A paper written ahead of the recent G20 summit by Zhou Xiaochuan, governor of the Chinese central bank, caused quite a stir. Zhou called for the establishment of a global reserve currency, a step which would firmly tip the balance of economic power in the direction of emerging economies like China and India, but would also bring benefits to poorer nations in the developing world.

The dollars role in international trade should be reduced by establishing a new currency to protect emerging markets from the confidence game of financial speculation, the United Nations
said.

Two very obvious changes have prompted this reaction: First, there is a growing recognition that
the course towards the current crisis was plotted when President Nixon severed the link between the dollar and gold in 1971. Second, the fact that, quite unlike any president before him, not only does Barack Obama believe in a more just and inclusive world, he also seems to recognise that creating such a world requires some levelling of the global economic playing field. The creation of a global reserve currency would be an essential first step in that process.

UN countries should agree on the creation of a global reserve bank to issue the currency and to
monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said on Tuesday in a report.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the US mortgage market led
to the worst global recession since World War II. China, the world's largest holder of dollar reserves, said a supranational currency such as IMF's special drawing rights, or SDRs, may add
stability.

There's a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management, Heiner Flassbeck, co-author of the report and a UNCTAD director, said. An initiative equivalent to Bretton Woods or the European Monetary System is needed. The 1944 Bretton Woods agreement created the modern global economic system and World Bank and IMF.

While it would be desirable to strengthen SDRs, a unit of account based on a basket of currencies,
it wouldn't be enough to aid emerging markets most in need of liquidity, said Flassbeck, a former
German deputy finance minister who worked in 1997-1998 with then US Deputy Treasury Secretary Lawrence Summers to contain the Asian financial crisis.

Emerging-market countries are underrepresented at the IMF, hindering the effectiveness of enhanced SDR allocation. An organization should be created to manage real exchange rates between countries measured by purchasing power and adjusted to inflation differentials and development levels, UN said. The most important lesson of the global crisis is financial markets
don't get prices right, Flassbeck said.

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The unemployment rate jumped to 9.7 percent in August, the highest since June 1983, as employers eliminated a net total of 216,000 jobs.

The level of job cuts is less than July's upwardly revised total of 276,000 and is the lowest in a year. Analysts expected the unemployment rate to rise to 9.5 percent from July's 9.4 percent, and job reductions to total 225,000.

If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the so-called underemployment rate reached 16.8 percent, the highest on records dating from 1994.

The economy is showing consistent signs of improvement, but probably not enough to stop employers from cutting jobs or to keep the unemployment rate from rising.

The Labor Department is expected to report Friday that the jobless rate increased to 9.5 percent in August, from 9.4 percent in July, as employers cut 225,000 jobs.

The employment report will follow other recent data that shows the economy is pulling out of the worst recession since World War II. A trade group reported Tuesday that the manufacturing sector grew in August for the first time in 19 months, while home sales have increased for several months.

But the economy isn't expected to grow strongly enough this year to persuade companies to ramp up hiring. Most economists expect the unemployment rate to top 10 percent by early next year.

"We have a very long, painful healing process ahead," said Bruce Kasman, chief economist at JPMorgan Chase & Co. "The good news is we're starting it, the bad news is we need much faster growth" to bring the employment rate down.

A loss of 225,000 jobs would be the smallest monthly decline since last year, a sign that layoffs are easing. Employers cut 247,000 jobs in July, compared with an average of 691,000 per month in the first quarter.

Still, the job cuts are holding down wages and salaries, while credit remains tight and home prices and stock portfolios have fallen. All those trends are restraining consumer spending, which makes up 70 percent of the U.S. economy, and could weaken the recovery.

Most retailers posted sales declines last month as shoppers limited back-to-school purchases to focus on necessities. Discounters did better than upscale chains, but the results Thursday raised further concern about the upcoming holiday season.

Other economic news on Thursday was mixed. The Institute for Supply Management, a trade group, said the service sector inched closer to growth in August, but still contracted for the 11th straight month.

The ISM's services index, which covers hospitals, retailers, financial services companies and more, rose to 48.4, up from 46.4 in July. Still, readings below 50 indicate the sector is shrinking.

