March 14th, 2009
11:38 AM GMT
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HORSHAM, England - I am sitting in the press tent at the G20 Finance Ministers, having just watched the "family photo" being taken. (What is the collective noun for such a group? A stimulus  of ministers? - thanks to craigeyles on Twitter for that.  A Recovery of Financiers?)

There are of course actually 26 groups in the room - the IMF, World Bank, ECB all come along, as well as Spain and the Netherlands as the special invitation of the hosts.

Actually there seems to be a great deal more people everywhere, and it is upon their shoulders and those of their political bosses, that rests the future course of this "Great Recession" - a phrase coined this week by the IMF Managing Director, Dominique Strauss-Kahn.

And I doubt few of them every believed they would find their economies in the horrible position they are today.

Here in the rural West Sussex countryside, at a grand looking country house hotel, they are attempting to sort out the very real differences that exist between them. Despite the world economy facing the first recession since the 1940s, they do not have a common view on how it should be handled.

The U.S. (with the UK in tow) wants other nations to provide greater stimulus packages. The Europeans along with some Asian economies want agreement on better regulation.

Everyone agrees on giving the IMF more money to help bail out distressed countries, but some, like Brazil, will only sign on the dotted line if they get greater power within the Fund.

There is nothing new about any of these issues, positions taken or disagreements, except the seriousness of the situation.

Bob Zoellick the president of the World Bank described the economic conditions this year as "dangerous."

So even though it was all smiles at the group photo taken outside this magnificent period hotel - those inside can't escape the fact that what they are deciding will influence the course of this recession for months to come.

Are they upto the job ? That's a moot question. They are the only ones we've got, so whether we like it or not, our financial future is in their hands

March 13th, 2009
02:00 PM GMT
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LONDON, England – Few have escaped the impact from the world financial crisis - and week-by-week the accumulation of data showing just how bad it is grows and grows.

Case in point: The United States. According to new statistics from the Federal Reserve, the net worth of Americans - that is the difference between their assets and liabilities - was $51.5 trillion last year, down nearly 18 percent from 2007. That's a massive drop in one year.

To put that in perspective, it's the first decline in net worth for American households since 2002 and one that puts their wealth back to 2004 levels. Four years of gains wiped out in just 12 months.

The value of their stock market holdings, including retirement plans, fell to $12.1 trillion in 2008 from $20.6 trillion the year before. And, of course, we know further losses have been suffered this year.

Add in rising unemployment, and it is no wonder Americans as consumers elsewhere are feeling more uncertain. I suspect a year from now, 2009, will show another drop in Americans' net household worth.

Of course, the wealth destruction we've seen in the United States is being repeated elsewhere. Sharp downturns in housing prices have hit the UK. There, the Bank of England has this week introduced quantitative easing - sometimes called "printing money" - to pump cash into the system. Interest rates, now at 0.5 percent, are at their lowest in the bank's 315-year history and have not much further to fall, hence the need for a new strategy.

Meanwhile Japan, the world's second largest economy - which itself tried quantitative easing earlier this decade - announced this week that it had seen its worst drop in GDP in the last quarter since 1974.

Chinese exports fell 25 percent last month - even Chinese Premier Wen Jiabao has said he was worried about the safety of China's assets in the United States.

But these are the numbers, statistics and data. Behind the figures lurks a massive cost to men, women and children around the globe.

Central and Eastern Europeans who bought homes in other currencies are now facing a sharp increases in mortgage payments because of the fall of their own currencies.

Those workers who came to places like Dubai and Taiwan to find employment on construction sites and in factories have lost jobs - and with it, the pay check and safety net they provided to their families back home.

Even Russian oligarchs have had billions shredded off their wealth with the fall in commodity prices.

The fallout from this financial crisis is not over yet - and for tens of millions the pain being felt across the globe will remain for sometime.

How is the recession affecting you - and what are you doing to deal with it? Tell CNN and tell the world how you are surviving the downturn by posting comments below or sending a video iReport to our Road to Recovery special.

