IMF funds drive caught in global power shift and BRICS Orchestrates Financial Chess Game

as i am not into politics i have no idea if this means anything so i bring it to my new extended family to find out

EW YORK (CNNMoney) -- China's economic growth lost more momentum at the beginning of the year, but other signs are showing the slowdown is unlikely to continue for long.

The Chinese economy grew at an annual pace of 8.1% in the first quarter, the National Bureau of Statistics said Friday, marking a deceleration from an 8.9% growth rate in the prior quarter.

Historically, that is low for China, which has barreled ahead at around 10% for three decades.

But it's also far from the "hard landing" feared by some economists. As the world's second largest economy, a major slowdown in Chinese growth could have a devastating effect on global economic growth.

But economic indicators now show Chinese economic growth may have recently bottomed out, and is starting to bounce back. A government reading on the manufacturing sector has recently shown improvement, as has an OECD forecast of future economic activity.

Meanwhile, Chinese officials have several tools at their disposal to boost economic growth. They've already started increasing the money supply and new loans have started to pick up in the country.

"For some sectors, the slowdown may have felt very hard. But this really is old news -- we have all done our field trips and looked at various reports and knew the economy was weak -- today's data just confirm that," said UBS economist Tao Wang in a note to clients. "Looking ahead, there are already signs of stabilization and improvement."

China's economy started slowing late last year following government efforts to cool rampant inflation and deflate a housing boom in the country.

World Bank: China's economy in 'soft landing'

Meanwhile, a shrinking eurozone economy and sluggish growth in the United States have also weighed on China's manufacturing sector and exports.

The Chinese government is now aiming for economic growth of 7.5% in 2012, lower than its goal for last year of about 8%.

That said, the government almost always overshoots its own predictions.

China's State Information Center, a government think tank, forecasts the economy will grow 8.5% in 2012 overall, despite a temporary slowdown in the first two quarters.

Outside groups are also relatively optimistic. The World Bank predicts the Chinese economy will slow to a 8.2% growth rate this year but rebound to 8.6% in 2013.

First Published: April 12, 2012: 10:32 PM ET

<H1>http://www.reuters.com/article/2012/04/13/us-imf-idUSBRE83C1F420120413


It appears that the BRICS nations are applying the pressure to secure increases in their global financial power PRIOR to the RV. Smart move as the USA will have more finances post RV if all we have heard for so many years soon is confirmed. China played the USA perfectly with all the Treasuries to get this moving.




Analysis: IMF funds drive caught in global power shift</H1>













A photographer takes pictures through a glass carrying the International Monetary Fund (IMF) logo during a news conference in Bucharest March 25, 2009.

Credit: Reuters/Bogdan Cristel



By Lesley Wroughton

WASHINGTON | Fri Apr 13, 2012 4:49pm EDT

WASHINGTON (Reuters) - Tensions among some of the world's leading economies are on a boil over a plan to raise new resources for the International Monetary Fund to contain the euro zone debt crisis and a quest by emerging economies to win more say in the global lender.

World finance leaders gathering in Washington next week will focus on proposals for countries to contribute more money to the IMF so it is better prepared in case of a fallout from any further escalation of Europe's debt crises.

Emerging market countries like China, Brazil and Russia are willing to put up more money for the IMF but they want something in return: greater voting power in the global lender.

It has become a hot-button issue given negotiations formally began this week on the next phase of IMF voting reforms to be completed in 2013. The emerging market push likely means Europe's voting share will be further diluted.

In January, the IMF said it would need $600 billion in new resources to help "innocent bystanders" who might be affected by economic and financial spillovers from Europe's travails.

Earlier this week, IMF Managing Director Christine Lagarde said the lender may not need as much money as it had thought because economic risks had waned. On Friday officials from the Group of 20 nations told Reuters the world's major economies are likely to agree to provide the IMF somewhere between $400 billion and $500 billion.

A G20 official, who requested anonymity, said the fundraising effort would likely raise about $50 billion from Japan and a similar amount from China and Saudi Arabia, in addition to the $200 billion already committed by Europe. Smaller amounts will likely come from countries such as Russia, Mexico and Brazil.

