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G20 leaders get OECD warning that global trade is in freefall
Ashley Seager and Julia Kollewe, The Guardian
World leaders gathering for Thursday’s G20 summit in London were warned today by the Organisation of Cooperation and Development that the world economy was shrinking much faster than previously thought and that global trade was in freefall.
The Paris-based thinktank also told the British prime minister, Gordon Brown, there was no room for the type of fiscal stimulus that the prime minister had been touting around the world.
“The world economy is in the midst of its deepest and most synchronised recession in our lifetime caused by a global financial crisis and deepened by a collapse in world trade,” the OECD said in its latest twice-yearly economic forecasts.
It predicted that in spite of big cuts in interest rates around the world, fiscal stimuli and banking system bailouts, recovery would not come until 2010 at the earliest.
(31 March 2009)
A Stimulus for Working Fewer Hours
Dean Baker, ZNet
More than 12 million workers in the United States are currently unemployed, with the number rising rapidly. The problem with the economy is that we can produce more goods and services than is being demanded. The way we generally deal with lack of demand is to lay people off, leaving a relatively small segment of the work force (the unemployed) to bear the pain of our economic problems.
An alternative would be to have everyone share in the adjustment to excess supply by reducing work hours. Fewer work hours would mean roughly proportionate reductions in pay, but there would be the offsetting benefit of more leisure time. Workers would have more time to spend with their families or in nonwork activities. This would bring us more in line with the rest of the world, where the standard workweek and year is considerably shorter.
Shorter hours can also be associated with more flexibility in hours making the workplace more family friendly. It may also be more environmentally friendly by reducing the congestion at rush hours and perhaps leading companies to reduce the number of commutes by allowing four day workweeks.
One reason that firms are reluctant to go the route of shorter hours is that many costs, particularly health care insurance, are typically paid per worker rather than per hour. This gives firms a strong incentive to maximize the amount of work they get out of each worker. Health care reform is an obvious long-term answer to this problem but in the short term it suggests that the government can play a useful role by providing an offsetting incentive to reduce work hours.
This can be an important part of a new stimulus package.
— This article was published on March 29, 2009 and is one of six in the New York Times’ Room for Debate blog on the topic “Europe’s Solution: Take More Time Off.”
(29 March 2009)
Chavez promotes `petro-currency’ over dollar
Brian Murphy, Associated Press
Venezuelan President Hugo Chavez tried Tuesday to court Arab support for another swipe at America as its economy stumbles: a proposal for a new, oil-backed currency to challenge the global prominence of the dollar.
The idea never reached the full agenda of a summit of leaders from South America and the Arab League — and has little hope of gaining any momentum among the U.S. allies in the Middle East. But it managed to reflect broader sentiments at the gathering: That Western financial leadership has been deeply eroded by the economic meltdown.
(31 March 2009)
