New Currency Requires To Obsecurity Of Financial Market

A paper written ahead of the recent G20 summit by Zhou Xiaochuan, governor of the Chinese central bank, caused quite a stir. Zhou called for the establishment of a global reserve currency, a step which would firmly tip the balance of economic power in the direction of emerging economies like China and India, but would also bring benefits to poorer nations in the developing world.

The dollars role in international trade should be reduced by establishing a new currency to protect emerging markets from the confidence game of financial speculation, the United Nations
said.

Two very obvious changes have prompted this reaction: First, there is a growing recognition that
the course towards the current crisis was plotted when President Nixon severed the link between the dollar and gold in 1971. Second, the fact that, quite unlike any president before him, not only does Barack Obama believe in a more just and inclusive world, he also seems to recognise that creating such a world requires some levelling of the global economic playing field. The creation of a global reserve currency would be an essential first step in that process.

UN countries should agree on the creation of a global reserve bank to issue the currency and to
monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said on Tuesday in a report.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the US mortgage market led
to the worst global recession since World War II. China, the world's largest holder of dollar reserves, said a supranational currency such as IMF's special drawing rights, or SDRs, may add
stability.

There's a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management, Heiner Flassbeck, co-author of the report and a UNCTAD director, said. An initiative equivalent to Bretton Woods or the European Monetary System is needed. The 1944 Bretton Woods agreement created the modern global economic system and World Bank and IMF.

While it would be desirable to strengthen SDRs, a unit of account based on a basket of currencies,
it wouldn't be enough to aid emerging markets most in need of liquidity, said Flassbeck, a former
German deputy finance minister who worked in 1997-1998 with then US Deputy Treasury Secretary Lawrence Summers to contain the Asian financial crisis.

Emerging-market countries are underrepresented at the IMF, hindering the effectiveness of enhanced SDR allocation. An organization should be created to manage real exchange rates between countries measured by purchasing power and adjusted to inflation differentials and development levels, UN said. The most important lesson of the global crisis is financial markets
don't get prices right, Flassbeck said.

Australian Dollar Lower At Noon

THE dollar was lower at noon as reduced sentiment towards risk on financial markets dragged the currency lower.

At 12.00pm (AEST), the dollar was trading at $US0.7341/45, down from yesterday's close of $US0.7395/98.

Since 7.00am, the unit moved between $US0.7341 and $US0.7430.

Francisco Solar, a senior trader with online currency firm, EasyForex, said the dollar had lost some ground in the local session after failing to push above a key resistance level during yesterday's offshore trade.

The dollar had its strongest start to the local session since October 6 last year, after opening at $US0.7421/26.

"The Aussie had quite a push up in the past few days with markets expecting some sort of test towards 75 US cents, but it faltered at $US.7480,'' Mr Solar said.

"People tend to sell on the back of that, even if it was a technical trade.''

A easing in risk appetite also hampered the dollar, Mr Solar said.

At 12.00pm, the S&P/ASX200 was down 0.53 per cent, while the broader All Ordinaries was 0.52 per cent weaker.

An above-forecast result for local retail sales in March gave the dollar a lift after the release of data at 11.30am, Mr Solar said.

Australian retail trade at current prices rose 2.2 per cent in March to a seasonally adjusted rise of 0.5 per cent, theAustralian Bureau of Statistics (ABS) said.

Some investors were becoming nervous ahead of the release of the results from the US Government's stress tests of American banks, due on Friday morning (AEST), Mr Solar said.

"There is some risk tied to those stress tests, especially as they were pushed back from May 4,'' he said.

Mr Solar forecasts the dollar to trade between $US0.7315 and $US0.7415 during the rest of the Asian session.

At noon, the RBA's trade weighted index (TWI) was at 60.3, down from yesterday's close of 60.7.

Meanwhile, the Australian bond market was firmer. The yield on the Commonwealth Government March 2019 bond was 4.750 per cent, down from yesterday's close of 4.825 per cent, while the yield on the April 2012 bond was at 3.638 per cent, down from 3.703 per cent.

