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The resounding message coming out of the world's economic leaders at the Bretton Woods conference today is that we need action.
And that in order for action, we need a strong leader. The fact that one does not exist right now was clearly on the speakers' minds as they spoke today.
Jean-Claude Trichet said that swift decisive action is needed in Europe.
Speaking at the Bretton Woods Conference in Washington DC on Friday (which we attended), the ECB President said that the world faces a sovereign crisis that is centered in Europe but has spread to larger economies. The rapidly rising risk of contagion threatens financial stability. In order to prevent contagion, Trichet says, decisive action is needed soon.
It sounds like the consensus is that we need a leader to come forward to propose and implement a solution to the crisis. The U.S., because historically it has been the global leader, has an opportunity to play that role. Unfortunately, Obama acts as a leader of the American middle class, etc, and not the world economy.
He also might not have enough business experience for his proposed action to be taken seriously, were he to make one. That suggests he would have to propose someone else's solution. Obama's war with business leaders makes that an unlikely possibility.
At the conference today there were multiple signs that the world's top economic intellectuals and leaders believe that what we really need is leadership.
Brazilian central banker Alexandre Tombini said that we must move fast to resolve the confidence crisis, and that the solution must come in a single message.
And Trichet said that we need authorities to who possess unquestioned authority, so that people have confidence in a solution, to deliver that message. What this leader would say, according to Trichet, would have to have 2 key components to it: triggering action – but not despair.
He echoed Larry Summers’ statement earlier Friday at the conference that one of the most difficult problems during a crisis is finding the language that generates concern and action, but that won’t trigger despair.
The obstacle right now is a leader who will deliver that message, or a lack there of.
These are solvable problems, said Summers. We just need action.
One action that has been gaining enthusiasm is the implementation of the EFSF, which could leverage investments by private investors to buy bad bank assets, among other TARP-like stability-increasing functions. However like TARP initially, the EFSF doesn’t have broad support yet.
PIMCO's Mohammed El-Erian said that the solution will involve convincing healthy balance sheets to engage in funding, which they will only do if they're convinced that the rest of Europe will participate.
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This week should be another biggie, just based on the economic data on tap.
Each day there will be big earth movers coming.
Monday:
ISM manufacturingConstruction spendingVehicle salesTuesday:
Factory ordersChain store salesWednesday:
Jobs week begins with the ADP reportAlso: ISM non-manufacturingThursday
FRIDAY:
THE JOBS REPORT!!!Consumer creditHere's the outlook on the jobs report from Nomura:
Employment report: We are forecasting an increase in total nonfarm payrolls in September of 60k, with private payrolls increasing 80k and manufacturing payrolls rising by 5k. Assuming no revisions to past data, a data release in line with our forecast would lead to a 3-month moving average for job creation of just 48k in September, sharply slower compared with a high for 2011 of 215k in April, and further ruffling the feathers of the doves on the FOMC that would like to provide more stimulus for the labor market. The economic outlook remained “unusually uncertain” in September, still fuel led by fears of European contagion and stock market volatility. The Verizon strike of 45k workers, which negatively impacted August payrolls, should provide a boost to September payrolls of similar magnitude. Elsewhere, we believe the average work week ticked back up to 34.3 hours and average hourly earnings increased by 0.2% following a decline of 0.1% in August. We also forecast that the unemployment rate held steady at 9.1%.
Meanwhile, expect a ton of news from Europe, the US (watch the banks, especially in the wake of California's decision to drop out of the foreclosure-gate settlements, and the newfound concerns about Morgan Stanley) and of course any drips and drabs out of China.
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Stéphane Richard, CEO of OrangeImage: Photo by Flickr user FeuilluStéphane Richard, the CEO of France Telecom, told reporters yesterday, "If we believe what we have been told, the iPhone 5 will be released on 15 October." France Telecom carries more iPhone data traffic than any carrier other than AT&T in the world, so it should know a thing or two about Apple's plans.
Via: BGR
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God's gift to Wall Street, Secretary Treasury Tim Geithner, says he has finally convinced Europe that the world will end if Europe doesn't bail everyone out the way the US did.
On ABC's World News With Diane Sawyer, Geithner said that Europe finally gets it:
“If you listen carefully to what they said this weekend, not just to us in private, but what they said publicly, they’re foreshadowing now the escalation that’s going to come. And we’d like them to get on with it.”
The "escalation," presumably, is a full-on Euro-TARP bailout, in which the losses on the idiot loans made by Europe's banks to Europe's fringe countries are transferred to Europe's taxpayers.
One can only hope that the rescue plan willl include forced bank writedowns and recapitalizations, which Geithner's US version of the bailout didn't--an error for which the country is still paying the price.
Geithner put the fear of God in Europe at the IMF meeting, at which he warned of “cascading default, bank runs and catastrophic risk” if Europe didn't get the situation under control.
Bloomberg's Ian Katz has more >
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