global economy, the u.s. dollar, strains in the euro market, and his work at the enterprise institute is focused on global and global currency issues. on my far right is hans timmer, hans timmer is director in the -- of the world bank development prospects group. under his management, the group produces the world bank annual publications, global economic prospects, global development finance, global monitoring reports, addition there is a wide range of forecasting publications that come out of the world bank under his supervision. so you see we have panel of heavy hitters on the subject matter for this seminar. :

which questions i will ask. that is deliberate in order to create an atmosphere of real discussion to make this summer different from the conventional presentations. after that we will have an opportunity for discussion. that will be for the audience and questions also from the larger audience. the first question -- i will ask three panelists with three minutes each to address it. to address the question and three minutes each. the first question is as is announced in the program for this program, why did 2009 turned out to be better than expected? and the persons to whom i will address the question are hans timmer, uri dadush and jorg

decressin. hawkins, will you start with the first question, why did 2019 not to be better and, please, try to limit your reply to three minutes? >> and the first question is, was actually 2009 better than we expected and i won't go back to all the forecasts that we all have before, but let me start with the observation is that 2,009, of course, was not a good year, it was one of the greatest recessions that we've ever experienced and is true that we have avoided a larger disasters but if you look at the current situation even after in many economies are coming out of the recession, productivity, production levels across the world are still some 7210% below what they were before the crisis. unemployment in many countries is around 10%.

there are huge problems emerging for the governments and their fiscal positions. the positive growth rehearsing at the moment is it to a large extent driven by temporary factors, by all means this was not a good year even in its growth was very positive. if you look at the forecasts and i cannot talk in detail about our forecast because we will publish them later in this month on january 21st, and you will see that the kind of a recovery that we're all talking about is relatively new to given the size of the decline that we have seen and then probably later in the discussion that we will talk about the major risks that are still out there. so going back to the question, why was 2009 much better, i

would answer with the observation that actually 2009 was a year that has created huge problems and that it will take several years to solve those problems. >> thank you, the next panelist who will address this question is uri dadush. >> thank you. first of all, i agree with him and that 2009, of course, was an awful year. at the same time if you real back to say 68 months ago, we were at that time of considering the possibility of a fallen in the question. the picture now looks remarkably different. we have just finished a quarter,

the third quarter, we don't have full data for the fourth quarter yet. industrial production and trade is on a sharp recovery path. one of the fastest growth is recorded. so one point before i say what actually explains this better than forecast the outcome, let me say that there is a marked difference in the exhilaration -- acceleration in industrial countries if you look at the consensus forecast that are made in the middle of 2009, the industrial countries, the advanced countries by and large are doing better.

but only a little bit better than anticipated to back six months ago. on the other hand,, in the emerging markets particularly referring to china, india, brazil as the largest but several others, the acceleration has been very significant to end of the numbers are the 2% stronger estimated for 2009. then they were in the middle of the year. what are the reasons, for reasons i will mention very briefly that we are doing better than we thought. first of all, the policy measures that were taken were unprecedented the. both the financial rescue, the fiscal stimulus and monetary

stimulus have virtually no president. maybe fiscal stimulus, you can call some precedents, so the aggressiveness of the policy response was extraordinary. the second reason is that to these policies by and large worked, not a foregone conclusion. many of these policies were very controversial, but if you look at the numbers, if you look at the spreads, it cetera, et cetera, and a number of indicators, you have to say that we are an enormously better shape than we were nine months ago. the third factor i will mention is the fundamental strength of asia. going into, going into this recession. and the fact that they were able to respond very aggressively. a lot of it had to do with

policy in asia as well, but basically the banking sector in the household sector and the corporate sector in asia was just in very good shape and has been able to provide the a major source of support to for the world of. in the fourth and last factor that i will mention is that the world avoided the worst contagion of tax. what am i referring to? i am referring to financial contagion, we avoided a series of massive sovereign debt crisis at least so far. imf played a very good role and various other things happened. but the crisis in the past, it greatly exacerbated the problem during the great depression,

during the asian financial crisis, and we have avoided also on the contagion having a surge of protectionism. we've had quite a bit of protectionism by the tass and become a general phenomenon as it did in the 1930's. >> thank you. the last person addressing the first question is jorg decressin. >> thank you. let me first explain to what we did it originally expect was going to happen and if you go back to about one year ago talking about january 2009, we forecast the advanced economies would be moving out of recession sometime in the middle of 2010. what has actually happened is quite different. if you look at the advanced economies as a group, they pose a growth rate of about 2% in the third quarter of 2009 already is of this recovery is off to a starch that is a good deal

earlier than we had expected one year ago. of the same time to distillate used to be said that the u.s. catches a cold and are emerging economies catching food. this time around it has been quite different, there have been emerging economies badly affected but at others have actually been remarkably resilient and in these economies for example and the second quarter of 2009 and third quarter of 2009 the server growth rates around 8% in them as a group and, of course, there are big differences between asia and america economy in some eastern european economies but on the whole the picture that has been a good deal better than what we expected one year ago. now, why is that the case? uri dadush diluted to the reasons. if you go back a year we all have certainly underestimated the depth of the contraction of

the global economy. that then materialize in the fourth quarter of 2008 and the first quarter 2009. we were puzzled by the deep ball and attributed it to basically the fear of a global depression so confidence factors and it's hard to gauge these confidence factor is correctly. what i'm seeing right now, we've had a strong policy response to this fear of depression and the turmoil in the markets. exceptional monetary measures with interest rates cut close to zero in many advanced economies with unconventional support made available. and we've seen fiscal stimulus deployed in emerging economies and then also seen recapitalization of banks and guarantees for banks in order to get the financial sector running. i can what is all this done? it's changed the fundamentals but has also changed poppins and again is very difficult to forecast confidence and a

rebound in confidence has been stronger than what we had expected so that's what i would say this recovery is off to a better start than what we expected a year ago. >> thank you. we are doing well on time. the second question i will put to three panelists is to do you expect the recovery to continue in 2010 and if so do you expect to be ella shaped, u-shaped or be shaped. the first person to whom i would like to address is desmond lachman. >> thank you, peter. i just noticed in the question that you have left out of letters like w. and square roots signs. [laughter] leaving aside the current -- i'm very much in the camp of people like janet and paul krugman and marty bell steen, expect a recovery to be extremely subdued. and i can be talking about this at the u.s. level and at the global level.

i would be rather concerned in policy-making circles it i saw with the massive stimulus we've had a in places in the u.s. economy and fiscal stimulus that's unprecedented in monetary ease that we only managed to reach 2.2% growth in the third quarter of the year purpose some of the big questions are arising, what happens when the fiscal stimulus fades as was costing less will certainly fade and the second half of 2010. and the real risk that we do get a double-dip recession as that paid. of the reason i say that is there are extraordinarily strong headwinds against u.s. economic recovery right now. now the most notable of those headwinds is the situation in the labor market. not only do we have 10% points of americans out of work, but if

you include those who are working part-time on an involuntary basis and thus discourage, if you look at the labor department's unemployment we are at 17.5% of the issue is an act that kind of labor market is going to be exerting very strong downward pressure on wage growth and income growth and without that income growth there's no possibility of getting meaningful recovery in consumption. in addition, what federal reserve officials keep a lid into is we are on the cusp of another big downturn in the commercial property market to which could cause problems in the regional banks. we've got a wave of foreclosures that is going to hit the residential property market so we could get declines in housing, in fact, continue. in addition, you've got a banking system that is still this of snow and we know this

despite reducing interest rates the way they have done a pumping liquidity into the system we've got the banks cutting back on credits especially to consumers and just small and medium-sized enterprises so i don't see the basis for a strong recovery in the u.s. appear, i think that's a be shaped recovery isn't wishful thinking. will see what happens in the second half. what i'm really worried about the note is a situation in your. that's what you've got now in europe is a real tensions emerging in the euro zone and on not just referring to greece but referring to portugal, spain and ireland, all those countries have really got trouble staying in the euro zone, going into big downturns, double-digit deficits both on the budget and current account. that is going to be a huge crack where the global economy and i

would not exclude the possibility that we have a real full-blown crisis in either greece, spain, or ireland in the year ahead and finally let me say a word on japan. japan makes the u.s. budget situation looks very prudent. well-managed budget situation, a debt that is now moving toward 200% of gdp and japan is again fighting with deflationary so don't expect japan to be pulling as out of the situation. in short, i'm in the camp of an l shape to recovery at best with a real risk of maybe 50 percent that would get double dip in the second half of 2010. >> thank you. might next panelist on this question, though the recovery continues if so what shape will it be, philip.