On the Sydney Futures Exchange, the June 10-year bond futures contract price was 95.250, up from yesterday's close of 95.185, while the June three-year bond futures contract was at 96.375, up from 96.315.

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World's Biggest Credit Cards

Credit card companies love issuing premium "gold," "platinum" or "black" cards, since elite cardholders rack up big bills.

Here's a sampling of some of the hardest-to-get cards with the biggest cardholder benefits.

1. American Express Centurion

Annual Fee: $2,500 (plus an initiation fee of $5,000)

Requirements: $250,000 spending minimum

Often regarded as the ultimate in its category, benefits of the "black card" include 24-hour concierge service, room upgrades at hotels and membership to the company's "By Invitation Only" program, which offers access to sporting, culinary and cultural events, including New York Fashion Week.

2. Bank of America Accolades

Annual Fee: $295

Requirements: At least $200,000 in assets with Bank of America

Bank of America's first high-end credit card launched in 2007 and provides customers with concierge service, cash-back rewards, comprehensive identity-theft protection and recovery services, as well as access to more than 500 airport lounges worldwide.

3.Coutts World Card

Annual Fee: $500 (waived if $100,000 is charged to your account over one year)

Requirements: Only available to Coutts clients who have at least $1 million in the bank

As the private banking arm of the Royal Bank of Scotland, Coutts offers cardholders travel insurance, 24-hour concierge service, Priority Pass membership and purchase insurance.

4. HHonors Diamond VIP Surpass from Hilton/American Express

Annual Fee: $75

Requirements: $40,000 spending minimum

Ideal for frequent travelers, this card rewards members with nine points on the Hilton loyalty program for every $1 spent at Hilton hotels, and free access to more than 500 airport lounges worldwide. Room upgrades and access to private lounges within the hotels are also included.


5. Sotheby's World Elite Mastercard

Annual Fee: $395

Requirements: You must earn over $250,000 per year and have over $2million in investable assets.

Designed for art collectors and fans, benefits include 24-hour concierge service, complimentary business-class companion international air tickets on certain flights, upgrades from economy to business class for international air travel, global airport lounge access, discounted prices in Sotheby's catalogs and free admission to top museums.


6. Visa Black Card

Annual Fee: $495

Requirements: No spending minimum, but membership is limited to 1% of the U.S. population

Launched in 2008, this is Visa's answer to Amex's Centurion. It offers similar benefits--24-hour concierge service, Priority Pass membership and 1% cash back on all purchases--without a spending minimum.

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Jobless Could Hit 4 Million - Predicts Bank Adviser

Unemployment could double to four million unless the Government takes drastic action to boost public spending and create new jobs, a Bank of England official has warned.

In a dire outlook, Monetary Policy Committee member David Blanchflower also said the recession could be deeper and longer than the Bank previously predicted.

He added that the Government needed to tackle the soaring numbers of young people out of work by raising the school leaving age sooner and pushing more people into higher education.

Doom and gloom: The Bank of England's predictions that UK output would tumble 3.5 per cent could prove 'too optimistic'.

Speaking at a Westminster conference, Mr Blanchflower called for the Treasury to launch a near-£90billion fiscal stimulus, including tax cuts and investment in new schools and hospitals. This would help create 750,000 new jobs, he said.

'This is not about people being lazy,' he added. 'There aren't jobs. In six months this is going to be the biggest issue in every MP's constituency.'

David Blanchflower says the recession could be deeper and longer than initially expected..

Mr Blanchflower has proved one of the most prescient members of the MPC, calling for interest rate cuts a year before the rest of the committee.

Last summer he forecast unemployment would hit two million by Christmas - a prediction that was fulfilled in January.

Last month the Bank of England predicted UK output would tumble 3.5 per cent this year, before recovering 1.2 per cent in 2010.

But this is likely to prove too optimistic, Mr Blanchflower said yesterday. As a result, predictions that jobless ranks will peak at three million are also likely to be too rosy.

'(With) any forecast of unemployment and output, the likelihood in a recession is we have undercooked it,' he told MPs. A surge in unemployment to four million would mean the total surpassing the heights reached in the deep recession of the 1980s, when joblessness peaked at nearly 3.3million.