March 12th, 2009
08:27 PM GMT
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NEW YORK– Bernard Madoff will likely spend the rest of his life behind bars, but that is little comfort to the thousands of investors who lost their life savings because of his actions.

Madoff arrives at court Thursday.
Madoff arrives at court Thursday.

After he entered his guilty plea, Madoff addressed the court and said he was deeply sorry and ashamed.

Sorry ... Sorry? This was not a one-time mistake, but a multi-billion dollar fraud carried out over decades. He ripped off friends, neighbors, charities and pensioners.

It seems incredible that he asks anyone to believe he has a conscience.

At the end of the hearing Madoff was ordered to go directly to jail while he waits for his official sentencing, scheduled for June 16.

Government prosecutors will no doubt declare victory, but victims are angry there was not a trial.

Richard Friedman, who lost $4 million in savings, told CNN: "It's not enough just to say, 'OK, I'm guilty, put me away.'

"What about all the other people involved? What about his family? I want to know. What about the money? I don't think there's $50 billion out there. I think a lot of it is with the IRS, but whatever money he had, I think that that should come out. Where is that money?"

Legal experts say we may never know where the money went.

Right now investigators have found just under $1 billion, a fraction of the $60 billion that some estimate he swindled.

The other unanswered question that I struggle with is: Why?

When people commit a crime it helps to understand the motive. Why did this respectable and, by all measures, successful man do this?

Why didn't he turn himself in earlier? He said in his opening statement he always knew what he was doing was criminal and that he would be eventually be caught.

How could he have ruined so many lives? One of his victims said simply, "He is evil."

I think it may have more to do with greed. Yes, at the age of 70 he now faces jail time, but for the last 20 years he has lived a life of extreme luxury.

If he is the only one to serve time for this ... has justice really been served?

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March 12th, 2009
02:40 AM GMT
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TOKYO, Japan - "Hey, that's not so bad!" That's what news bulletins reported across Japan this morning as Japan's government released its fourth quarter gross domestic product (GDP) figures. The economy still shrank at the worst rate since the 1970s oil crisis - but again, not at the rate initially estimated. When "not so bad" sounds like good news, you know times are tough.

But this is one report, and one that will surely be followed up with another next week, maybe showing more gloom than silver lining.

As far as today's report, Japan's cabinet office says the annualized GDP shrank 12.1 percent versus the initial 12.7 percent estimate. Quarter to quarter, the economy shrank 3.2 percent, a little better than the expected 3.3 percent.

Japan's export-driven economy has been particularly hard hit in the global economic slowdown, as consumers in the United States and Europe lose their taste for Japan's cars and electronics. Companies such as Toyota and Sony have dramatically slashed production, trying to bring inventories in line with demand. That inventory build, according to economist John Vail of Nikko Asset Management, is one reason the GDP revision is a little better than initially estimated, and that the next quarter may show a deeper contraction when the inventory build falls.

"I wouldn't get too excited about the difference between 12 (percent) or 13 percent," says Vail, who points out GDP numbers are highly subject to revision. "Right now we're in a unique situation: falling demand and destocking. It's a double whammy. As soon as destocking is over, we'll have some stabilization or improvement in production in manufactured goods. We're probably in the period of maximum decline and things will improve going forward once the destocking is completed."

Bottom line: don't get too worried about every single report. Economists urge you to look at the bigger picture, which currently in Japan shows a mixed bag of possible recovery or deepening recession, depending on how world leaders move forward with stimulus packages and reform. This global crisis isn't as simple as one cause, one quick fix or one single GDP report.

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Filed under: AsiaBusinessFinancial marketsJapan

March 6th, 2009
04:50 PM GMT
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"PRINTING MONEY" scream the newspaper headlines. Not surprisingly many of you are getting worried about the possiblities of inflation. We have all been taught printing money is a recipe for economic calamity.