>> and hajj river talking about growth rates are level but the bottom line is if you look at our forecasts and i think most these days we have already seen the sense that we have modest growth in 2007, 20008. kerry -- as we heard earlier, -- global growth in 2009. and someone predetermined by the dynamic that we have going into the year. the very strong likelihood of return to moderate global growth in 2010. i think what's interesting these days in the global outlook discussion is really most discussion isn't really about the issue of what comes next, we sort of take its strong and those of us would take it for granted that the global economy will grow at 2.5% this year. it's what comes after that in 2011 and beyond.

the key issue. desmond raised a whole series of issues that i am sure will come back to it in the next half-hour or hour or so that really i think derives much of the medium term outlook. but coming back to the 2010 issue, i think would probably position myself certain a relative to numbering the panel relative optimists and i would highlight for aspects of the outlook that are important, that tend to not be the focus of the current time. someone to unfortunately our industry tends to be extra ablative when things are going well, we tend to think they will go well and when things are going poorly we tend to side of those factors as reasons for things to continue to go poorly and on not so sure that's the right way to think about the world but i highlight for factors that i think dominate 2010. first is the synchronize nature of the upturned.

we had a synchronized downturn, very powerful in the fourth quarter of 08 and the first quarter of all non and we've seen this synchronized upturn about six months in duration and will continue for at least another 6 miles and will feed on itself as most globally synchronized processes do. second, the feature is a point i think is very important, what i think we should keep coming back to it is of a growing role of the emerging markets in meeting the expansion and it isn't just a share. it's latin america, and its parts of east asia, parts of south asia and latin america and even an emerging europe there are some strong economy is beginning to show signs of vigor such as poland. third factor is and this is i think the big unknown to extend a very important point not to lose sight of is the turnaround liable to occur in the corporate sector. one way of thinking about the

downturn of 2009 is we had corporates adjusting it very aggressively. and in so doing turn the financial position from one of modest to win a substantial financial surplus. now maybe that financial surplus position will remain for the next six months, nine months by my suspicion is it will increasingly turn into a little more corporate activity and corporate optimism whether on the capital spending side or the employment side and that is my fourth final point which is i think we're going to get a turn in the global employment picture. desmond use the high level of unemployment in the u.s. and the weekly market as a reason for extending weakness and i would turn that point on its head and say as a the economy picks up what we're going to see here is turning labor market conditions and i think we're already seeing in the high-frequency indicators

and i think it's going to become a global phenomenon. what we're seeing an hiring service we look at is the global employment picture looking better by the time we get to the middle of next frontier. that's not the same thing as saying the unemployment will go way, we're going to be stuck with high unemployment levels and low employment levels for extended time. but the delta on those variables on terms of they're going to a soon-to-be pretty much close to inflection point. >> you've heard two very interesting views on the prospects and i'm curious what your views are on the question of recovery and if so my view is that, of course, the recovery i believe will continue certainly in the course of the 2010.

i am much closer to fill up probably a little more than im2 desmond. and let me point to my four factors. for saying that we have in the advanced economies of lease -- at least a year shape to recovery, not necessarily very sharp be shaped recovery, but quite easily have a percent or so restaurants and consensus which in this country, for example is i think 2.7% or 2.5% depending on what two look for 2010. fifty-four factors overlap to a degree with phil, but i've got the first one is that the push

by the emerging markets i think that we simply have to underscore the fact that a large part of the world and this is a part of the world which is on a very rapid a long-term growth path to not have a massive banking crisis. does not have a financial crisis of the classical type. they suffer its, a large external shock, but by and large their financial sectors remain whole. and if you look and to the three largest emerging economies, china, india and brazil, there are basically somewhere near their long-term growth span. and even in 2010 according to -- even in 2009 there are of those

below the long-term growth path and not much. so the underlying momentum in that part of the world is a very strong, more of it is being driven by domestic demand. of course, almost by definition. less by exports. >> the second factor that overlaps with phil is that i am very impressed by the speed at which the nonfinancial corporate sector has reacted to the year at the united states and there's a lot of evidence that employment has been cut their rapidly and more significantly men in some sense warranted by demand. and this is reflected and so has investments in inventories it's

that iraq and this is reflected much better than expected earnings of nonfinancial corporate, by the way not just in the united states but in europe as well in the course of a 2009. and a strong provincial position. this suggests to me that along with many others i expect a turn in the employment picture. especially given the latest numbers coming from the p.m. i, that suggest that we are still on a strong expansion path. the other two factors that i will point to one which go beyond deferring them souse, are in the order of importance i would say policies remain supportive in 2010.

a large part of the stimulus package is still to be spent supporting to the omb. i think it's only about a third of the stimulus money has been spent in this country. financial support of the banking system remains. i'm actually encouraged by the fact that the largest banks in the united states and europe are repaint the government unless you are convinced that the new boards and the new ceo's of these banks are suicidal. you have to assume that they are looking at their businesses and the fact that they are repaying the government is good news. the third and most important factor in policy is i believe that the power of monetary policy is increasing, his increase very significantly in

the last six months. a year ago you could argue we were in the liquid to the term, lowering policy interest rates didn't matter much because there were so extreme people accumulated cash. all indicators of this conversion have come down big time and so the very historical low policy interest rates are having now a varied important positive impact on economic activity. of -- and we'll do it in the future in 2010. >> and finally, just mentioning briefly because the point is often made, we are coming off a situation where all the expenditures were deferred. we deferred capital expenditures, deferred cars, we deferred houses, we deferred the buildup of inventories. and all you need to is for some improvement in those deferrable

items compared to the large declines that occurred in 2009 for you to see significantly rapid growth in 2010. >> thank you. my next question deals with something that various panelists have already commented on it and that is the difference in performance, recovery performance between the established industrials countries, the older and does russ country and the emerging economies. my question really is, how do we explain that and what is the outlook in the near-term future for these two major groups, the emerging economies and the older established industrialized economies. the rest person to whom i like to put that question is hans timmer. >> thank you very much. the bill said that the recovery

is very synchronize the nature and that, of course, is true. we were talking about global downturn and also global recovery, the fact that it is synchronized has a lot to do with the functioning of the financial markets, but given that fact it's very interesting to see that there are major differences between the emerging economies in the rich economies and that there are major differences within the developing world, within the emerging economies. have a year ago it in the penal year i made two points, one was that the recovery will be relatively muted given the size of the fall in production that we have experienced in the second observation was that the strength will depend on the emerging economies because emerging economies have become of the driver of growth in the world economy. that's especially true for

emerging asia, if you look at their contribution to growth. not the size of the economy is that still only 25 percent of of world economy but their contribution to growth was more than 50% during the boom time for the crisis, but much more important their contribution to growth and investment is significantly larger than the contribution of investment. !a&!u&@ å

>> their production levels are higher than in the crisis. while in the income country, production is still 12.5% below than before the crisis. you see a big difference between the emerging economies that are really leading the recovery, and the high-income country has are more following. but within the emerging economies, there's a major differentuation. the kind of recovery that we are seeing in asia is not there in central europe and eastern europe. despite the fact that, indeed, poland's is relatively -- showing relatively solid performance. but there is still many countries where the recovery is hardly there.

basically what we are seeing there is that the drop in production has stopped, but no clear signs of recovery. the picture in latin america is very diverse. strong recovery in brazil. but there are the following production was also very strong. but in a country that has sound policy, like chile,ty we are not seeing the recovery yet. what we are concerned about is the low-income country. they were not that much impacted in terms of falling in production. they were much more impacted in terms of falling income because of the fall in commodity prices. and our expectations is that the impact of the crisis is much more in the medium-run for those low-income countries. not so much in the short run. in the medium run, because they don't have the fiscal space to

the response to the events. many of the mechanisms in terms of the dynamics of poverty, the dynamics of the fiscal positions in those countries. a really diverse picture. but what is very positive that emerging asia especially is playing the leading role that was forecast also. >> thank you. not just the emerging issue, but several large emerging economies are doing better. my next question is desmond what explains the remarkable issue between the performance in the larger emerging economies in 2009 and the established industrialized economy. what lies ahead in the near-term future? >> right. before i address that i would just like to go back to some points that have been raised earlier. i think something that is being missed the very different nature

of this recession. and one of the features of the this recession is the damage that it's done to the banking system that imf's estimate suggest that we still have very much of the done losses that have to be recognized. we have banking sector certainly in the united states and in europe that is not lending. that they are, in fact, cutting down on credit. so despite what the fed is doing, we've got ore duction in credit to particularly consumers and small enterprises. research done by rocof and ryhart suggest that when you do have major financial crisis of this sort were your recoverying tend to be very shallow and really have risks of having another leg down. another point that i would want to make is just on the employment situation.

certainly, you are not doing to get unemployment continues to rise. but we will have in 2010 is economies like the united states being characterized by unemployment at a rate that is close to 10% or double what economist would regarder as the full employment rate. as long as that exists, you have downward pressure on incomes and that will make it very difficult for a recovery to go. as for the question on the emerging markets, i agree that the fundamentals of a lot of these emerging markets are a lot better than that -- those in the industrialized countries. and i state most notably what you is see is pretty much better public financing in the emerging markets. the deficits are a lot smaller. and the levels are debt of something like half of those in the industrialized countries. where the industrialized are heading towards 100% of gdp, the

emerging markets have close to 50% of gdp. you have seen the emerging markets certainly in asia, latin america, that learned from past crises, that it's better to have their finances in good shape so they weather a recession like that well. emerging markets are benefiting from a couple of factors that i'm not sure will persist in 2010 if my call is correct that you're not going to get much of the global recover re. first is commodity prices have boomed in the way we haven't even isn't the post-war period. many of them are benefiting from that. what they are also benefiting from is risk-taking has come back with the v-shape recovery. if you don't get the recovery and you get risk aversion

returning as i'll expect you'll get, you'll then begin to see problems reemerging in places like erin europe, where the baltic countries, just to mention, one area just looks like it's heading for a full blown crisis. you also get ukraine, hungary, the eastern riff row of europe is likely to be in the trouble. just on the situation in china, china has surprised us by it's rapid growth in 2009. and that was really achieved through massive fiscal stimulus policy, massive easying of monetary policy. the question that i have in whether in 2010 we're not going to see problems emerging in the global economy from the chinese situation. what i'm referring to is much of

