Obama names Economic Advisory Panel.

President Barack Obama on Friday named an advisory panel led by former Federal Reserve Chairman Paul Volcker to help guide his efforts to rescue the economy and rebuild the shattered U.S. financial system.

Obama used a White House ceremony announcing the members of his new Economic Recovery Advisory Board to prod Congress to pass his economic stimulus package, a need he said was reinforced by the latest "devastating" job losses.

"It is inexcusable and irresponsible for any of us to get bogged down in distraction and delay or politics as usual while millions of Americans are being put out of work," Obama said. "Now is the time for Congress to act."

Volcker said the entire 15-member panel, effectively a team of rivals ranging from business executives to labor leaders and including experts from inside and outside of the new administration, shared Obama's "sense of urgency."

The Labor Department said on Friday that U.S. employers slashed 598,000 jobs in January, the deepest cut in payrolls in 34 years, and the jobless rate shot up to 7.6 percent in a sign of deepening recession.

Volcker, highly respected across party lines, is among several high-profile players advising Obama on economic policy as he confronts the worst financial crisis in decades.

The team includes Lawrence Summers, a former Treasury secretary who now heads the National Economic Council, and Treasury Secretary Timothy Geithner, who previously headed the New York Fed. Another important aide is Christina Romer, who chairs the White House Council of Economic Advisers and is an expert on the Great Depression.

Other members included Robert Wolf, chairman and chief executive of UBS Group Americas, and Jim Owens, chairman and chief executive of Caterpillar Inc, and labor leaders such as Anna Burger, secretary-treasurer of the Service Employees International Union.

Penny Pritzker, chairman and founder of Pritzker Realty Group who was also the finance chair of Obama's presidential campaign, will sit on the board as will Laura D'Andrea Tyson, a former Clinton administration economist.

The panel includes some officials who served Republican administrations, such as William Donaldson, who was Securities and Exchange Commission chairman under former President George W. Bush, and Harvard economist Martin Feldstein, who served in the Reagan administration.

'FRESH VOICES'

Obama has stepped up pressure on Congress to pass a more than $800 billion package of public works spending projects and tax cuts aimed at lifting the economy out of recession. He has set a mid-February deadline for getting the bill to his desk.

Meanwhile, Geithner plans on Monday to unveil a plan to quell turmoil in the banking system and revive frozen credit markets.

Obama has also said one of his key priorities is overhauling a Wall Street regulatory structure whose laxity he believes helped to set the stage for the financial meltdown.

When he announced the idea of the Economic Recovery Advisory Board in November, Obama said its intent was to help him avoid "insular" government decision-making.

Obama relied heavily on Volcker for advice during the campaign for the White House. The 81-year-old former Fed chief gave the Democrat's presidential bid a boost last year with an early endorsement.

As Federal Reserve chairman from 1979 to 1987 under Presidents Jimmy Carter and Ronald Reagan, Volcker was credited with breaking the back of double-digit inflation through interest-rate rises.

Austan Goolsbee, a longtime Obama adviser, is serving as staff director and chief economist for the economic advisory panel. Goolsbee is also a member of the Council of Economic Advisers.

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Judicious use of Sovereign Wealth vital for GCC

ABU DHABI - Gulf Arab states need to initiate reforms and investments for the longer term in order to make the economy more competitive internationally through a judicious use of their sovereign wealth funds, said Dr. Uri Dadush amid the global economic crisis.

In an interview with the Emirates Center for Strategic Studies and Research (ECSSR), Dadush, a senior associate in the Carnegie Endowment for International Peace, called for a greater integration and participation of the Gulf Cooperation Council (GCC) economies in the global economy.

“I think there are significant risks now of some backtracking and of protectionism. I believe that if this acute recession is relatively short-lived and lasts for a year or so then we should be able to avoid the worst effects of protectionism,” said Dardush on the sidelines of the ECSSR's 14th Annual Conference entitled “Human Resources and Development in the Arabian Gulf”.

However, Dadush expressed a serious concern about the current crisis which could last several years.

“Already we are witnessing significant signs of parties backtracking. This underlines the importance of economic stimulus measures and steps for strengthening the banking system, so that we rid ourselves of this crisis in a relatively short time,” he stressed.

“If the recession is short, the process of globalization would sustain itself as it is driven by very strong and deep forces, like technology, communications, people's need for diversity, etc.”

Dadush said the process of globalization would not be affected as long as “we do not get into a depression.”

Call for GCC’s participation in the global economy

In his lecture at the conference Dadush spoke of the need for greater integration and participation of GCC economies in the global economy.

However, certain sovereign wealth funds of the region have faced minor setbacks in the wake of the current financial crisis, prompting some GCC states to presently address their own immediate economic concerns of the global economic crisis.