In a separate report, the Labor Department said the number of laid-off workers applying for benefits dipped to 570,000 last week from an upwardly revised 574,000. That was a weaker performance than the drop to 560,000 claims that economists projected.

The number of people receiving jobless benefits totaled 6.23 million, up 92,000 from the previous week, which had been the lowest level since April.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.

First-time claims have trended down in recent months and are below the recession's high of 674,000, reached in the first week in April. But even with the improvement, they are running at levels well above the 325,000 mark considered a sign of a healthy economy.

Federal Reserve policymakers said in minutes from an August meeting, released Wednesday, that they expect the economy to recover in the second half of this year. But labor market conditions are still "poor," the Fed minutes said, and many companies are likely to be "cautious in hiring" even as the economy picks up.

Many economists credit the Obama administration's $787 billion economic stimulus package of tax cuts and spending increases, along with the Cash for Clunkers program, with helping spur the recovery. But they worry about what will happen when the impact of the stimulus efforts fades next year.

Vice President Joe Biden issued an upbeat report card on the economy Thursday, saying that the massive stimulus program had been more effective "than we had hoped."

Still, consumers are not spending enough to boost retailers' bottom lines. Discounter Target Corp. and warehouse club operators Costco Wholesale Corp. and BJ's Wholesale Club Inc. said Thursday that sales at established stores dropped.

A 5 percent jump at TJX Cos., which operates discount chains TJMaxx and Marshall's, topped expectations. But upscale retailers, including Saks Inc. and Nordstrom Inc., reported a weak month.

On Wall Street, stock indexes rose. The Dow Jones industrial average added about 64 points, as broader indexes also edged up.

More job cuts were announced this week. Washington-based manufacturer Danaher Corp. said it will lay off about 3,300 of its roughly 50,000 employees, an increase from the 1,700 cuts it announced in the spring. American Airlines said it is cutting 921 flight attendant jobs as it deals with an ongoing downturn in traffic and lower revenue.

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How will companies pay for the mountain of dodgy debt maturing soon?

Nearly $1 trillion in risky debt comes due from 2011 to 2015, and even if the credit crunch is long past, companies will likely struggle to refinance it says CreditSights. Expect to see more battles like the current one between General Motors and its creditors.

It’s not just the size of the looming maturities that poses a problem. The central issue is that many of the buyers who helped build the mountain of debt have disappeared. The shadow banking system, the mix of hedge funds and structured investment vehicles, has collapsed, writes Chris Taggert, analyst at the credit research company. Companies with junk debt will have to fight with sturdy, investment-grade companies for survival.

Part of the blame lies with private equity firms like the Blackstone Group and Apollo Management. During their heyday, they bought companies by loading them up with debt. Those bank loans and bonds were sold to other investors, such as hedge funds and collateralized loan obligations that often borrowed to buy them. The days are gone “when one real dollar could easily buy $5 or more dollars of leveraged finance debt,” Taggert writes. Many maturities will come from these companies whose capital structures were layered with debt in 2006, during “the peak of the credit craze.”

Some $936 billion in high-yield bonds and loans will come due from 2011 to 2015. That’s 96% of all leveraged loans and 59% of the entire junk-bond index, CreditSights says.

As a result, there will likely be a rise in fights between creditors and companies similar to the current battle over General Motors debts. Debt swaps, in which companies offer to buy back debt at a steep discount, are suddenly popular with companies trying to escape bankruptcy.

Another $176 billion in credit lines also fall due between 2010 and 2015. Banks are likely to cut credit lines further as long as the economy slumps, much as Bank of America and others have for their credit card holders. Smaller lines of credit can have a ripple effect, Taggert writes: companies push to extend their debt and shorten due dates on what’s owed them. 

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When the economy gets ugly, nothing talks like cash in the bank. Although banks and car companies may be pretty much screwed right now, IBM, Hewlett-Packard and other big tech companies are rolling in greenbacks. Check out the list and suggest some more info's you need to be here..

1. IBM

Armonk, N.Y.

Cash and Equivalents : $12.7 billion

2 . Hewlett-Packard [ HP ]

Palo Alto, Calif.

Cash and Equivalents : $11.2 billion

 3. Google

Mountain View, Calif.