the stimulus package went to be building up editional excess capacity which is going to come on screen in 2010. and at a time that europe and the united states are going to be having very high unemployment levels, i'm not sure that that is going to be a very positive development for the world economy. what we're going to see is heightened protection pressures which you have already have right now. and if china is going to be providing additional supply, that's really going to make life rather difficult for the u.s. and europe. >> thank you. my final of this question what is the explanation for the different performance between the large emerging economies especially in asia and the oldest industrialized economies? and what lies ahead? it's jorg. >> let me talk about similarities and then go and

talk about differences and then give you some explanations. now in similarities, if you look at growth rates in advance economies in 2007, they were somewhere around 3%. and in 2009 they were at minus 3% or somewhat more than that. so you have the 6% reversal in growth. you look at the emerging economies, in 2007, they were around 8% and in 20092%. also a 6%. so there's a similarity. we are the advancing emergencying economies are connected. but then again i'd much rather have 2% growth like the emerging economies have that more than minus 3%. this seeds me to the second part. the dissimilarity. this is that fundamentally, the structural growth prospect of the emerging economies are a good deal stronger than those of the advance economies. in fact, if you look at what happened to the emerging economies during this global

downturn, they did a good deal better than that they did during previous global downturns. why is that the case? what's going on here? many of the emerging economies are tapping production potential that has just remained bottled up for many years beforehand. they are tapping it via market friendly reforms. the second is they have learned from past mistakes. and therefore typically had a very conservative approach to regulation of the financial sectors. therefore, the financial sectors have held up quite well. the third aspect that in terms of micropolicies they've had an approach. they went into the downturn with broadly-balanced budgets. they had penalty of ammunition. which they didn't have during previous down turn. so you put all of the things together. they make for a performance that is fund many tally stronger than of an advance economies. this is also a many ways the way

it should be. in economics, typically what you say, what you observe is if you observe history over long periods. and poorer economies relatively poorer economies grow faster than relatively rich economies. for as long as they put the right conditions in place. this is very much what has happened over the past decade. that said, there's also a good deal of originality among the emerging economies. you'll got -- sorry, asia in the lead then latin america, then the picture becomes more mixed in the eastern european and commonwealth of the independent states. even these are fairly success such as poland has phil had mentioned. you can't trust with we are in the advance economies, as desmond pointed out, we are looking at very high or rising unemployment rates through much of this year. this will weigh heavily on

growth. this will be of the recovery that for these economies that is a good deal slower than the recovers that we've observed such as the mid 70s and a early '90s. so what is the repercussion of this difference in the outlooks between the advance and emerging economies? you see capital increasingly again knocking on the doors of emerging economies. looking for investment opportunities, because, well the growth on it is stronger, the yields are higher, and in many ways, the micropolicy has been good. >> thank you. third question i would like to panelist to address even though you may have already hinted at it, or spoken about it explicitly is what really the major risk that you see. what confidence do you have in

your own expectations? the first person is uri dadush. >> okay. pieter, thank you. first of all, there are downside risk to this forecast. there are also to the consensus, let's take the consensus as efforts. there are both upside risk and downside risk. i wanted to stress that. to start with. it isn't just about downside risk. the second point i want to make is that the gamet of possible outcomes is in my view a lot narrower than it was six to nine months ago. essentially because the likelihood of, you know, relapsing to major recession and

depression is much lower than it was six to nine months ago. the upside risks first. then the downside risks. the upside risks really relate to what phil said about synchronized recovery. and we have a long history of forecasting of examination of forecasting track records. that's suggest that there's a lot of inertia in economic forecasting. so that we miss turning points, so that when things are going up, we tend to underestimate the speed at which they go up, when things are going down, as they did until recently, we tend to underestimate the speed at which they go down. and we are in a clearly in a

turning point kind of situation. and it is a synchronized recovery around the world. which carries, therefore, the upside risk of the strong effects. the implications of this is that you want to worry about the inflationary pressures building up. you want to worry about the asset bubbles building up. again, this is a very, very country by country type of situation. it's very difficult to generalize on those. but i did want to underscore the upside risk. downside risks to the forecast are primarily coming from economic policy. and here i would highlight two aspects. one is the withdraw of stimulus

and how that is going to happen. and where the private sector will be strong enough to support the economy going forward. the other is protectionism. just very briefly on the withdraw of stimulus i think the risk is coming from the fiscal sidereal tvly modest. first of all, the effect in the advance countries hasn't been that large. and second, this is a very sticky policy lever. it's not going to turn in a dime. i also think that the way the withdraw of financial rescue is happening is minimizing risk in the sense that it is responding to market situations. it is allowing the banks to come forward. and say, look, we don't need all of the help.

and i think that that's right way to do it. i think that the risk there are relatively limited. where the risk are much more significant is in the expected and inevitable increase and withdraw of stimulus. again were here history teaches that when you are in that situation, it inevitably, you are going to uncover weaknesses. we are in position where the world economy continues to be fragile. and so those weaknesses where it's dubai or whatever, are out there. and they will be uncovered as policy interest rates rise. so the way that it is done, i think, is very, very good.

that's the downside risk. a word about protectionism. so far we've kept it under control. i am becoming more and more worried about the china, u.s. relationship that fit and tat, most recently steel and tires and the chinese have don -- done their share as well. here that situation, i think, bares careful watching. i could say a lot more about that, but i'll stop there. >> thank you, uri. the next panelist that will address the question is phillip suttle of the institute of international finance. phillip, in your earlier comments you've tended to emphasizes more hopeful, more optimistics aspects of the situation, what do you see as the risk? >> well, for one issue, i think it's important to get one's mind

around is the issue of timing of all of this. one thing i think is in the near term, there are more more upside than downside even for the consensus. a lot of that is things that uri and myself have been talking about whether it's synchronizization or policy cycles. i think it's easier to see downside risk. if i can focus my risk discussions on those sort of medium-term vulnerabilities.

by the way, i'd like to say hi to poland, who we seem to be pandered to. the first is oil. if you think about what gives you a global recession, oil is five or five. including frankly 2008/2009. it so happens that oil and lehman came together. if we've seen oil prices move back above $80 or if they go to $100 or above. if it does happen, that would be something, i think would add significant near-term, medium-term downside risk. second, the fiscal issue. which we can talk about all day. don't worry, we won't. i think the issue that i haven't heard anyone latch on to is the

sort of unknowledgeable we should all, you know, with respect to people like desmond who call the '08 crisis very well. we should all be prepared to imagine the unimaginable. what i'm talking about here is not turn oil in the greek market or even the spanish debt market. but turmoil in the u.s. treasury market. because u.s. debt issue is perceived to become so is high that is raises concerns. one important thing to keep your eye on there is what the rating agencies do and say. at the moment, they seem to be sticking their head down and trying to avoid attention. at some point, they are going to have to recognize that many of the dynamics, not in the small or in the major cdc countries are not sustainable with triple a debt rising. there's the vary on the whole tension in the euro zone. i think my concerns about tensions in the euro enthrones

are just about budget deficits. it's about the tough ride that we have in that region, in a period where we basically are trying to implement or maintain a fixed exchange rate system in a tough period. we fix exchain rate systems as we know are dead easy to maintain in bullish credit environments. take the first seven or eight years of convertibility in argentina. when the credit environment becomes tough and unemployment rates go up in different between region within the monetary zone, that's when your rough right comes. that's very much the challenge that europe faces, not just for the next few courses or the next couple of years, but i think for the next four or five years. and then the final issue which you might expect me to rise given that i'm working for an organization sponsored by the banks, issue is the issue of the banking sector. desmond raised that point earlier in the context of the damage done to the banks.

but the thing that worries me more actually is that the fix is being proposed to kind of stop another crisis. well, while in many ways legitimate, if they are imposed too early, and that's quite plausible, given the political imperative to do something. if they are imposed too early, it would act as severe constrain on the ability of the system to finance recovery. if we get aggressive actions taken to curtail bank activity, that will come at a significant cost to the economy in the near term. >> thank you, phillip. my last panel question is this, desmond, desmond i'm going to slightly rephrase the question. since most of your comments have emphasized the risk already, are there any upsides that you can tell? [laughter] >> there are two upsides that i can think of.