“I think it would be very damaging if we just focused on mitigating the effects of the crisis and nothing else,” Dadush said.

“The UAE is very fortunate to have very large reserves of sovereign wealth in this period of global economic crisis, and a lot of countries would like to be in the same position.

“However, there is also a need to initiate reforms and investments for the longer term — be they in education, opening up the services sector, deregulating the economy, and making the economy more competitive internationally.”

He stressed that these investments will have very good returns as he predicted the globalization process will be a lot stronger 20 years from now than it is today.

“I also believe that oil prices would rise significantly in the medium term, say over a period of three to 10 years.”

The US dollar

Amid a growing perception that the value of the greenback is under threat, Dadush agrees that there is a significant risk of a dollar realignment.

“As we begin to come out of the crisis, the 'safe haven' argument in favor of the dollar may disappear quite quickly. I do not think anybody can predict this, but the argument that you should have a diversified portfolio in terms of currencies is a very powerful one,” he said.

GCC’s demographic imbalance

Dadush acknowledged the complexity of tackling the issue of a demographic imbalance in GCC states without compromising on the bloc’s requirements for development.

“Some of the GCC states have 80 percent immigrant labor force which is unique in the world and does raise all sorts of fundamental questions,” said Dadush.

“In terms of the economics, what is striking about Gulf countries is that the productivity of the service sector is a lot lower than that of high-income countries, even though this sector provides 70 percent of employment.

“This is a reflection of the easy availability of unskilled labor. Over a period of time, I think the region would see an improvement in productivity and wages, lesser reliance on unskilled labor and the creation of more employment opportunities for nationals.

Dadush believes that economics will drive the demand and not the other way round.

“The idea that you suddenly stop the use of unskilled labor does not work here, just as it does not work in the United States. People will need unskilled labor, given the current economic constraints.”

“However, it is possible to make the economy more productive over a period of time, and move to more capital-intensive forms of industry to limit the use of unskilled labor,” he added.

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National Association of Manufacturers Urges Obama to fight protectionism

NEW YORK -- The Obama administration must make every effort to ensure that the government works for a global standstill on protectionist measures both by the United States Congress and by the major U.S. trading partners or the result will be "economic disaster."

In his keynote address to the first Journal of Commerce Exports Conference, Frank Vargo, vice president of international economic affairs for the National Association of Manufacturers, said the U.S. must also continue to negotiate bilateral free trade agreements, which he called the "brightest part of our trade picture."

In the question-and-answer period that followed his address, Regina Vargo, his wife and a former assistant U.S. trade negotiator, said she thought that free trade agreements with Panama and Colombia will be approved by Congress later this year but that it will take some time because Congress' attention is currently focused on the economic stimulus plan.

The FTAs with South Korea will not pass this year because of concerns by both nations on provisions governing the automobile trade, she said.

"The U.S. government is not doing a good job of promoting U.S. exports," Frank Vargo said, adding that even though the U.S. is still the world's largest manufacturer, its share of the global market for manufactured goods has fallen to 10 percent from 14 percent a few years ago.

"The U.S. government is spending far more to promote agricultural exports than it does to promote manufacturing exports, he said. "Congress appropriates twice as much for agricultural exports as it does for manufactured exports. For example, the U.S. will pay for half or more of all travel costs overseas by U.S. agriculture exporters but it doesn’t pay anything for travel by exporters of manufactured goods.

The proportion of the U.S. budget that goes to export promotions has been declining since the Sixties, he pointed out.

He called on President Obama to take a number of measures to help promote U.S. exports. It should work toward easing the growing shortage of skilled manufacturing workers; lower excessive corporate taxation which he said is the highest in the world; address soaring health and litigation costs, and lower barriers created by export controls which are still aimed at the former Soviet Union.

At the same time, Vargo said that Customs' new importer security filing rule, known as 10+2, is going to cost $20 billion and add five days to importers' supply chains annually.

As for China, a major exporter, he said, "China has maintained a severely undervalued currency and is now talking about devaluing it further," and called on Obama to "work very carefully with China to get its cooperation."

By Peter T. Leach / The JOURNAL of COMMERCE ONLINE

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US-based group to back medical tourism in UAE

ABU DHABI // The UAE has authorised a US-based medical group to promote the country as a destination for medical tourism.

The Government signed the agreement with the Medical Tourism Association (MTA), a Florida-based non-profit group made up of hospitals, insurance companies and healthcare providers that opened an office in Dubai Healthcare City last July.

It was signed by Humaid Mohammed Obaid al Qattami, Minister of Health, and Jonathan Edelheit, the president of the MTA.

