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In China the Government owns the Banks; the bankers do not own the Government. China’s stimulus plan is working better than in the US and the UK because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends. In the USA, the banks are the most powerful lobby on Capitol Hill; they own the Government.

The USA is spending trillions of greenbacks to bail out its banking system, leaving its economy to languish, as China, now called a “miracle economy,” decoupled from the rest of the world, is maintaining a phenomenal 8% annual growth rate. That, by the way, is being questioned by lots of Pols, commentators, economists and other talking heads, as they ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Read more

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The economic outlook is improving, but US stocks’ rally that began in March may run into an obstacle or two this week as investors will assess data on new and existing home sales that could point to whether the battered housing sector has bottomed, and they will keep an eye out for profit forecasts or warnings as Y 2009 Q-2 comes to a close. The US Fed is expected to leave rates unchanged after its two-day meeting ends Wednesday, but investors will check its statement for clues on the central bank’s economic outlook going forward.

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Last weeks long awaited G20 Summit Communique lifted the hopes of the world’s investors and leaves a lot of work to be done going forward by the Group. The language of the was vague and optimistic

The Highlights:
On Resources: The G-20 announced US$50B for low-income countries, and an additional US$100B in lending for Development Banks.

On Reform: Developing countries will have greater representation in the international financial institutions and that election to World Bank/IMF leadership will be based on merit.
On Regulation: The G-20 announced regulation of illicit tax havens.

As with all world summits, the G-20, just stated the goals and heralded the agreements of the parity countries leaving the hard specific work to be done.

The powers that be need to work to ensure that money going to developing countries is given as grants, not loans that trigger another debt crisis.

There remains much work to be done on the Green Agenda in the interests of developing countries at the UN Climate Change Conference in Copenhagen later this year.

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Bank of America Corp. Chief Executive Officer Kenneth Lewis recently said that the US should consider separating commercial lenders from investment banking activities. Lewis made the comment on his way to a meeting with President Barack Obama and other peer US banking chiefs. Asked what he would tell Obama if given the chance, Lewis said it would be that “commercial banks are the fabric of any community in which they operate and we probably need to separate the commercial banks from the investment banking activities.” The remarks may reopen the debate on whether the U.S. should bring back laws put in place after the Great Depression designed to insulate lenders from the risks of investment banking. Bank of America, the biggest US bank by assets, bought Merrill Lynch & Co. in January, helping the largest US brokerage avoid the financial collapse that drove Bear Stearns Cos. out of business.

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Technology companies like Sybase (SY) and VeriSign (VRSN) are looking to tap robust growth in the nascent US mobile banking market as text message use rises and banks aggressively explore ways to save. Mobile banking services typically allow users to make payments, check balances, transfer money between accounts and generate statements of recent transactions on their handsets. In the deepening recession, mobile banking is seen as a cost saver for banks, as customers who use mobile banking make fewer calls to customer service.”The big banks are all moving aggressively,” said Steve Kietz, chief executive of Mobile Money Ventures, a joint venture between Citigroup Inc (C) and top South Korean mobile carrier SK Telecom (017670.KS). Text messaging, initially slow to catch on in the United States, has been getting more popular with Americans, especially younger ones.

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The US Treasury Department is expected in the coming week to roll out its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks. The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks, and to help protect taxpayers, who would pay for the bulk of the purchases, the plan calls for auctioning assets to the highest bidders. The plan is not expected to impose restrictions on the executive pay of private investors or fund managers who participate. The three-pronged approach is perhaps the central component of Mr. Obama’s plan to rescue the U.S. banking system from the unprofitable assets weighing down bank balance sheets, crippling their ability to make new loans and deepening the recession

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