one of which, you know, i think is possible is that you get a sharp decline in commodity prices, especially oil, you know, that could really be helpful. that would be equivalent to a tax cut for the industrialized countries. that that could be helpful. the other upside risk that i can think of is that policymakers miraculously get their act together and engage in proper coordinated policy response. i think that's talk of early withdraw from some of the stimulus package. that has the downside risk. the upside risk i would see is if he really started talking about a second stimulus package in the united states that was coupled, and i stress this point, that was coupled with an indication of how we are going to deal with the united states medium-term budget problems, you

know, that we have to seat the largest peacetime build up in the united states public debt. how are we going to address that? i think that is critical. when i was talking about an l-shaped recovery, i wasn't really focusing on the downside risk that i see. i would say the four downside risk, some of them have been mentioned. that i think have got a very good chance. all too good of a chance of materializing in the 2010. it's that the middle of 20 so for me is the short term. i don't know if they seem to think that's long term. the long term is beyond 2010. but the four risk that i would indicate. the one that -- and i put them in the order in which i really think i worry about them. the first is the situation in

europe. you know, phil correctly mentioned parallels with the argentina plan. without having exchange rate or independent monetary policy to deal with it. that is a risk. i think that train wreck waiting to happen. the noise that is we are getting about grease really should be a a canary in coal mine is the key one that i'm worried about. and portgal. the second is oil. i would just note in passing, i don't want to get into politics. the united states is fighting two major wars in the id the east and iran is on its way to nuclear weapons. you know, so is who knows what

could happen in the middle east. you could get a supply disruption, that that -- i toll tally agree with phil, that would be the bad thing for the economy. the third risk that i see which is very real and which i notice the federal reserve officials keep talking about, is what's happening in the commercial real estate market, you know, that you've got $500 billion of commercial real estate loans coming due in 2010. if those loans don't roll as many of them won't, we're going to get another look down at commercial real estate market. that's going to have real damaging effect on the regional banks of the united states, regional banks, half of their portfolio is in commercial real estate. so the last thing we need is to get a credit crunch in the regional banks which are the supplies of credit to the small and medium-enterprises which in

term provide most of the growth in the employment. so that is a real risk. the fourth risk, you know, to witch uri has eluded is the idea of protectionism. 2010 is a election year. china somehow persists in fixing this exchange rate now to depressuating dollar. and it has protection ramping up. if we've learned anything from the great depression, that is not very healthy for the prospects getting out of the mess that we are currently in. >> thank you, desmond. we're running slightly over time. i'm going to ask the three respondents to my last question to discipline yourself. imagine yourself in the meeting where you have a chance to

address the g-20 for three minutes. the question is what should be done other than perhaps what is already being done to promote the recover chances in the world and in the major economies. if you wish to select any particular country or group of countries for your recommendations, you're free to do so. my first -- the first panelist will address that question is jorg. >> the first is to get private sources. the second is shift in demand from countries that have had large increases in housing booms and have very relied on domestic demand. two country that is have relied

on experts in order to stimulate the growth. we need to shift there from say demand in the united states to more demand in emerging and other economies. and the third challenge is that we need to repair the financial systems in many advance economies. and at same time, also effect changes on the supply aid of these -- supply side of these economies. obviously real estate and natural resources will be less drivers. the resources freed from the sectors will need to be em employed elsewhere. now given where we are right now, what would we recommend that policymakers do? well, first fiscal policy in our view needs to stay accommodative. because at this stage, private demand is not just strong enough to carry this recovery forward. and there are, however, some have eluded there are risk

building up in fact in-debt markets. they are watching. what does this mean for the strategy that governments should adopt for the fiscal poll p si? well, it means we need to stay supportive now. but at the same time address medium and longer run challenges. how can this be done? i give you a good example. if in the advance economies you were suddenly to link retire -- statutory retirement ages to life. it exists in some, but not all. if you were to do this. many economies would do a whole lot in terms of redressing future fiscal imbalances. of reducing accident pendtures in the future. therefore, it would give markets a reassurance that the expansion that we see right now in fiscal policy is going to be contained. that the debt that we are building up right now is going to be rolled back.

but at the same time, the type of measure would not depress demand today. so it would still help government support the private sector. but there are other examples of such policies. the bottom line is we need to deal with the medium and long-run challenges. second, again in advance economies, unemployment is going to be either high or rising in 2010. so the scope for staying accommodative is which what banks are doing right now. the third challenge is to deal with the financial sector. it's good news what wangs are paying back what governments have lent to them. you know, what we are reason concerned about to rebuild the capital and restart lending. these are the two thing that is we need to monitor. now, progress is being made in that respect. but at this stage, there's still more to be done for the banking sector to be a strong supporter of growth in the future. if more is not done, one can see

the economy running into a bottle neck as credit command picking up again. these are the challenges that policymakers face. then there's the other aspect. we need to shift demand. u.s. are rising while consumption is being cut back. to other countries where savings have been high, they need to be brought down. that concerns a number of emerging economies and what we are looking for there is measures to basically boost consumption, coming through, for example, reforms to social safety nets. but there is a whole range of other such as developing nontradable sectors. so it's a complex agenda. progress is being made. and to the g-20 in that regard is, you know, a major good news for the global -- for those very much supportive of coordinating global policies. >> thank you.

next hans timmer of the world bank. you have the audience, g-20 for three minutes. >> thank you very much. i think the biggest challenge for policymakers, including those of the g-20 is to transition from short-term fire fighting as if there's no tomorrow to medium and long-term growth strategies. that doesn't mean that fire fighting is not important. because you can prevent having your house burn down. it doesn't also mean that prematurely you should stop extinguishing the fire. but with the turn around of the economy at the moment, the fact of the acute phase of the crisis is over, we really have to focus through the medium term. with fire fighting, you are not

developing new terms. there are three reasons why i think the transition is so important. the first one is that there are serious limits to short-term stimulus programs. uri said earlier that it is positive that there is still some stimulus, fiscal stimulus in the pipeline. in the united states we have only spend 1/3 of the total amount allocated. so this year we could spend another 1/3. it should be clear that by spending the same amount as last year, you are not generating growth. you are just preventing that there is no negative impact now of the straw of the stimulus. and we have seen during the 1990s in japan that just with fiscal stimulus, you are not recreating growth in any economy. it's only very short term that that kind of a policy is effective.

and the same is true for very lose monetary policy. it has been very effective. already know we are very worried about the dollar carry trade and the surprise inflation that might come in several countries. so you have to quickly find other sources of growth. so that is the first reason. there are limits to the kind of policies that have been put in place until now. the second reason is that it is very important to restore confidence in the global economy. you restore confidence not by continuing to spend as if there's no tomorrow. but by being very credible in the medium run. by putting on the table fiscal policies that are really sustainable. by making sure that you can get for the infrastructure projects that are needed. a third reason, i think that's

the most important one is that this is a kind of a crisis that has the potential to create lasting structural changes. this is not a normal crisis. whether you have to look for a turning point which is very difficult to miss at the moment. and then everything is okay again. this is the kind of a crisis that will change the global economic lynch probably forever that is true in financial markets. it's true also for the -- for the production patterns. this is a kind of crisis where the whole industries and countries can disappear and sudden lilos it against industries in emerging economies. and that means that as policymakers you have to accommodate those structural changes. you have to open the way to create new growth. now in that respect, i'm very worried that policymakers cannot get a consensus, for example, effective climate change

policies. because those are actually the kind of policies that are needed to create much more stable and predictable environment. and there's no decisive action there. and if there would be predictable and decisive action, then you could create in high-income countries new growth anies. the so-called green industries. then you could create new opportunities in the sense that there is a new way of securing of creating energy security. it is not just about a climate change. it is also about the global policymakers being able to guide alonger term road forward. >> thank you, hans. phillip suttle, you have the last word. what are your recommendations to make this recovery more sustainable and more p robust. >> okay. well, obviously, the easiest

thing to say is i agree with northeast of what's been said. most of the good points have been made. i think it is fair to say that while we need to maintain stimlative policies both monetary and fiscal for the very near term, there are clear implications and cost that we've been talking about for keeping on pushing. and i think the whole state of easying strategy, which both the fed and bank of england in particular have adopted is frankly a little bit of an experiment. we need to be a little cautious as we look out over the next year or so about how that strategy is implemented. now i think there are some considerable financial risk associated with both -- with what both central banks have been doing. i think to kind of cry and summarize a lot of what's been said, i think there are three sorts of sets of principals if you like, i'd lay out to the

g-20 ministers here. in the first, you know, many ways they are all very obviously points. the first is make sure policy is forward looking. don't try to fight the battles of the past too much. you know, i often feel that when i hear policymakers make a statement about what needs to be done, it's sort of -- it's what they really wish they had done in 2004/2005/2006. well, that's too late. you didn't do it. you messed up. let's move on. [laughter] >> let's think about what can be done from forward-looking perspective from the situation as given. the second issue is i think recognized consistency. and try consistency. that's really another way of saying policy coordination. i think there were two consistency concerns i have to give you illustrations. what is the obviously one of china running one monetary

policy, the u.s. running another monetary, and trying to maintain a fixed exchange rate between the two. you can't have that. you need to have some give and take. and obviously in that context, you need counties currency flexibility. and that's an illustration. it's not my main point, but it's not illustration at the moment i think the g-20 policy statements are pull of loaded with consistency issues. and another illustration actually picks up on the point you just made. he said the banks need to rebuild capital. but they must lend. well, actually what really has to happen in the banking system according to the some of the new rules is capital ratios will be going up. frankly, probably the most likely way of that happening is for banks to restrain asset growth. you either want one or the other. it's very hard to get them both. don't sort of aim for an inconsistent outcome. aim for inconsistency.

my third point, which in a sense picked up on the hans is one of hans' points. one need to recognize to the world is tremendous flux here. and that there is a real need here for supply side flexibility. you know, that means giving up certain things as well as gaining certain things. i think hans' point about green jobs and the shift in technology related to the climate change issue is perfect illustration of that. >> thank you, phillip. i'd like to thank all of the panelist for their contributions to the five crucial questions. we have about 40 minutes left for a discussion. and i'd like to open it up to questions from the audience. i'd like to invite you to state your name and affiliation, wait for the microphone to arrive, and state your question very

concisely. and if possible, identify the panelist to whom the question is addressed, otherwise, i will do that for you. [laughter] >> wait for the microphone. >> so first of all, thank you very much to the moderator and panelist. this has been a rich discussion. i can't resist following up on protectionism. i would wondering if you could elaborate and you could say more about it, but weren't doing more. i'm going to give you an opportunity to address that issue. >> uri? >> yeah, i -- protectionism has been kept at relatively understand control. virtually all of the g-20 countries have engaged in protectionism measures of various types.

