the act.

In response, Toronto police Chief Blair said, “I think it’s important that the public be assured that we’re all taking this very seriously” and noted five officers accused of using extreme force had been identified with more to come.

Premier Dalton McGuinty said the province acted with “good intention” yet was rash in allowing the law alteration. “The police were given additional authority. We moved too quickly to provide that authority,” he said.

Last Tuesday, Const. Babak Andalib-Goortani was charged with assault with a weapon in the takedown of a protester near the Ontario legislature during the summit.

Source: Metronews.ca

http://www.metronews.ca

Japan: A cautionary tale

CNN) -- As the G-20 meeting wraps up, many leaders -- including U.S. President Barack Obama -- will take a short flight from Seoul, Korea, to Yokohama, Japan, for a summit of Asia-Pacific leaders.

They are taking a flight into the feared future of the developed world.

Japan's economy is beset by the three D's that other nations long to avoid: Deflation, staggering deficits and aging demographics.

"Japan is the one facing the worst problems," says Piero Ghezzi, managing director and head of emerging markets research at Barclay's Capital.

"After Japan are the fragile European countries that are in very dire straits: Greece, Ireland and Portugal ... Spain and Italy, too, but their problems are of a different order," Ghezzi said. "After that, the U.S."

Japan PM Kan speaks
The tale of twin sisters

Leaders from 21 Pacific Rim nations are gathering Saturday in Japan for the annual APEC (Asia-Pacific Economic Cooperation) summit.

It's the first summit since China became the world's second largest economy this year, taking a mantle Japan held since 1968 when its economy soared out of the ashes of World War II. The bubble burst in 1989, and the country has achieved only anemic growth.

Japan is saddled with the world's largest government debt baggage -- estimated to be 225 percent of GDP, and forecast to grow to 250 percent by 2015. By comparison, the U.S. debt is 93 percent of GDP, UK debt is 76 percent and for China it's 19 percent.

"Japan has additional problems like terrible demographics," Ghezzi said.

The aging population means fewer replacement workers who must shoulder the burden of public debt.

"The number of young people supporting our elderly is going to be 2-to-1 in the very near future," said Kathy Matsui, chief Japan strategist for Goldman Sachs Japan. Japanese governmental figures show 40 percent of the population will be over the age of 65 by 2050.

"Unless you allow immigration, it's very difficult to reverse," Ghezzi added. "It's structural, and almost irreversible."

To be sure, Japan remains a strong economy -- although it has slipped to the third largest this year -- there are no likely contenders to knock it further back in the global pecking order in the near future.
But prospects have been diminished by the steady corrosion of deflation, as Japanese consumers delay spending -- why buy today when it will be cheaper tomorrow? That has hurt the domestic job market. Once the land of lifetime employment, approximately one third of 20-to-30-year olds don't have full-time jobs, according to Japan's Ministry of Internal Affairs and Communications. The ministry's figures also show that the highest rate of unemployment is among people under age 25.

An aging population prefers deflation, which influences monetary policy, says Avinash Persaud, chairman of Intelligence Capital and an advisor to several G-20 government boards.

"Europeans and Japanese don't mind a deflationary environment," Persaud said. "Both are filled with older people, with fixed income bond investments. As a retired person on a fixed rate, then deflation is a good thing."

But it is bad for the Japanese economy as a whole and only made worse by Japan's rising yen. The credit crisis led currency speculators to dump the falling U.S. dollar for yen, causing the Japanese currency to hit 15-year highs against the dollar. That has hit export-dependent Japan hard, forcing companies like Toyota, Nissan and Sony to accelerate production outside of Japan.

In an interview with CNN's Kyung Lah earlier this week, Prime Minister Naoto Kan placed part of the blame on U.S. monetary policy. The U.S. Fed announced plans to pump $600 billion into the economy, driving the value of the U.S. dollar even lower.

"With regard to the strong yen, the basic cause is the U.S. economy was undergoing changes with everything being skewed to a weak dollar," said Kan. "Should there be excessive fluctuations in exchange markets, then we need to take resolute actions. In fact, we've already intervened in the market once. This remains an option we can take again."

But in the meantime, the younger generation has fewer expectations of a brighter future.

"Japan is a difficult place to live for young people," 30-year-old Toshiko Kubo told CNN in Tokyo. "Young people don't have goals. We can't have dreams. Even if we have a dream, there's no way to make it come true."


By Kevin Voigt, CNN
Source CNN
www.cnn.com

China tees up G20 showdown with U.S.

By Alan Beattie in Washington, Geoff Dyer in Beijing, Chris Giles in London

(FT) -- China has curtly dismissed a U.S. proposal to address global economic imbalances, setting the stage for a potential showdown at next week's G20 meeting in Seoul.

Cui Tiankai, a deputy foreign minister and one of China's lead negotiators at the G20, said on Friday that the U.S. plan for limiting current account surpluses and deficits to 4 per cent of gross domestic product harked back "to the days of planned economies".

"We believe a discussion about a current account target misses the whole point," he added, in the first official comment by a senior Chinese official on the subject. "If you look at the global economy, there are many issues that merit more attention -- for example, the question of quantitative easing."

China's opposition to the proposal, which had made some progress at a G20 finance ministers' meeting last month, came amid a continuing rumble of protest from around the world at the U.S. Federal Reserve's plan to pump an extra $600bn into financial markets.

Officials from China, Germany and South Africa on Friday added their voices to a chorus of complaint that the Fed's return to so-called quantitative easing would create instability and worsen imbalances by triggering surges of capital into other currencies.

Tim Geithner, the U.S. Treasury secretary, has proposed using what the U.S. refers to as current account "guidelines" to accelerate global rebalancing, partly as a way of changing the debate away from simply pressing China to allow faster appreciation in the renminbi.

But on Thursday and Friday, governments focused instead on the global impact of the Fed's action. "With all due respect, U.S. policy is clueless," Wolfgang Schäuble, German finance minister, told reporters. "It's not that the Americans haven't pumped enough liquidity into the market," he said. "Now to say let's pump more into the market is not going to solve their problems."

Pravin Gordhan, finance minister of South Africa, a key member of the emerging market bloc, said the decision "undermines the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain during the current crisis", and ran counter to the pledge made by G20 finance ministers to refrain from uncoordinated responses.

The U.S. Treasury declined to comment on Friday.

Experts say the mood has soured since the G20 Toronto summit in June and worry that unless the summit can patch up differences on trade imbalances and exchange rates, the outlook for international economic agreement is poor.

Ousmène Mandeng of Ashmore Investment Management and a former senior International Monetary Fund official, said: "The G20 will also have to show [in Seoul] it can work on the issue or its very existence will be in question."

In recent weeks, there had been some hints that China was favourable to the idea of current account targets. Yi Gang, a deputy central bank governor, said China aimed to reduce its surplus to 4 per cent of GDP in the medium-term

But Mr Cui's comments suggest that China's senior leaders have decided to reject Mr Geithner's proposal. "We believe it would not be a good approach to single out this issue and focus all attention on it," he said.

Separately, the deputy foreign minister also had a stern message for European leaders, warning them not to attend next month's Nobel Peace Prize ceremony for Liu Xiaobo, an imprisoned Chinese democracy activist.

Source:CNN
www.cnn.com