The Bank of England has decided to introduce quantitative easing.
The Bank of England has decided to introduce quantitative easing.

Remember Weimar in Germany; the wheelbarrows of cash required to buy a loaf of bread? Or Mugabe's Zimbabwe, where inflation is running at 230 million percent because the central bank has printed so much cash? You can stop worrying. Now.

There is a world of difference between the so-called quantitative easing being introduced by central banks like the Bank of England, and running the money printing presses willy-nilly thus stoking hyperinflation.

First and foremost, inflation in major economies like the U.S. and EU is falling Today the fear is deflation. The money being printed is actually trying to turn that around. There is little danger of sudden hyperinflation before we have a chance to do something

Secondly, the money is being used to buy government and corporate bonds. It is being channeled through the banks, and hopefully onto consumers. It is not being handed to the government to pay everyday bills with no thought to how or where. In previous disasterous cases the money was used to pay wages, and there was no end in sight. It was out of control.

Finally, this is all being done in the full glare of the markets and transparency. We know how much has been approved and when. Government and central bankers have a firm hand on what is being done and why. We also know that there is an exit strategy for when the economy does turn around.

For those who are worried about the environmental effects of all this printing (well, of course, they are not actually going to print bank notes): Commercial banks have accounts with the central bank. Those accounts will be topped up automatically and electronically. Literally, the accounts will suddenly be much healthier and richer.

Yes, this is new territory for most countries, and the bankers admit they don't know quite how it works, but they are doing it carefully and with thought.

Are you still worried ?

March 5th, 2009
07:57 PM GMT
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Richard uses a cocktail fountain to explain how quantative easing might work.

March 5th, 2009
09:46 AM GMT
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March 5th, 2009
09:11 AM GMT
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BEIJING, China - When the National People's Congress met in Beijing last year, the mood was cheerful and the recurrent theme was the Summer Olympics and rapid economic growth.

Colourful costumes on display at the congress.
Colourful costumes on display at the congress.

This time, the mood is somber and the theme is "jobs, jobs, jobs."

Inside the cavernous Great Hall of the People, Premier Wen Jiabao delivered a two-hour "government work report."Much like a state-of the-nation speech that the Chinese premier delivers to the parliament every year, Wen focused on domestic issues, outlining China's plans to get its economy back on track in the face of the global economic crisis.

The more than 3,000 delegates listened intently, following Premier Wen reading through the 52-page text. A few delegates took notes keenly. Others listened expressionless.

There was a ripple of applause when he declared that China will ensure that "schools are the safest place for our children" - an obvious reference to the defective school buildings which collapsed during the Sichuan earthquake last May.

Midway through Wen's speech, some of the delegates sneaked out of the meeting hall to drink tea or chat with fellow delegates in the hallways. There I met Lai Baorong, a Taoist priest from China's hinterland. I snapped pictures of delegates representing the military and ethnic minorities clad in colorful costumes. Our TV crew interviewed Li Haiyan, who of the delegates who represented the migrant workers. "We hope to expand training for migrant workers to help ensure employment and social stability."

China says over 25 million migrant workers have lost jobs because many factories, especially those export-oriented enterprises, have closed down. "I've put in a proposal on this," she says, "but Premier Wen has already thought about it and it's in his government report." Li, who hails from the mostly rural Henan province, says "the Premier's report has given us the confidence and determination to defeat the financial crisis."

Prowling the corridors of the Great Hall of the People, I saw a few familiar faces among the 3,000 NPC delegates. Wang Hongju, mayor of Chongqing, China's biggest municipality in southwestern Sichuan Province, arrived early for the opening session. I spotted Yang Yuanqing walking away with a coterie of assistants and admirers. Yang, the newly appointed CEO of Lenovo, is overseeing a major revamp of the blue-chip computer company challenged by a tough business climate.