in the united states, you know, to buy america provisions the entire case now the steel pipes, there have been a couple of other issues. if you go across the g-20, you will find just a number of these in just about every one of the g-20 countries. this remains a contained phenomenon. there's been very little of sort of i -- sort of across the board on specific products et cetera. part of this is discipline. the wto discipline buy much more on the industrial countries than they do on the developing countries. the developing countries have a

lot more water. they should grace tariffs and still say. wto compliant. wto discipline are also out there. because of the possible threat of dispute settlement. but i think in the end, the control of protectionism isn't so much about, you know, the actual discipline that are out there. which can be caught in the round in various ways. it is about two things. it's about the memory of what happened before, and it's about the political pressure that exist. i happen to believe, and i wrote about nine months ago on this issue that if we had not managed to control the global recession and the possibility of the depression that occurred, that

the protectionist pressures would have been become very, very great. and in some cases, perhaps, overwhelming. so this is one important factor. so if you believe desmond's outlook, then be very concerned about protectionism. because it is very contingent, in my view, on the state of the economy. let me say one more thing. while i agree that we need exchange rates flexibility in china, and we need some exchange rate appreciation in the asian countries in general and that this will make it a lot easier to manage the growing gap that exists between the potential of growth in the industrial and developing countries. i think that to make this sort

of sental question at the moment has a number of risking. one of them is exactly to animate. to add to the protectionist rhetoric and so on. and the other is essentially to take the heat off of the heal questions which underlie these global imbalances which is more to do with the fiscal policies in the united states, household saving rates in the united states. and distortions within china which artificially inflate the savings rate in china than it has to do with the -- you know, the international exchange. the international exchange is essentially a way that these economies are adapting to these pressures and distortions. which really have to do with domestic policyies.

>> since the issue of protectionism is so important and treacherous, i'd like to ask if other panelist have any comments on that question? >> can i take a point in which is sort of varies on it. which i think is the most concerning aspect of protectionism in the moment on the financial sector. it's been promoted by many who were saying one way to make our system safer is to fence it. that you see especially in europe. and in a way very understandable. because of the some of the traumas that some of the smaller countries experience in europe with cross border banking difficulties. i think if we go down that root and ring fence wanging systems and impose essentially protectionism and financial services then it carries with it some pretty negative implications. the least of which it's fair to say that a lot of growth in

emerging markets in recent years have some from the opening up the financial systems and the introduction of best practices. maybe that's not the right phase. but certainly. >> i'd like to move to the next question. my name is james bond, i work at media part of the world bank group. we spent the last year heavily involved in the financial crisis. by question is to phil bullet, i want to ask him about what will happen to the pigs in europe. what will some of the science fiction from phillip suttle in terms of what it would look like if the tensions in the zone become accessive and unmanageable and it falls apart. >> good question. i'm sure desmond will have to

comment on this as well. i worry that precisely because those links are so tight. fair to say, argentina going off conservetivity which is tougher nut to contract. i think what it leads to is the conclusion that you report of -- you report of use the acronym of the country that you mention. they have to tough it out. and you're looking at multi-year awe terrify. you could say we've had multi-year austerity in key parts before. islands being an example itself in achieving a massive reduction over a number of years. somehow the country survived and

flourishing out of it. then you have the ability to converge interest rates. they started off high and converged on german levels. you also had an opening up of the economy to the massive influence. neither of those two are setting financial support that seem to be there. it looks to me like this group of country is in for austerity on the fiscal side, not just for a year or two but for an extended period. desmond, maybe you have these on the unwind issue? >> i was trying to strike an optimistic note. [laughter] >> in the seminar, i was told that question was raised. because i don't think it's a question of if it's going to happen, or when it's going to happen. basically, the stakes are incredibly high. if any of them were to be forced out of the euro and have been to

be boring in the own currency, that would mean instant default. what we're talking about is not a small country like dubai or iceland or something of that sort. we're talking about serious countries. we're talking about something like spain. which is very large and you talk about the huge amount of debt. so what it would do is it would sink the whole of the european banking system. it would be real armageddon. this is the reason that the ecp is going to fight it and hold its nose despite the fact that we're talking about solvency issues. we're talking about unsustainability issues. the prospect of having this kind of cat schism occurring within europe is going to cause them to continue to pump money until they get tired. the reason that i'm very pessimistic about this is the size of the imbalances that are involved.

and most importantly, the amount of international competitiveness that these countries have lost. so, you know, if you are looking at countries like island were portugal, they've lost the competitiveness against germany. they have the regain the competitiveness against the country that doesn't believe in inflation. so what it means is that you have to get prices and waging falling by 30%. which is then going to complicate the fiscal problem. unfortunately, when you get to my stage of the -- the stage that i'm at many my career, you've been to this movie is number of times. the last rendition was at the argentina plan which everybody said it wouldn't fall apart. when it did, i just don't see how the -- it's just the

inconsistencies are just so great. that if you try to go with the austerity route, you try to tighten your budget, you drive your economy down. if you drive your economy down, you lose your tax base. so you don't gain much. i think this is a fool's errand. it should play out the ecb will keep kicking it forward until they realize it's not just grease, but it's grease the whole bunch of them. four or five countries which involves a huge amount of money. it's going to be a huge transfer from the north of europe to the south of europe. and this is going to have a political dynamic of its own. i can't imagine that spaniards are going to tolerate unemployment at 20% and rising forever. they are going to be asking there's got to be a better way than this. and that's basically what occurred in argentina. >> i'd like to suggest maybe what the schedule on something like this in the future on

euro. you can invite desmond again. next question from the audience. this gentleman here in the front. >> barry wood, rjhd in hong kong. i'd like to ask hans to expanned morally the bricks on the power markets. why do you really think that's happening? i mean it's in the just debt in the united states is it? how -- i'm not persuaded that domestic demand is going to ride in china and brazil and thus sustain it. and if the united states is going to grow at a low level, aren't we going to see madty prices decline from these current levels? -- commodity prices decline from these current levels? >> you want to go first, hans?

>> why is it happening? let me first say why it is not happening. many people think that this was happening because of export growth. because either through manipulation of currency or through other impulses to stimulate the manufacturing sector in china, for example, these emerging economies were basically boring growth by exporting at the rate out. that's complete misread of the data in my opinion. and i would say that the line of thinking is actually another danger against the trading system as we know it. we talk about protectionism, often we talk about limiting the

imports. but there's a lot of discussion now about rethinking export growth. which also could be a threat against the trading system. again, it's a misread of the data. the developing countries, including china. but it was happening in many, many more countries. we're growing two and a half times, almost three times as fast as the high income countries over the last ten years before the crisis. and they accelerated their growth. while nothing was happening in the high-income country. growth was not accelerating and important demand. that was basically happening because of internal reforms which unleased a productivity potential that they had not used yet. and through enormous increase in productivity, and with that an increase in the supply of

products,ing they were gaining market share and incoming trade. not only their export but also the imports. i think earlier on, if you look at china all of the discussion about the exchange manipulation, the imports are growing much faster at the moment, and much faster than their experts. so this was happening because of reforms in their economies which enables them to catch up in productivity level to what was already achieved in the other countries. a world of financial y

and china was an exception but it was particularly in latin america. and i think part of this world turned upside down story is we've seen it dramatic version

of that financial instability and so a big part of the emerging markets' around

having to engage in expenditure cuts, revenue increases to put the public finances on a better footing otherwise what we're doing isn't just -- just inviting major prices down the rough. >> do you have a supplementary comments on this critical question? controversial? >> no, i think these are very good comments. i don't have much. >> next question from the audience. the lady. >> i'm jean hanson from tv

china, i have a question. i remember that you said china needs to improve international influence in the world. i want to know how, do you have some specificity as suggestions for the chinese policy makers? they give us. >> well, of my observation is a longstanding one that comes from many years spent in frustration in trying to do not fit to work on negotiations along. one and noticing two things, one, that china is pretty much destines -- destined to be the world's largest nation it is not

already, it's going to be within the next several years. and is in a sense the free trade power it relates to this concept. the united kingdom, britain, was the free trade power in much of the 19th century. the united states, it was the free trade power in a good part during second half of the twentieth century. and free trade power is basically the world's largest trader but it also is a competitive trader. it is a trader that is confidence and my point about china is that they could be doing more, could have done more to promote the negotiations and two recognize that no country

has a greater interest than china in free trading system. and that's where that particular point, but i think the point increasingly can be generalized. in so many areas. in climate change. china is now the biggest emitter of carbon dioxide in the greenhouseç gases. therefore, moving toward on the climate change negotiations will not happen unless china together with the united states, of course, which is the second-largest a major come to some sort of an agreement especially since these two

countries are the opposite to in some sense at the opposite side of the spectrum developed and developing. so it's really at the point about china recognizing, on the one hand, its growing influence and i think this is obviously happening but, on the other hand, recognizing that they have a very important stake in the system and that unless the conditions are created where rapid growth in the world is not impeded by whether it is environmental degradation or the absence of adequate rules in trade and finance, that china needs to play an important role. and that is why the currency

issue even though i am on record saying that in appreciation of the r and d will do absolutely nothing to correct the current account of the united states, because it is a completely marginal issue. the main issue in the united states is domestic policy. even though that is the case, it is important that china move in the direction of greater change and flexibility. over china itself and in part to defuse the protectionist pressures that are becoming more and more important but it's very important and it will help china to move in that direction. >> if i may add because i'm focused on the china questions almost full time, even though i'm the moderator, and i completely agree with his

responses but i still like to add one and two other comments. many of the senior leaders in china i think are still used to the idea that china has become a major factor in the world of. in every -- mentioned. is almost certainly already the second largest economy in whatever way you measure it to. it's probably the largest trader in, the largest co2 a mentor and so on and so on. and yet in the mindset of many of the senior people china is still struggling developing country which has to fend for itself. china now has 2i think i got a mindset where is for itself the role of a major player in all dimensions of the world economy. with regard to specificsee me play and kids from my foundation. it's going to be cool. >> tonight's opponent, the philadelphia sixers coming off a west coast trip where hay won

three of five. eddy jordan asked about his former team and he said i have no comment. >> there's a report that states many of the wizards players can requested a trade. >> i can tell you that's definitely the case. several of the wizards players are frustrated with the see wil the story as it develops. that's chris miller in philadelphia. >> we will bring you tonight's game between the wizards and sixers coming up right after geico sportsnite. after the game make sure you stick around for wizards postgame live. we are minutes away from the caps and cavs. alex ovechkin the new captain.

