In the News
Group of 20 vows to avoid currency devaluations.
From the L.A. Times, Oct, 2010
GYEONGJU, South Korea (AP) — The world's leading advanced and emerging countries vowed Saturday to avoid potentially debilitating currency devaluations, aiming to quell trade tensions that could threaten the global economy.
The Group of 20 also said it will pursue policies to reduce trade and current account imbalances, and agreed to give developing nations more say at the International Monetary Fund, part of what it described as an ambitious set of proposals to reform IMF governance.
The grouping, which accounts for about 85% of the global economy, said in a statement that it will "move towards more market determined exchange rate systems" and "refrain from competitive devaluation of currencies."
The agreement comes amid fears that nations were on the verge of a "currency war" in which they would devalue currencies to gain an export advantage over competitors — causing a rise in protectionism and damaging the global economy.
"Our cooperation is essential," the statement said. "We are all committed to play our part in achieving strong, sustainable and balanced growth in a collaborative and coordinated way."
The agreement, which includes no specific numerical commitments, appeared to be a step forward from a similar meeting two weeks ago in Washington when finance officials failed to resolve differences.
U.S. Treasury Secretary Timothy Geithner praised the results, calling them part of necessary changes in how the global economy operates.
"If the world economy is going to be able to grow at a strong, sustainable pace in the future, if we're going to be successful in building a more stable global financial system, and if we're going to be able to continue to expand opportunities for trade and preserve an open trading system, then we need to work to achieve more balance in the pattern of global growth as we recover from the crisis," he told reporters.
Geithner had pushed in a letter to G-20 members for a commitment to policies that would reduce current account and trade imbalances "below a specified share" of gross domestic product "over the next few years."
But the G-20 statement said that large imbalances — such as China's vast trade surplus with the rest of the world — would be "assessed against indicative guidelines to be agreed." Geithner's proposal had drawn resistance from export-reliant countries such as Japan.
Geithner, however, said Saturday that the U.S. was not pushing for any specific quantitative targets and that the country's stance found substantial support within the G-20.
Japanese Finance Minister Yoshihiko Noda, who on Friday called the idea of any specific targets "unrealistic," urged a cautious approach to any specific numbers, though he expressed support for "guidelines."
"There are many perspectives on the current account issue," he said. "Every country has a different situation when it comes to surpluses and deficits. So we need to study this carefully."
Nations in Asia and other regions have been trying to limit the strength of their currencies amid a sustained weakness of the U.S. dollar out of fear their exports will become less competitive in world markets. At the same time, China's currency has been effectively pegged to the dollar, provoking an outcry that it is being kept artificially low and giving China's exporters an unfair advantage.
A shift for Asian nations to become less reliant on exports for growth is seen as one of the adjustments that countries should make in the wake of last year's downturn to ensure more stability in the global economy and markets. Stronger currencies, meanwhile, would make imported goods cheaper and boost domestic spending as a contributor to economic growth.
The G-20, which has been around since 1999 and includes both rich and emerging countries, assumed the role of global economic leader following the financial crisis. The Group of Seven advanced nations faced criticism that it was too narrow a forum and failed to represent the voices of China and other fast-growing countries such as India.
Since the crisis, the G-20 has pursued major reforms to the global economy and financial system, such as attempting to coordinate economic and interest rate policies to spur growth and forge stricter regulation of banks and other financial institutions seen as responsible for the meltdown.
The meetings come ahead of a G-20 summit in Seoul set for Nov. 11-12 when leaders will consider the agreements reached by the finance officials as well as other proposals for strengthening the global economy.
Regarding the IMF, the G-20 called for greater representation for emerging countries on its executive board by reducing European seats by two and shifting more voting power to developing and underrepresented countries.
"It is a milestone in reforming global governance," said Olli Rehn, economic and monetary affairs commissioner of the European Union, which also belongs to the G-20. "Today we have been rebalancing global growth and rebalancing political influence in global governance."
Copyright 2010 The Associated Press. All rights reserved.
Blythe Solar project in Riverside County gets federal approval. Oct. 25, 2010
A proposed solar plant that would be the largest in the world, doubling the amount of solar electricity the U.S. can produce, got the go-ahead from federal regulators Monday to begin construction.
The Blythe Solar Power Project, backed by German company Solar Millennium, won final clearance from the Bureau of Land Management, making the project the first of its kind to be approved on federal public land.
The planned installation, set for more than 7,000 acres in Riverside County, is designed to deliver 1 gigawatt of power using parabolic trough technology. The process involves curved mirrors that gather the sun’s rays, heating liquid that creates steam to run generators.
The multibillion-dollar Blythe project is to consist of four separate, 250-megawatt sections that together will be able to power more than 300,000 average homes -– even up to 750,000 residences, by some generous estimates.
The groundbreaking should happen by the end of the year, Solar Millennium said. But first, the company is in “advanced discussions” with the Energy Department as it attempts to land $1.9 billion in government debt financing for the first two portions of the project, as similar projects have done.
Construction is expected to directly create more than 1,000 jobs, as well as thousands more throughout the supply chain, the company said. Once built, the plant will support nearly 300 permanent jobs.
The project, however, will have some effect on the environment. To mitigate potential damage, regulators are requiring that Solar Millennium cough up funding to support more than 8,000 acres of habitat for native species such as the desert tortoise, the western burrowing owl, the bighorn sheep and the Mojave fringe-toed lizard.
The Blythe installation is the sixth in recent months to be approved for public land. Several proposed solar plants have been fast-tracked through the permitting process as they race to meet the December deadline for federal stimulus funds. One of those, the Ivanpah Solar Electric Generating System, is breaking ground near Primm, Nev., on Wednesday.
-- Tiffany Hsu