Cash and Equivalents : $8.7 billion

4. Dell

Austin, Texas

Cash and Equivalents : $8.4 billion

5. Microsoft

Redmond, Wash.

Cash and Equivalents : $8.3 billion

6. Oracle

Redwood City, Calif.

Cash and Equivalents : $7.4 billion

7. Apple

Cupertino, Calif.

Cash and Equivalents : $7.2 billion

8. EMC

Hopkinton, Mass.

Cash and Equivalents : $5.8 billion 

9. Cisco Systems

San Jose, Calif.

Cash and Equivalents : $4.2 billion

10. Intel

Santa Clara, Calif.

Cash and Equivalents : $3.4 billion

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Interest rates have been cut to such an extent that you could be earning as little as 0.04 per cent after tax (0.05 per cent before tax) - or 40p interest a year on each £1,000.

But you can earn as much as 2 per cent (2.5 per cent) in some top-paying accounts used by banks to tempt in savers.

Now is the perfect time to switch, even if you are in an account that demands you give notice to get at your money. With interest rates this low, you will lose only a few pennies' interest if you move immediately without giving notice - and you can make that back in a couple of weeks.

David Black, from financial researcher Defaqto.com, says: 'If you have been in an easy access variablerate account for more than six months then check your rate. Best buy tables are full of newly launched accounts and those boosted by an introductory bonus.'

Nearly a quarter of the 460 easy access accounts on offer pay 0.08 per cent (0.1 per cent) or less on balances of £5,000, research from Defaqto shows.

But these figures only include accounts open to new savers. There are hundreds more among accounts closed to new savers where your money might have been languishing for years.

Switch and save: Banks are tempting customers to switch accounts

These appalling rates have come to light after banks and building societies adjusted the interest they pay to savers following the 0.5 percentage point cut in base rate to 0.5 per cent on March 5.

They tend to wait until the start of the following month after a base rate change to make adjustments to their savings rates.

Among larger providers, accounts where you earn a pitiful 0.04 per cent 0.05 per cent) are Barclays Savings Builder, six accounts from C& G - Cheltenham Gold, London, Direct Transfer, Instant Transfer, Young Saver and Cash Isa - First Direct Savings, HSBC Flexible Saver, Intelligent Finance Direct Access Savings and West Bromwich's Oak Account.

Branch-based accounts paying 0.08 per cent (0.1per cent) - or 80p a year on each £1,000 - include Abbey Flexible Saver, three accounts from Halifax (60 Day Gold, Instant Saver and Saver Reward) and three from Lloyds TSB (90 Day Notice, Flexible Saver and Instant Access Saver)

Notice accounts, such as Halifax 60 Day Gold, typically demand that you give 60 days' notice to take out money or pay a fine equivalent to 60 days' interest.

But with rates so low, the fine is tiny. The fine on £5,000 in a 60-day notice account earning 0.08 per cent (0.1per cent) works out at just 65p in lost interest. On a 90-day notice account it is £1.

You could also be earning appalling rates on tax-free cash Isas. Older versions of Alliance & Leicester Direct Isa pay just 0.1per cent, as does Abbey Postal Isa and Easy Isa to some savers and RBS Instant 60 Day Isa.

Both Halifax Isa Saver and Barclays Cash Isa pay 0.1per cent on balances up to £18,000.

A £10,000 sum earns you £10 interest a year against £300 in a top-paying account. And don't be fooled into thinking you earn a good rate on your internet account. Old Alliance Online Saver and Lloyds TSB Online Saver accounts, along with Abbey eSaver and Barclays e-savings, pay 0.08 per cent (0.1 per cent) once your introductory bonus has run out.

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Forget werewolves and vampires. With markets melting and 401(k)s dwindling, people are much more afraid of going broke. This Halloween, give revelers a real shot of terror with a costume that reflects the tough times.

1. AIG Executive

You'll need a fluffy robe and a respectable manicure.

Accessories:

--Spa slippers
--Clay facial mask
--Fluffy slippers
--AIG "Hi My Name Is..." sticker badge

2. Cowboy Capitalism

Dress up in a business suit but with a cowboy hat and boots. Sport a black eye.