lisa hillary talked with alex ovechkin next. clint hasn't been one to keep his thoughts to himself. you will not believe what he had to say about his team or teammates. jim zorn live presented by: if anncr vo: with the new geico glovebox app... anncr vo: ...you can get help with a flat tire... anncr vo: ...find a nearby tow truck or gas station... anncr vo: ...call emergency services... anncr vo: ...collect accident information. anncr vo: or just watch some fun videos. anncr vo: it's so easy, a caveman can do it. caveman: unbelievable... caveman: where's my coat? it was suede with the fringe. vo: download the glovebox app free at geico.com.

welcome back to geico sportsnite. and the ravens are getting ready to go new england for the playoff game. but the big ravens logo is beinged painted outside stall in baltimore and they are painting the town purple in charm city all fired up for the

nhl playoffs, first amendment rightst first we talked about the redskins and the head coach and gilbert arenas and to keep in the depressing theme, let's talk about the capitals and the three game losing streak. the capitals at the vermont center. whatever negative talk the exciting news is about alex ovechkin. >> thank you. you had me worried. let's bring good news to the folks of the district. it's alex ovechkin named today as the 14th capital captain of the washington capitals. our analyst joining me now. >> in a way it is. i expect the best player to be the captain. i think they did the right thing. >> reporter: there were other names like brooks and knuble. >> without a doubt he's the

best player every night and i think it's a no-brainer. >> reporter: can he lead this team inside the locker room? is he a vocal leader? >> from everything i'm told he's the vocal leader. he's the guy they follow and he's the guy that stance stands up and he will always stand up and be counted. a greatert great leader with rob. he did his leading on the ice. >> reporter: i was told alex wanted to be the leader but it was important, heaved i want to be the captain but only if my teammate want me to. >> he wants his teammates to respect him and he wants to be the leader. he's a leader every night on the ice and there's absolutely no doubt he should be the go-to- guy. >> semyon varlamov out for for

an injury. ninety fourith to make a start. jose theodore is disappointed he doesn't get to play not to mention one of his former teams. >> neurith has been playing well. someone has to get a win. that's the most important thing. >> reporter: we will enjoy your postgame comments as always. >> thank you. >> there's one lineup change. tomas fleischmann will play center and likely on a line. i understand they asked him to play the role of center? if we put a c. would it stand for captain or canadien. >> canadien. >> i thought you meant piuma.

that's another discussion. >> you get me every time. >> don't call me that other c. word [ laughter ] >> what are they drinking up in canada. to find the csn plus channel go to csnwashington.com and enter the key word plus. coming up on geico sportsnite, d.c. united, by the way, she meant cougar. we'll introduce you to the new head coach in the black and red. who's hot and who's cold is presented by cropp metcalfe.

and what did she say? she said whatever.

welcome back. the season is over and a new head coach is on the way. it's the perfect time for the redskins to tell us how they really feel and no one seems to do that more than clinton portis. today he spoke his mind on the radio and that included criticism of his quarterback. >> as a leader i never heard was jason couldn't take it or he didn't do that and that. that wasn't jason's character. you can't know somebody who's not their character. you can't play so much on somebody who's not ready for that situation. i think jason had snuff trouble in getting the plays compared to controlling the huddle and making sure we do this and we do that. but you going and jason

campbell he ain't going to tell the coach we need do this and that. d.c. united introduced their head coach. he takes the reins. the black and red failed to reach the post-season in the last two years and it's unacceptable with this club. >> i understand the expectations. i put enormous pressure on myself. whatever is going to be thrown on my shoulders i have no problem. i've been through a lot in my life. at the end of the day i coach and there's not a better job to have. coming up we'll resap our top stories. they try to lock up mike shanahan.

welcome home, man.

you're watching comcast sportsnet. you're watching the official sports network of the wizards, comcast sportsnet. welcome back. here's a look at tonight's lineup. basketball fans we have the wizards and sixers. we have the candgen caps on csn plus. stick around for postgame and geico sportsnite. big story continues to be mike shanahan. he's in town and so is his agent. we haven't forgotten about the man she to succeed. chick hernandez tracked down jim zorn for an interview today. >> with less than two years you

were hired. was it a blur? >> yes. it wasn't long at all. in fact i still, you know, i would still want to be the head football coach of the washington redskins. >> extended version of that interview at 10:00 on geico sportsnite. the entire interview on csnwashington.com. the maryland sophomore forward going back to south korea. he's going to basketball in south career -- good choice. forget about those studies. >> that's it for us on geico sportsnite. it's russ thaler and michael jenkins. coming up next, we have a choice for you. on the main channel, you get the wizards and allen iverson and the sixers. >> tip-off next and for comcast

sportsnet plus, caps and canadiens. he has the jersey but never one with a c. on it. alex ovechkin has his new sweater. next. is the glass is half full. verizon center is packed to the rasters nightly providing them a fierce home advantage. a lengthy division lead comes from hard work and repeatedly unfriendliness to neighbors. several players made their narc. while the duo of backstrom and ovechkin connects quickly as a sight to see leaping into the

homestretch on comcast sportsnet. ♪[ music ] it's nice to be home and so unusual. comcast sportsnet presents the nhl. tonight red, white, and blue reigns as the canadiens cross the border. i'm joe jacoby and craig laughlin and laughlin on board. there seems to be a season to drag on in an eternity u. but that's to the the first half. >> only 11 regulation losses, six by only one goal. the caps have the most potent offensive 3.5 goals per game.

10 players, 7 players with 10 plus goals. they score from front and back. a healthy 12 point lead. their only loss to the hands of carolina hurricanes. the fans love this team and you can't get tickets here at verizon center. when you put the whole team under the microscope you appreciate the individual achievements of three plays are. >> number 8, alex ovechkin even with eight games missed is the points per glame goals per game leader in the nhl. he's one goal behind marlon for the trophy. mike green is in double dig hits in goals. he's rushing the puck and crushing. when the game is on the line he has delivered. nicklas backstrom scoring on pace for career highs all

around. when he's got the puck, the caps are a threat in every zone on the ice. >> most people would be inclined to think those three would perform brilliantly. al koken sheds light. >> surprises in the first half for the washington capitals. it begins with semyon varlamov. the record is unbelievable for this rookie. 12, 1, 2. you add a goals against average percentage of 922 and the varlamov has been a true surprise. tomas fleischmann, he's tied for third with 14. 24 points overall and 30 games in played and also just 25 years old. you have more young talent on the way with the established young stars on this team which means the second half and beyond should be good.

more on the open is joe beninati and craig laughlin. >> before we set foot bravely is the in the second half what have you cooked up. >> we look at the guys behind the mask. long range bouncing puck. semon in a shootout. not once but twice, robbery between the pipes. best work against pareasy and the devils. ovie the open ice. john erskine cleaning out guys. now the best goal. five way passing play. the best of the season. s.w.e.e. t.. it doesn't get better than

this. nice we got to watch this baby twice. and then morrison. what a play. top shelf shot against miller and the buffalo sabres. >> of course after all this discussion you realize you're only halfway home. three full months of the regular season loom before the cup chase begins. let's line up with montreal next on csn.

oh! blue! time! time out. i touched it. i touched the ball before it went out, coach. come on, alex, the ref did not call that! you gotta be kidding me, alex! it's the championship game! talk to him, coach. i touched, it's their ball. don't foul them when they inbound. team on 'three.' one, two, three. nice going, alex. sorry coach. alex! good call.