Mr Blanchflower's fiscal stimulus plan includes 'large cuts' in income taxes and national insurance contributions for the lowpaid and young people.

In a paper co-written with David Bell of the University of Stirling, he said the Treasury should plough billions into construction projects by health authorities, universities and housing associations.

The raising of the education leaving age to 18 should be brought forward to this year to prevent legions of school leavers seeking jobs when there are few available.

This summer more than 600,000 people will leave schools and universities and embark on a desperate search for work. Already 40 per cent of the unemployed are under 25.

Mr Blanchflower said young people's entire lives would be affected if they were unable to find work now.

Honda workers to get pay cut

Carmaker Honda is asking its workers to accept a pay cut for at least a year to ensure the survival of its UK factories.

The Japanese firm is sending letters to 3,600 workers at its Swindon plant stressing the dire state of car manufacturing.

The letters do not state the size of the cut, but a similar arrangement at Toyota has seen both working hours and pay cut by 10 per cent at its two UK plants.

The average wage for lineworkers is around £22,000. The Unite union said negotiations were yet to be held on the issue.

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Top 7 Forbes Rich List

The much-watched Forbes annual rich list put Microsoft founder Bill Gates back on top with a net worth of $US40 billion, although he saw his bank balance lose $US18 billion over the last 12 months.

In second place came Warren Buffett with $US37 billion, despite losing $US25 billion this year in the value of his Berkshire Hathaway shares

Carlos Slim Helú - who owns 90 per cent of Mexico's telephone landlines - is the world's third richest person. He has lost $US25 billion since the economic downturn, but is still worth $US35 billion.

Database titan Lawrence Ellison came in at fourth place with a $US22.5 billion fortune.

Ingvar Kamprad opened his first Ikea store 50 years ago. He retired in 1986 but still works on his brand's image. His $US22 billion fortune makes him the fifth richest person in the world.

Karl Albrecht, the founder of the Aldi Sud supermarket chain, moved from number 10 to 6 as he cashed in on shoppers after cheaper products. He is worth $US21.5 billion. No photo of Albrecht was available.

Indian businessman Mukesh Ambani comes in at 7th place with a $19.5 billion personal fortune. He is the chairman, managing director and the largest shareholder of Reliance Industries

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Global Economy Set To Shrink, India Loses Half A Million Jobs

With over half a million jobs lost in India alone in recent months, the World Bank predicts the global economy and global trade would both shrink this year for the first time since World War II.

While the global economy is likely to grow at least 5 percentage points below potential in 2009, world trade is on track to record its largest decline in 80 years - with the sharpest losses in East Asia.

World Bank forecasts show that global industrial production by the middle of 2009 could be as much as 15 percent lower than levels in 2008, it said in a paper for next Saturday's meeting of the Group of 20 finance ministers and central bank governors.

Developing countries face a financing shortfall of $270-700 billion this year, as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty.

The paper said that 94 out of 116 developing countries have experienced a slowdown in economic growth. Of these countries, 43 have high levels of poverty.

To date, the most affected sectors are those that were the most dynamic, typically urban-based exporters, construction, mining, and manufacturing.

For example, 'more than half a million jobs have been lost in the last three months of 2008 in India, including in gems and jewellery, autos and textiles,' the paper noted.

Many of the world's poorest countries are becoming ever more dependent on development assistance as their exports and fiscal revenues decline because of the crisis.

Noting that donors are already behind by around $39 billion on their commitments to increase aid made at the Gleneagles Summit in 2005, the bank said: 'the concern now is that aid flows will become more volatile as some countries cut their aid budgets while others reaffirm aid commitments, at least for this year.'

The World Bank said that international financial institutions cannot by themselves currently cover the shortfall-that includes public and private debt and trade deficits-for these 129 countries, even at the lower end of the range.

A solution will require governments, multilateral institutions, and the private sector. Only one quarter of vulnerable developing countries have the ability to finance measures to blunt the economic downturn, such as job-creation or safety net programs.

'We need to react in real time to a growing crisis that is hurting people in developing countries,' said World Bank Group President Robert B. Zoellick.

'This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis.

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