Lew and Lou Give Opposed G-20 Messages; U.S. Denies Bank Problem
Feb. 25, 2016 (EIRNS)—U.S. Treasury Secretary Jack Lew and Chinese Finance Minister Lou Jiwei presented opposite messages to the Finance Ministers’ session of the G-20 summit now taking place in Shanghai.
Lou’s published speech called for coordinated fiscal stimulus to be given to economic development by all the G-20 countries, and said that China would increase government investment in 2016. Chinese press accounts, for example on CCTV, imply that by "fiscal stimulus," Lou means, largely, infrastructure investment. He explicitly rejected any idea of a "new Plaza Accord" being pushed on Wall Street and in London—that is, a "guidance agreement" on exchange rates which would involve steady appreciation of the Chinese yuan. Lou called this idea "just fantasy."
Lew, by contrast, said that no coordinated economic stimulus should be expected from the G-20 heads-of-state summit, because none, he said, was needed. Lew claimed that economic conditions were nothing like what obtained at the Spring 2009 G-20 meeting; that the U.S. and other economies were in good shape, and that stock and bond market plunges did not reflect real conditions.
Interestingly, on the day of Lew’s speech (Feb. 24), a report was issued by Citigroup finding that "the danger of recession is rising" for the United States and Europe. "We are currently in a highly precarious environment for global growth and asset markets," Citigroup said, noting that global growth was "unusually weak" in the fourth quarter.
"The most recent deterioration in the global outlook is due to a moderate worsening in the prospects for the advanced economies; a large increase in the uncertainty about the advanced economies’ outlook (notably for the U.S.); and a tightening in financial conditions,"
the bank said.
Also that day, the Kansas City Federal Reserve Bank became the fourth regional Fed bank (the others are New York, Philadelphia, and Richmond) to report continuing manufacturing decline in February. For the Kansas City district, this contraction has continued steadily for over a year, and the Bank’s index for February was -12, the worst yet. Every sub-index was below zero, with employment sub-indicies the worst; for example, "number of employees" at -19.
Next to report will be the Dallas Federal Reserve Bank, which has been registering the worst industrial depression in the nation for more than a year. Halliburton, the huge oil systems and contracting firm, based in Houston, today announced 5,000 more layoffs, making 27,000 since mid-2014, or about 25% of its workforce. The company said its revenue fell 42% in the fourth quarter. CEO Dave Lesar told a conference call, "Let me sum it up: 2016 is shaping up to be one tough slog through the mud."