BUDGET POLITICS

IMF funding will be discussed by the Group of Seven wealthy nations on April 19, jointly by the G20 and G7 that evening, and at a lunch the following day among the G20 and the Fund's steering committee, G20 sources said.

Lagarde said she hoped to make progress on the issue at next week's meetings but said an agreement could take time.

G20 sources said Beijing was being cautious given internal opposition against providing money for wealthy Europeans, even though the funds are meant to protect non-European nations.

Together with other emerging economies like Brazil and India, Beijing wants any funding commitment eventually tied to greater IMF voting power.

The United States, which is heading into a presidential election in which its hefty budget deficits are a key topic, has insisted it will not be part of the fundraising effort for the IMF. Canada is also unlikely to give money.

U.S. officials say they are already helping Europe by providing dollar swap lines to the European Central Bank to ease dollar funding strains among European institutions.

Some senior IMF officials say not having Washington participate has changed the dynamic of the fundraising effort since the United States is the largest IMF shareholder and its leadership is often sought on such issues.

IMF sources said an agreement on new IMF resources would likely be postponed until a G20 leaders' summit in June.

"The Americans have to be part of this, perhaps not quite as much as they would've been in the past, but through some significant gesture," said Uri Dadush, director of the International Economics Program at the Carnegie Endowment for International Peace. "They have to be part of the leadership group that makes it happen."

GROWING FRUSTRATIONS

The growing frustration among emerging economies with the slow pace of IMF governance reforms has been exacerbated by a likely delay of a 2010 agreement on voting reforms, which the United States pushed for aggressively.

The reforms included changes in the make-up of the IMF's 24-member board, in which two chairs occupied by European countries would go to emerging economies.

However, the package cannot go through until the U.S. Congress approves the move, which is highly unlikely ahead of November elections because it would require authorizing additional funding for the IMF.

The 2010 reforms would move China into third place in the ranks of IMF voters, while also increasing the voting share of Brazil and India.

Paulo Nogueira Batista, the IMF executive director for Brazil and a constituency of other Latin American and Caribbean countries, said the United States needed to stick by its 2010 commitment.

"There is a commitment in the agreement to undertake best efforts to complete the steps by the annual meetings this year (in October), and that commitment includes the U.S.," said Nogueira Batista, speaking in his personal capacity. "I expect them to follow through with the commitment."

"The problem is that the economic and political difficulties of the advanced economies, mainly the U.S. and euro area, are having negative spillover effects on international governance," he said, "They are negatively affecting the G20 and the functioning of the IMF through delays in the implementation of the agreed reforms."

While there are frustrations with U.S. delays, many countries understand the tough political environment the Obama administration faces.

The new negotiations under way on voting reforms will initially focus on agreement around a formula for calculating quotas, or membership subscriptions. The new formula will influence how members' voting shares are realigned to give emerging and developing countries more say.

Domenico Lombardi, a senior fellow at the Brookings Institution in Washington, said emerging economies are using the IMF's push for more resources as leverage to gain even more voting power in the next round of reforms.

"This is a very political game," said Lombardi, a former World Bank board director "What emerging economies are saying is that even if the 2010 reform package is not approved at least you have to be more lenient and concede more on the quota formula discussion."

"They are in a position to exert the greatest bargaining power they can and extract concessions from the advanced economies," he said.

I feel that giving the BRICS countries more (voting / decision power) will definately be hughly better than the BRICS going it out on their own as they have discussed amongst themselves. Better for the world and better for the U. S. for sure! IMO

Thanks for another fine article Kai.

This topic is already in another area. Here goes I will try and merge the two. Wish me luck LOL

I would expect no less .. or perhaps I should say no more from the BRICS, 4 out of 5 don't like the US at all but make nicey nicey, because they need our dollars in trade and/or assistance. However they suffer serious US envy and would like nothing less than to stick us in the back if the opportunity presented itself.