>> let's do this in dcment it's the washington capitals and the canadiens. this opening draw by papa john's. the new captain is out there manning his left wing position along with nicklas backstrom and tonight mike knuble and alex ovechkin wears the c on the sweater. linesman cova chick and murray. the two eastern rivals and montreal playing especially well on the road. >> craig: they finished a seven game road trip. this is a team playing well. >> joe: 22 seconds in and the puck leaves the rink. good to see nicklas backstrom back. >> craig: he got hit hard in the boards in los angeles and

left the game after 8 minutes. he said playing with a migraine is twice as hard as a regular headache. you can't see and you're blurry and your body gets numb and it's a bad bad feeling. >> joe: at the top of the screen, bruce boudreau has done shuffling to try and shuffle his team. >> craig: the one guy to watch in the lines is tomas fleischmann who's playing center regularly tonight. they are looking for the speed and passing able of tomas see their i say kiddingly your experiment is in order. it rolls right to carey price. >> craig: for the visitors canadiens they go to price. 10, 14, 3. recently he doesn't allow a lot of goals. make it one just about per game. michal neuvirth gets the nod. he's had goods outings for the

caps. >> joe: he suffered one loss to montreal. came here back in november. cammalleri the leader for the canadiens. these usually play one game performances. knocked down in front. semin is there. and it's battled away but not cleared. schultz in tight quarters along the board. below the goal line. a rely and a snare. >> craig: carey price to the right way in the corner getting to the right to get it. that rush to the net by alexander semin. >> new year to brooks laich. one bump for brendan morrison.

erskine is blocked. >> craig: with fleischmann moving to the center, that means brooks laich goes back to his more comfortable position. >> new year good hustle washing off the icing by the defender, marc-andre bergeron. he can really shoot it. open ice hit. we hear a whistle and we need to go back to washington's first good scoring opportunity. >> craig: there's the long range shot. doesn't pick it cleanly enough. that allowed carey price to get back in position. semin felt he couldn't put that in the small area he had to shoot against price who has been quick of late especially post to post. >> joe: boyd gordon and sloan not given a sweater tonight.

andrei out. ryan o'bryne did not make the trip. 20 players to play tonight. >> craig: neurith to the post. that goes arye. first time the capitals have seen. >> craig: the canadiens are a lot different team. brian a going concern. passed across the head of you don't want that to happen in the 1st period. >> joe: montreal wins the draw. paul mara's stick breaks in

half. a stop and start move away from green. gill will reload it. up to tomas. whistle here offsides against montreal. we have time for the keys to the game. >> craig: you take a look at the teams. the visitors need extra man mayhem. they were 11 of 22 on the recent road trip. they have to have that type of play. they have to regrain their identity. they are a fast, hardworking team that gets in with speed and they have to fine tune their stick. the last five games, 5, 4, 3, 2, 1 goals. they need to amp up the

offense. >> new year working >> joe: working with tom poti. bradley getting support from quintin laing. four players. they join the fray. david steckel to the point. on the way. he'll swingist that was a nice pick up by price. that was a high out deflection. caps with a good opportunity. joe moving the puck down low. notice the d man doing a great job of getting the buck through. there's the deflection. that's a beauty. nice job, matt bradley. >> joe: the caps are going to

improve upon your scoring, they'll need players to camp out in front and search for rebounds and deflections. delayed offensive against montreal. approaching the scoreless 1st period. pouliot came in exchange. >> craig: just recently, they need him to play a little better than he was and he's a guy that has high octane offense and he's got to start doing that at the nhl level. >> joe: five on five play continues. shots on goal very low in the first five minutes. washington outshooting montreal 2-1. nicklas backstrom. >> craig: turnover fumbled by

semin. counter attacking for the canadiens. no running room for pacioretty. it never got to ninety fourith. neurith. icing is washed out. bruce boudreau is tinkering with this idea. fleischmann played center as a junior and his national team would like him to play center at the olympics. >> craig: he that is type of speed and vision you need play center. the big question is will he be able to handle the defensive responsibility? a lot different at center compared to wing. at the center you have to work hand and hand with defenseman. you have to take the brunt of

the heavy hits down low. that's going to be a challenge for tomas. >> joe: you have to learn it on-the-fly. alex semin tried to cradle it around josh gorges. out of the corner. poti a trailer. has room to fire. he'll squeeze. we played 6 minutes and 36 seconds of the opening period. montreal looking to threaten michal neuvirth. and not what you get? like electricity for gadget power at your seat. room to stretch your legs, and your wingspan, food when you're hungry, and taking off your shoes, only if you feel like it. these aren't luxuries, they're basics. get them back on acela.

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>> joe: commonality washington at the verizon center. -- montreal and washington at the verizon center. >> craig: big part of the power play and for the caps, alex ovechkin. 26 goals in 33 games. only marly and gaborik ahead of him. the 14th captain in the history of the franchise. >> joe: montreal has not named a captain after sookey left town shaone morrisonn comes over to coral. this one the length of the

pond. hamrlik with the touch up and al koken has more. >> rarely does bruce boudreau start alex ovechkin at home. he certainly did tonight and much to the delight of the crowd who noticed and was told your new captain in the starting lineup. he also received a standing ovation from his teammates. good beginning for alex ovechkin wearing the c for the first time. >> joe: al, we appreciate it. this one clicks towards the front. with the ovechkin has leagued with there would be a lot of people that would think this was the right move to put the c on number 8's sweater. >> craig: arguably the face of the nhl. some great quotes have come out since he was the captain. one was ovechkin is a truly magical player on the ice,

creative, thoughtful read and a player that seems destined to lead the club to lofty heights with a passion to the game. i think that encapsulates ovechkin. >> joe: stay with us. in between periods 2 and 3,al koken talked to ted leonsis about the subjected and other ideas they cross the midway mark. feathered it back to the point. georges to the wall. >> craig: erskine came up with a good shoulder check and ovechkin sails it away. >> joe: carey price miss handled that one. georges is there to clean up the mistake. poti walking in pirets away.

even in full strength these two squads, no scores past the eight minutes mark and the fans get into it. >> craig: the capitals would like to get back to their winning ways. the canadiens were shot out sunday. >> joe: play for us semin. backstrom fires. price was in good position to make the stop. >> craig: alex semin has had the best two opportunities to beat the netminder. >> joe: the long stretch pass stopped by price with a good pad save. >> craig: make it three. >> joe: green loads it up and fires. that one gets wide of the goal. shaone morrisonn jumping in from point position. set for brooks laich booted away by pouliot. corralled by brooks laich. offsides call coming here. offsides against montreal.

>> craig: all the chance for the caps seem to start with alexander semin. here's the rotation around the circle. that's a nifty pass by semin. the hard shot. look at the butterfly. is that textbook or what. alexander semin going for 15th goal. >> joe: he's got 14. 11 at home. carey price has been a tough netminder to solve of late. canadiens in the sharp white looking sweaters. green will scale it out. gill pressured by lang. green takes over. better than 30 minutes of activity for mike green. not going very far. bruce boudreau wants the

change. jacques martin getting fresh troops out. maxim lapierre down the wing. jason chimera making his debut as a cap. >> craig: playing under 11 minutes for the first two game for us bruce. bruce is getting used to what he can do in practices and games. as he gets more familiar with chimera you will see climb. the caps with only one give away so far. that's something to look forward to if the caps continue to pressure the montreal team. >> joe: moen is tremendous. quickly corralled by

d'agostini. morrison for washington reversing the flow. erskine deals down the dasher board and back to center. 9 minutes to play in the opening period with the nhl on comcast sportsnet tonight. d'agostini will drive is behind neuvirth as the canadiens get fresh legs. working along the wall. plays with cammalleri. one of the best snipers in the league. he fires. it's neuvirth who got the shoulder up in time. >> craig: a free agent at end of the year. he's wrapping up big numbers for the montreal. >> joe: price was wait for example knuble at the doorstep. jetting back. shoulder there by poti. pacioretty helping out on the

rush. long lead to backstrom. spoiled by hamrlik. coughed it up. ovechkin and the capitals are ruled offsides. still no score in this one, the great 8 entertaining in dc.

>> joe: chairman and majority owner ted leonsis watching his

team. no score with the canadiens and ted's team has a new captain. >> craig: and it's going to be alex ovechkin. when you look at all the guys have been named alex becomes the first european born captain in caps history and the youngest. the youngest was walter in 1979. >> joe: semin works out the corner. walter was traded. it happens more than i thought. >> craig: closing in. zooms through center. gionta. semin fires to the webbing of carey price. carey price allowed just one goal in the last two games.

you thought mike would have got the knock considering he was the force in the seven game road trip. he's been terrific. a battle between goalies. >> craig: halak had that one stretch where he was it is the hale's star. three straight wins and totals above 46. >> joe: and player of the month in december and was also selected to the olympic team. pretty good december. >> craig: cammalleri side stepping a defender there. quintin laing digging along the boards. absorbs another hit. five on five play continuous. backside for cammalleri. deflected away with laing

drawing defensively. >> craig: cammalleri one of the more intelligent players bruce has coached. they were together in the kings organization. >> joe: both teams playing disciplined hockey and that's going to be the case. this is arguably one and two in power plays in the nhl. >> craig: moen outlasting david steckel. hal gill didn't get it over the head of karl alzner. whistle here. back to the net minding situation. who's your number one? >> joe: oh, man. on the road halak and home carey price. goals against about even. same percentage even. it's a good, healthy battle to see who's going to come out as the number one guy. if you're in montreal, the fans i think back carey price. >> craig: the net minding, the

capitals have more concerns about semyon varlamov. >> joe: even though he made it through sunday he could be gone as much as two weeks. >> joe: michal neuvirth anchoring today against price.