Accessories:

--Adult beverage in a brown bag

3. Dow Jones Industrial Average

Paint a large piece of cardboard with a downward plunging arrow and write "DJIA" across your chest.

Accessories:

--A teddy bear
--A case of the shakes

4. Fannie Mae and Freddie Mac

A guy and a gal dress up as drunken sailors in the style of Raggedy Ann and Andy.

Accessories:

--Bottles of booze
--Toy houses

5. Financial Bailout

Gear up in red and gold as the Hammer and Sickle Superhero. You'll need: a headband, tights and a cape.

Accessories:

--A bucket labeled $700 billion and stuffed with cash.

6. Golden Parachute

Put on a jumpsuit (preferably gold). Then spray-paint a trash bag gold and attach parachute strings.

Accessories:

--Affix giant dollar sign to chest
--Safety goggles or golden superhero mask, depending on taste
--Play money tucked into belt and pockets.

7. Lehman CEO Dick Fuld

Climb into your Skeletor costume. Put on a golden parachute.

Accessories:

--"Blame the Shorts" button
--Golden handcuffs

8. Mortgage-Backed Security

Strap a small, plastic child's play house on your back.

Accessories:

--Wrap two bike chains across your chest
--Makeup to turn face black and blue

9. Treasury Secretary Hank Paulson

Get a sharp looking suit, bald cap, rimless spectacles.

Accessories:

--Toy bazooka

--Assistant Secretary Neel Kashkari "mini me" doll.

10. Underwater Mortgage

Make a diorama of a house with a hole in the bottom for your head. Paint fish and furniture floating in the windows. Wear a snorkel and diving mask

Accessories:

--Life preserver labeled "foreclosure relief plan"

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Credit card companies love issuing premium "gold," "platinum" or "black" cards, since elite cardholders rack up big bills.

Here's a sampling of some of the hardest-to-get cards with the biggest cardholder benefits.

1. American Express Centurion

Annual Fee: $2,500 (plus an initiation fee of $5,000)

Requirements: $250,000 spending minimum

Often regarded as the ultimate in its category, benefits of the "black card" include 24-hour concierge service, room upgrades at hotels and membership to the company's "By Invitation Only" program, which offers access to sporting, culinary and cultural events, including New York Fashion Week.

2. Bank of America Accolades

Annual Fee: $295

Requirements: At least $200,000 in assets with Bank of America

Bank of America's first high-end credit card launched in 2007 and provides customers with concierge service, cash-back rewards, comprehensive identity-theft protection and recovery services, as well as access to more than 500 airport lounges worldwide.

3.Coutts World Card

Annual Fee: $500 (waived if $100,000 is charged to your account over one year)

Requirements: Only available to Coutts clients who have at least $1 million in the bank

As the private banking arm of the Royal Bank of Scotland, Coutts offers cardholders travel insurance, 24-hour concierge service, Priority Pass membership and purchase insurance.

4. HHonors Diamond VIP Surpass from Hilton/American Express

Annual Fee: $75

Requirements: $40,000 spending minimum

Ideal for frequent travelers, this card rewards members with nine points on the Hilton loyalty program for every $1 spent at Hilton hotels, and free access to more than 500 airport lounges worldwide. Room upgrades and access to private lounges within the hotels are also included.


5. Sotheby's World Elite Mastercard

Annual Fee: $395

Requirements: You must earn over $250,000 per year and have over $2million in investable assets.

Designed for art collectors and fans, benefits include 24-hour concierge service, complimentary business-class companion international air tickets on certain flights, upgrades from economy to business class for international air travel, global airport lounge access, discounted prices in Sotheby's catalogs and free admission to top museums.


6. Visa Black Card

Annual Fee: $495

Requirements: No spending minimum, but membership is limited to 1% of the U.S. population

Launched in 2008, this is Visa's answer to Amex's Centurion. It offers similar benefits--24-hour concierge service, Priority Pass membership and 1% cash back on all purchases--without a spending minimum.

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Unemployment could double to four million unless the Government takes drastic action to boost public spending and create new jobs, a Bank of England official has warned.

In a dire outlook, Monetary Policy Committee member David Blanchflower also said the recession could be deeper and longer than the Bank previously predicted.

He added that the Government needed to tackle the soaring numbers of young people out of work by raising the school leaving age sooner and pushing more people into higher education.