Research produced last year by the UK and Ireland office of the Dubai’s Department of Tourism and Commerce Marketing suggested that the emirate would attract more than 11 million medical tourists between last summer and 2010, in part because of the relatively low cost of health care in the UAE and the lack of long waiting lists compared to other countries.

At the time, the director of the department, Ian Scott, said: “Excellence in health care is a global concern and medical tourism is a booming industry worldwide.”

Since 2000, 16 hospitals in the UAE have gained accreditation to treat medical tourists by the US-based Joint Commission International, one of the largest accreditation bodies in the world.

The latest to be accredited is Sheikh Khalifa Medical City in Abu Dhabi.

In November, the Ministry of Health established a committee to examine how to attract more medical tourists and build an industry that would generate more income.

rhughes@thenational.ae

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World Economic Forum Calls For More Investment In Clean Energy

Annual investments of $515 billion between now and 2030 will be required to effect a world transition to clean energy, according to a report released by the World Economic Forum during its annual meeting in Davos, Switzerland.

The report says alternative energy technologies can address two serious world problems – energy security and climate change – but can also be a source of good financial returns.

The report urges governments to make clean-technology incentives and investments part of their economic stimulus projects.

"It is essential that this stimulus also build our capacity to solve the longer-term climate crisis. Well-meaning but short-sighted economic stimulus programs could lock us into a predominately fossil fuel-based world economy for decades," says the report.

The report advocates initiatives like retrofitting government buildings for increased energy efficiency, saying they can create jobs and lay the foundation for economic growth.

It also focuses on eight “large-scale, clean-energy sectors” that governments should promote including onshore wind; offshore wind; solar-photovoltaic energy; solar-thermal electricity generation; municipal solar energy; waste-to-energy generation; sugar-based ethanol, cellulosic and next-generation biofuels; and geothermal power.

The World Economic Forum would also like to see public-private investment mechanisms to redirect world capital flows into low-carbon and energy efficiency technologies, and the deployment of clean and affordable technologies to the poor “to help them leap-frog onto a low-carbon development trajectory.”

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Masdar/SBI May Up Investment In Japanese Cleantech Start-Ups

Abu Dhabi’s Masdar Clean Tech Fund and Japan’s SBI Holdings may invest up to $300 million in Japanese alternative energy start-ups through their newly established joint investment fund, Reuters reports.

Masdar and SBI have each contributed $10 million to create the fund, which will invest in “early stage investments in prominent alternative energy-related companies in Japan.” Each firm would receive around $2 million.

SBI officials said they were in talks with Masdar to increase investment to $200 million to $300 million, once the first $20 million fund has been used.

The Masdar initiative of the Abu Dhabi government aims to develop and commercialize clean energy technologies.

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Dubai house prices down 25% since September peak, says Morgan Stanley

UAE. Residential property prices in Dubai have fallen 25% since peaking last September, with high-end real estate units in the emirate taking the biggest hit, Morgan Stanley said.

Real estate prices in UAE capital Abu Dhabi are also down an average of 20% since a peak last summer as the UAE's property sector is dealt a 'worse than expected' blow by the global financial crisis, Morgan Stanley said in a research note.

'Anecdotal evidence suggests sharp falls in transaction volumes in the fourth quarter due to deteriorating economic conditions, the disappearance of speculative buying and the lack of financing,' the bank said in the 30 January note.

Since September, Dubai apartment prices have fallen 25% and villa prices are off 26%, 'belying the argument of some developers about the prices resilience of villas and low-rise building segments', Morgan Stanley said.

Prices of high-end Dubai properties -- including those at the Burj Dubai development that includes the world's tallest tower, as well as the man-made Palm Jumeirah -- are down 35% since their peak, the bank said.

Dubai's building boom has unraveled since the autumn amid a worsening global financial crisis that has led to scores of job losses and project delays. Some US$263 billion worth of projects in the UAE have been delayed or cancelled, Morgan Stanley said, citing data of Middle East business information website Zawya.

Emaar Properties is likely to be the 'worst affected' among Dubai developers by the change in selling prices, Morgan Stanley said.

'We believe that Emaar runs a high risk of sales returns and defaults among its recent launches,' it said. 'The company's high-end developments, the Burj area and The Old Town, have taken the biggest hit since the peak.'

Analysts surveyed by Reuters in December said they expected Emaar's fourth-quarter profit to fall 7.5%. The stock has fallen about 17% this year.

Morgan Stanley said real estate units at Aldar Properties' Raha Beach development had suffered a near 30% downturn in prices since hitting a peak last summer.

Rents in Dubai, meanwhile, were down 7% in December from a peak last summer, while the cost of renting villas had declined 10%, the bank added.

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