We have stopped our economic freefall - President Obama

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In his weekly address to the nation, President Obama gave credit to all nations for taking measures which he believes have stopped the economic free-fall. However, there is still much work to be done and he believes the G20- Summit in Pittsburgh September 24-25 will provide an opportunity for "a five-month checkup to review the steps each nation has taken – separately and together – to break the back of this economic crisis."

President Obama pointed to the Recovery Act, which was enacted in February, as an example of action his administration has undertaken to spur economic growth. He also stated that they have worked hard to free up the credit market to put more money into the hands of the consumer.

At the G20 conference the United States is going to "discuss some of the steps that are required to safeguard our global financial system and close gaps in regulation around the world – gaps that permitted the kinds of reckless risk-taking and irresponsibility that led to the crisis".

To this end President Obama is pushing his Consumer Financial Protection Agency proposal (currently before Congress). This agency will have clearly defined rules aimed at preventing shady lending practices such as:

• Loan contracts written to confuse

• Hidden fees

• Financial penalties issued without warning

President Obama gives his assurance that this agency will both establish clear rules and enforce those rules.

He recognizes that Wall Street banks would rather maintain the status quo and have hired lobbyist to work at stopping the bill currently before Congress, but this does not deter his determination to stop the business as usual mentality which this time could result in total financial collapse.

We have all seen how quickly many financial institutions have decided to pay back the government loans rather than abide by the strict rules applied to those loans.

Money Magazine Hoss agrees with the President's philosophy and sincerely hopes that he sticks to his guns and does not succumb to the pressure that will undoubtedly be put on him and his administration to withdraw their proposal for a new Consumer Financial Protection Agency.

Stay on Track,

Money Magazine Hoss

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G20 Summit

From the Hoss's Mouth

The G20 summit has ended. Hoss Cents Money Magazine has reviewed the statement issued by the G20 summit leaders (which can be found here). Before The Hoss comments on the commitments contained in that statement, I would like to say it is fantastic to see the USA emerge as a RESPECTED nation. This is due to President Barack Obama and the First Lady Michelle Obama showing themselves to be real people, with real ideas and real concerns for all people.



The G20 leaders have pledged to:

• restore confidence, growth, and jobs

• repair the financial system to restore lending

• strengthen financial regulation to rebuild trust

• fund and reform G20 international financial institutions to overcome this crisis and prevent future ones

• promote global trade and investment and reject protectionism in order to underpin prosperity
  

• build an inclusive, green, and sustainable recovery

Some of the steps to be taken to achieve these lofty goals are:

• G20 to increase resources available to the IMF (International Monetary Fund) to $750 billion.

• G20 to provide a new SDR allocation of $250 billion (The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries.)
  

• G20 to provide at least $100 billion of additional lending by the MDBs (Multilateral Development Bank).

• G20 to provide support for trade finance up to $250 billion.

• G20 to provide additional resources from agreed IMF gold sales for concessional finance for the poorest countries.

• G20 to constitute an additional $1.1 trillion to restore credit, growth and jobs in the world economy.

• G20 to provide over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance.

The G20 Summit leaders established an action plan and issued a declaration stating they will strengthen the financial system. In particular, they made the following commitments:

• to establish a new Financial Stability Board (FSB) with a strengthened mandate as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission

• that the FSB should collaborate with the IMF to provide early warning of macro-economic and financial risks and the actions needed to address them

• to reshape our regulatory systems so that G20 authorities are able to identify and take account of macro-prudential risks

The Hoss realizes that the leaders of the G20 must do more than just make commitments; they must also follow through with the required action. Many summits are held and many commitments made, but when leaders return home they do not take the necessary steps that would enable them to achieve what they have committed to do. Can you say Kyoto Accord? Let's hope the G20 leaders are truly determined to achieve all the goals contained in the G20 statement. If they do follow through with their commitments, it should lead to a worldwide economic recovery.

Stay on track,

The Hoss


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