>> joe: eric fehr didn't play saturday in los angeles but he wouldn't miss a game with montreal. in montreal the caps looked

like they were going to be doomed until they came to life. that goal and with the goalie called ensures the caps to get a point. good work by eric fehr. he scores on the shots he's played. >> joe: washington wins it is face-off. nicklas backstrom doing the honors. alex ovechkin away. ovechkin burning in. he trys to cut back. >> craig: you made a good point. they had a little huddle at the blue line. the montreal canadiens all five players and the goalie. i'm sure number one on the discussion was number eight. that didn't work out way. >> joe: to the front.

neuvirth, save. glen metropolit close by. travis moen took the hit from schultz. 5 minutes, 3 seconds to go. no score. schultz scales in and price will wait. hamrlik defender 35 native. czech republic. poti wide. chimera watching morrisonn. to paul mara. stapled to chimera. maxim lapierre off the glass. bergeron will send it out as mike green returns and winds his way through center. chimera out wide to brendan

morrison. swamped my hal gill. a man who covers a lot of ground. checked by gomez. sends it to pouliot. gets away from pouliot and washington will work back through. both teams with personnel changes on the move. georges puts himself and his teammates offsides. folks, the dates get closer. casino night is january 24. you can enjoy a night out mingling with caps players and coaches all in the name of charity. get your tickets at washingtoncaps.com. >> craig: the team in red, the caps out shot 35-11 the last three games in the 1st period. the first 38 games that's where they set up their game plan.

they dominated teams and they are leading the canadiens 8-3. a much better first on home ice. >> joe: that one is ripped high by alexander semin. schultz puts it up. closing if in with a wrister and wide. carey price lost his goalie stick. he'll have to field it with a glove and hang on. >> craig: got to get some of that sticky stuff. the goalies want it to be easily moved in their hands. a lot of players use friction tape so they have a little bit of stickiness and there you see the stick coming out of the blocker glove of carey price. >> joe: would you want to go to the old-fashioned stickem? >> craig: yes. >> joe: glen cleanly on the

draw. d'agostini on the criss-cross. he crushes him along the board. and gets a nice round of applause for his efforts. thry minutes away from intermission might have on comcast sportsnet. canadiens love to cycle. moen, glen metropolit, d'agostini out there now. the capitals work the other direction. knuble with ovechkin and backstrom. an open mike green closing in. fires. saved, price. >> craig: there's mike green sneaking in towards the fence. the whole half of the ice was wide open. number 52 finds that. our thompson creek window of opportunity. here's greeny. he's trying to calm down the puck. the puck stopped rolling and

there he lets her fly. green looking for 11 and 40 point on that shot. >> joe: mike green with goals in four of his last five outings. green has scored just one time against montreal. it was an overtime game-winner at bell center against this netminder. bradley hooks off. the passing play and bradley did not get through gill. on the wing, d'agostini ahead and we have a penalty here. a roughing call to come. the game's first penalty. >> joe: number 57. roughing. 2 minutes 4 seconds to go. we have this american service center. caps and canadiens are usually close. >> craig: caps won three.

a shootout. brought to you by the american service center. pouliot in the box. he had a pretty good 1st period. he's skating and using his we'll wheels. >> joe: first two meetings split each winning on the other's home ice. deflection try. moen opened up for just a second in front with michal neuvirth. green sweep its on to backstrom. blocked by gill. >> craig: just when you think you have a shooting lane, that long reach takes it away. the two big defensemen with an extended reach. >> joe: backstrom delivers. ovechkin fires. long rebound belongs to gomez. >> craig: the caps have to be much better on their power play making sure they make good

passes. >> joe: wide by semin. green loads it up and fires. brooks laich behind the goal for semin waiting on the half. did not thread it through markov. >> craig: the caps love to start the power play at the top of the circle and move it down. unlucky for semin because that would have opened up the two on one. >> joe: gomez on the hot for montreal. backtracking with alex ovechkin. leads it to alexander semin. like fired with. the rebound gets away from green and back to semin. 24 seconds to work in the opening period.

brandon diving into the action. nice action. [ laughter ] >> joe: 4 seconds. this 1st period comes to its conclusion. caps and canadiens no score. michal neuvirth and carey price with a clean slate after one. washington trying to break out of a three game losing skid. scoreless after 20. intermission live. al koken will speak with brian pothier. the washington capitals, red, white, and blue and a new letter c on the jersey. and i lo-- ( stutters ) so cute!

i loooo... i loooo... i loooo... - another miller lite? - i'd love one. - do you love the taste of your beer this much? - thank you. - what? well, you could. try the great pilsner taste of a triple hops brewed miller lite. taste greatness. you're gorgeous, look at you, i loooov you! hos15% or more on car to geico insurance?e you host: is ed "too tall" jones too tall? nurse: i'm just gonna guesstimate. vo: geico. 15 minutes could save you 15% or more.

verizon center in washington, dc where the caps are entertaining the canadiens. no score after 20 minutes of play. washington working without brian pothier. he joins al koken. >> i have good news and bad news. the bad news we are about to lose a comcast sportsnet viewer. the good news is brian pothier is about to get in action soon. how about your new captain? what was your opinion of alex ovechkin wearing the c? >> it's inevitable. just a matter of time before he gets that position. >> is that something isn't locker room you discuss and alex the obvious choice? >> it was pretty obvious. it's pretty clear. he'll be a captain of this

organization for years to come. he's the best player in the world. he's our leader. he's our go-to-guy. when he's going, we are going. and we absolutely, absolutely know he's the guy and we're excited to have him as at captain. >> what do you see the role of a captain being? >> he's the catalyst. he's the guy who drives the team. when he drives and scores, that's who we follow. >> you have been practicing and cleared. you are getting close. maybe thursday getting back to the ice? >> i hope so. i sure feel good. i had a great practice today. i had contact and shot a lot of shots and tried to put a lot of stress on my rib and push it and is it respond really well. >> obviously you never want to miss a game but when you get in

the situations missing because of injuries you watch on tv and here watching. what do you take away. is there anything you pick up from your time away from the ice? >> absolutely. it's a great learning tool. every time you're in the press box you see the game from a different perspective. it's easier here. you really see position and where you should be and where you need to be. you are sort of yelling at the guys mike the easy play. when it's on ice, it's a whole lot different. here it seems easy. >> we thank you for the visit and look forward to seeing you soon. >> thank you. >> our intermission live. when we come back, joe beninati and craig laughlin will bring you highlights of period one.

especially nine home games in the month of january. entertaining the canadiens tonight after 20 minutes, no score. joe beninati and craig laughlin with you. tomas fleischmann playing center. >> craig: i like him. a left should the as the shot he can dish the puck. it's tough to give a definitive grade when you are playing a jacques martin team. when he gets free that's when we will see the explosive power of tomas fleischmann. >> joe: washington had chances to score. they didn't breakthrough carey price. >> craig: they have to find a way to get harder shots through because of the reach of some of their defenders. no one in front. backstrom on the door. semin overall in the 1st period

had the best opportunities other than that. green shot. >> joe: michal neuvirth wasn't overworked by any stretch. >> craig: three shots overall. pouliot didn't collect. this one off the old-fashioned coconut. down low. their cyclers very aggressive. >> joe: here are the numbers presented by the washington area chevy dealers. >> craig: winning the face-off battles outhitting the montreal canadiens. the reach and the use of block and shots, the caps have to take one extra step or get around. >> joe: caps had a couple days off. ovechkin 9 minutes of work with the new captain c. no score after one.

that we do the game from those tables. >> craig: i will pay them to send you there, that's for sure. >> joe: no score after one. what's up. >> we are taking sign ups. we have programs for kids of all ages. younger kids, little bit less intense for the older fellows who want to go on as juniors in college and fur purr sue junior opportunities. a more intense five day program in june, july, and august. all the necessary stuff to make you a great athlete. >> what do you think. >> joe: all i know you're trying to get rid of me at every opportunity. >> craig: we're going to take a look at the capital's delay that leads to a good opportunity. here's the play. watch tom poti go there.

the caps are all about movement. they want to move the puck. this is a delay. tom poti is going wide and he's looking for somebody back there and he's going to find nick who's who's gone underneath. a move at the blue line. now he started to rush at the ice. now it's a rotation. it's the old-fashioned pinwheel rotation around the circle. hold it here. look at the caps have taken away the inside position and they half ice the montreal indicated. good job by the boys. >> joe: unleash some goal scoring. that would be nice. period two is next. a job hunting expense ?

( man ) last summer my kid made 4 figures.

does he need to file a tax return ? they're not just any questions. ( woman ) did we just make a charitable donation ? they're the trickiest, thorniest, questions of all. ( woman ) is this considered a home office ? bring your tax question to the company that helped clients get over 43 billion dollars in refunds last year alone. how can i get more money ? click, call, or come over. h&r block: get it right.

>> joe: comcast sportsnet coverage of capital's hock sebrought to you by net star one. and by sport automotive and honda. >> >> how fast can you sew a c on the jersey. no score after one and no good news in the notes and news department. >> craig: a little bit of a losing streak, they went back to basics yesterday without chris. patrick ewing and the bruins out two weeks with an injured thumb. he is going to heal quickly. he doesn't want to be replaced on the olympic team.

and kevin a severed tendon. similar to an injury on mar cov who's playing tonight. >> joe: he's so important on totheir back line. we begin period two, cammalleri from a sharp angle. neuvirth had to face three shots in the 1st period. the fewest the caps have surrounded. knuble down the wing and answered by hamrlik. mike green for backstrom. backstrom one handed to ovechkin. swivels on top for green. wide to the cage guarded by carey price. hamrlik will settle this one. ovechkin comes up with it. makes one more feed and that will kick start the break for montreal. >> craig: that was a tricky feed. he knew carey price had a