I did not get a chance to interview Yang, but I encountered another high-profile entrepeneur fielding questions from a clump of journalists. "The bigger your company's scale, the better you can cope with business challenges," Liu Yonghao said, in reply to a question. "Smaller businesses find it more difficult to get loans and investments in hard times." Liu, one of the richest entrepeneurs in China, chairs the Hope Group, a conglomerate engaged in the agro-business, scientific research, trade, real estate and tourism.

I tried an "ambush" interview with another prominent face. Zhang Yin, affectionately known in China as the "Queen of Trash," became one of the richest woman in the world by collecting paper for recycling. Her publicly listed company has dominated the world's paper trade, so I asked how's business. "We're doing okay," said curtly, smiling, after I introduced myself as a CNN journalist. She promptly walked away and that was all I could get from one of the richest women in the world. I wonder if she still is?

March 4th, 2009
04:34 PM GMT
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LONDON, England - Have you seen the cover of this week's Economist with Brown, Sarkozy and Merkel having to pay the "dinner" bill to rescue Eastern Europe? If you did you would have seen the artwork of Kevin Kallaugher - or Kal as he signs his work.

An example of Kal's witty and perceptive cartoon talent.
An example of Kal's witty and perceptive cartoon talent.

American-born Kal has contributed more than 100 Economist covers during the past 30 years. He's also been published in my hometown paper; the Baltimore Sun. Kal was discovered during the recession of the late 1970s drawing caricatures on the streets of London and Brighton.

He has benefited from Reaganomics, Thatcherism, Bill Clinton (fish in a barrel all of them) but is now tasked with describing the "credit crunch" with pen and ink.

Some commentators speculate that the end of the Bush era might mean the end of cartoon satire to reflect today's news. Not Kal.

"Certainly it (the Bush presidency) was the golden era to a certain degree," he told me during an interview at the Political Cartoon Gallery in Central London last month.

"I mean also what we're seeing in Obama's case - although the satire may not be immediately directed at him as an individual - is that we're going through such historic changes, politically, economically, around the world, it's going to supply a lot of material."

The challenge for Kal and his contemporaries is to describe the credit crunch in one drawing. Kal hopes his craft actually helps people make sense of the global recession. "You not always just react to the news. I like to think that we're in the business of kind of clarifying the news," he said.

He is very busy these days trying to "draw" the recession and also the new president. "It's this early phase, where we as the cartoonists are helping to establish in the public's mind what these people look like, this is an interesting time for us."

Kal has drawn many a character during his career. He often has to hear their voice to capture their essence. If you want to hear his imitation of one famous voice (he says it drives his wife crazy as he talks to himself in character as he draws some people) and see his efforts to capture the character of a certain CNN employee, watch Quest Means Business on Thursday night or check out on Friday.

March 3rd, 2009
07:05 PM GMT
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NEW YORK– When it seems like there is no hope, when the economy is said to be in "shambles" (as Warren Buffett aptly described it), THAT is exactly the time to take a deep breath, step in and buy stocks.

New York traders still on the floor Tuesday.
New York traders still on the floor Tuesday.

At least that used to be the common wisdom.

Nowadays, investors are scrambling to sell into strength in an attempt to hang onto whatever money they have left.

Even with stocks at 12-year lows, there doesn't seem to be anyone willing to buy.

Baby boomers have lost more money than most can realistically recover in time for retirement. Younger workers have seen a decade of savings evaporate.

When discussing the latest headlines of yet another tycoon charged with swindling billions from investors, a friend of mine recently commented, "Ponzi schemes? I think the whole system is one big ponzi scheme."

She is not alone. Investors are beginning to wonder if they too were duped into believing stocks were the answer.

The system worked for executives who made millions in salaries and prospered off of stock options on the way up.

But what about the shareholders? What were they left with? Companies worth a fraction of their value. Stock portfolios decimated.

I am not sure I am ready to throw in the towel yet, but what about you? Have you lost faith in the stock market? If so, how do you plan to pay for retirement?

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Filed under: Business

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