G-20 Unity Born in Crisis Fractures as Leaders Pursue Own Ends

[dipsydoodle]

Source: Bloomberg News

President Barack Obama finds himself on the defensive as world leaders gather in Seoul for the Group of 20 summit, with members disparaging U.S. economic policies they say weaken the dollar and stoke hot-money flows.

The U.S. Federal Reserve decision last week to pump $600 billion into world’s biggest economy has stolen the spotlight away from China’s currency. Brazilian Finance Minister Guido Mantega said today that the Fed’s move may inflate commodities prices and proposed the world move away from using the dollar as the main reserve currency. Former Chinese central bank governor Dai Xianglong this week faulted the U.S. for adopting policies without regard for the dollar’s global role.

The policy fissures and concern countries may react with currency devaluations and capital controls underscore how the G-20 unity displayed during the financial crisis has given way to national divisions as members chart their own recovery path.

“The last thing a developing economy wants is for that liquidity to distort their asset markets and create a destabilizing bubble,” Stephen Roach, Morgan Stanley’s nonexecutive Asia chairman, told Bloomberg Television in an interview yesterday. “The process is not going to work if they don’t come up with a multilateral solution.”

Read more: http://www.bloomberg.com/news/2010-11-10/g-20-unity-born-in-financial-crisis-fractures-as-leaders-pursue-own-ends.html

[Catherina]

1. Why is it a surprise that members chart their own recovery path?

Countries are not going to subsidize an empire hell-bent on destruction. Nor should they.

Rec'd

[harun]

2. U.S. is making everyone else's currency worth less and they are upset about it.