Doom and gloom: The Bank of England's predictions that UK output would tumble 3.5 per cent could prove 'too optimistic'.

Speaking at a Westminster conference, Mr Blanchflower called for the Treasury to launch a near-£90billion fiscal stimulus, including tax cuts and investment in new schools and hospitals. This would help create 750,000 new jobs, he said.

'This is not about people being lazy,' he added. 'There aren't jobs. In six months this is going to be the biggest issue in every MP's constituency.'

David Blanchflower says the recession could be deeper and longer than initially expected..

Mr Blanchflower has proved one of the most prescient members of the MPC, calling for interest rate cuts a year before the rest of the committee.

Last summer he forecast unemployment would hit two million by Christmas - a prediction that was fulfilled in January.

Last month the Bank of England predicted UK output would tumble 3.5 per cent this year, before recovering 1.2 per cent in 2010.

But this is likely to prove too optimistic, Mr Blanchflower said yesterday. As a result, predictions that jobless ranks will peak at three million are also likely to be too rosy.

'(With) any forecast of unemployment and output, the likelihood in a recession is we have undercooked it,' he told MPs. A surge in unemployment to four million would mean the total surpassing the heights reached in the deep recession of the 1980s, when joblessness peaked at nearly 3.3million.

Mr Blanchflower's fiscal stimulus plan includes 'large cuts' in income taxes and national insurance contributions for the lowpaid and young people.

In a paper co-written with David Bell of the University of Stirling, he said the Treasury should plough billions into construction projects by health authorities, universities and housing associations.

The raising of the education leaving age to 18 should be brought forward to this year to prevent legions of school leavers seeking jobs when there are few available.

This summer more than 600,000 people will leave schools and universities and embark on a desperate search for work. Already 40 per cent of the unemployed are under 25.

Mr Blanchflower said young people's entire lives would be affected if they were unable to find work now.

Honda workers to get pay cut

Carmaker Honda is asking its workers to accept a pay cut for at least a year to ensure the survival of its UK factories.

The Japanese firm is sending letters to 3,600 workers at its Swindon plant stressing the dire state of car manufacturing.

The letters do not state the size of the cut, but a similar arrangement at Toyota has seen both working hours and pay cut by 10 per cent at its two UK plants.

The average wage for lineworkers is around £22,000. The Unite union said negotiations were yet to be held on the issue.

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With over half a million jobs lost in India alone in recent months, the World Bank predicts the global economy and global trade would both shrink this year for the first time since World War II.

While the global economy is likely to grow at least 5 percentage points below potential in 2009, world trade is on track to record its largest decline in 80 years - with the sharpest losses in East Asia.

World Bank forecasts show that global industrial production by the middle of 2009 could be as much as 15 percent lower than levels in 2008, it said in a paper for next Saturday's meeting of the Group of 20 finance ministers and central bank governors.

Developing countries face a financing shortfall of $270-700 billion this year, as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty.

The paper said that 94 out of 116 developing countries have experienced a slowdown in economic growth. Of these countries, 43 have high levels of poverty.

To date, the most affected sectors are those that were the most dynamic, typically urban-based exporters, construction, mining, and manufacturing.

For example, 'more than half a million jobs have been lost in the last three months of 2008 in India, including in gems and jewellery, autos and textiles,' the paper noted.

Many of the world's poorest countries are becoming ever more dependent on development assistance as their exports and fiscal revenues decline because of the crisis.

Noting that donors are already behind by around $39 billion on their commitments to increase aid made at the Gleneagles Summit in 2005, the bank said: 'the concern now is that aid flows will become more volatile as some countries cut their aid budgets while others reaffirm aid commitments, at least for this year.'

The World Bank said that international financial institutions cannot by themselves currently cover the shortfall-that includes public and private debt and trade deficits-for these 129 countries, even at the lower end of the range.

A solution will require governments, multilateral institutions, and the private sector. Only one quarter of vulnerable developing countries have the ability to finance measures to blunt the economic downturn, such as job-creation or safety net programs.

'We need to react in real time to a growing crisis that is hurting people in developing countries,' said World Bank Group President Robert B. Zoellick.

'This global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis.

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