Russia seems to be drifting back towrd the bad old days ... Brazil is more Socialist than not and really does not care for us capitalist pigs. India is mostly Muslim or Hindu and about as trustworthy as Pakistan. Then there is China, behind their smile is a very sharp knife they would love to use on us. More dangerously perhaps, based on my reading, I suspect that China is a lot worse off than they let on, you can get away with a lot of stuff when you control everything ... they have been spending huge amounts of Yaun on their military and on infrastructure, but not necessarily spending it wisely, unless you consider multi-lane highways to unoccupied cites wise. Many economists believe that they have committed all their reserves to these projects, and have been cooking the books to keep it hidden. It's hard to be sure as government control is so pervasive and they don't know the meaning of the word transparency. They could rapidly become desperate, and desperate people do unwise things.

South Africa alone could possibly be counted on as a friend ... the others we would do well to keep a wary eye on them ... JMO

Pretty interesting kevin53. I agree with part of what you said and although not completely disagree I do differ in some of the rest.

Agreed they all do have that dollar envy you so speak of but, The matter of fact is pure and simple. Only the possibility being Brazil could make it without us. The U.S. That includes yes China and India. They could not (basically) survive without us. No question! Either one of those 2 in particular were to rasie their hand in any sort of agression (no matter what one says agression looks like) toward us in any way and their economy would tank in only a very few days. I can say that only because it is true.

Were either one decide and then act the "people" would only need stop purchasing. Oh and one important thing actually decide that the jobs that the "people" here literally threw away, need return. How can I say that? I will tell you. When a peep here had a job that was only worth $10 and they allowed "collective bargaining" to Pull their nose ring to intice them to DEMAND $20 (not being worth $20) and got it they effectively priced themselves out of a job.

I can make that clearer by saying this...Take the price of any said widget you like,ok? now the price fits into the rhelm where peeps in this country would take the widget off the shelf so fast it couldn't be made fast enough. Once labor cost increased too high (enter the $20 worker that is only worth $10) Corperations needed to seek out ways to keep that said widget lower in price so it would still leave the shelf. (It was Ok in the beginning) when not to many jobs left this country but like the lowly cockroach this pattern began to multiply. Systematically these jobs left to these other countries. Now all those widgets are made there, (where ever there is)

Simplified... If the people of this country decided that we weren't going to buy from abroad and would take those jobs AND AND take the pay that the job was worth than these other countries would fold period!

I am not saying that our workforce here should take jobs that pay 50 cents a day BUT take jobs and not expect to retire every year whilst thinking they are "sticking it to the man" by getting 2 or 3 times their worth.

So basically "We the People" hold the entire economy of the world in our own attitude and I believe that there is an attitude adjustment on thwe way. Where the poeple of this country are going to see the light. Then things will come BACK to the true normal.

The U,S. has been for over 100 years the leader in the world, in technology, inventions, design and, outright witts.


Last thing before anyone brings it up I brought the real numbers (in a thred a few months ago) as to the U.S. debt and what China holds (of the 14 trillion debt) about only 3.5 trillion. Not enough for China to "foreclose" or other wise threaten this great country unless the people continue to allow by insisting on too much or allow by not taking our country back from the corruption grip held over our heads by Federal, State and, local government.and their own opinions of what a job and real pay is. IMO

Agree totally, hence my use of the words "make nicey nicey," and "If the opportunity presented itself." I believe they see this whole financial thing as at least a step in that direction. I also fully agree that many have foolishly riced themselves out of a job, not to mention the tax advantages afforded corporations to move their operations to other more corporate friendly countries. You can play the numbers games, and semantic games all you want, but in the end, when you unravel the disaster we call a tax code our corporate rates are among the highest in the world. Couple that with capricious and arbitrary regulatory agencies and there is little incentive for most companies to remain here.

Unfortunately until "we the people" wake up and stop re-electing the same corrupt, ineffective politicians to Washington because they brought some pork home to us, we will see no change. In the last election, the congressional disapproval rating was around 80%, yet the re-election rate was well above that 80% rate. Does that suggest something? It should ... and no, it's not because the votes were tallied by some evil minions of some evil foreign company ... it's because "We the People" have proved ourselves fools once again.