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Goldman's Take On G-20: "The Conclusion Is Countries Have No Alternative To Accepting Appreciation"
For some reason there are those who still believe today's G-20 meeting was relevant. For them, we provide the following summary from Goldman's Thomas Stolper which confirms that this weekend's theater is over, and nothing has changed. "Bottom line: The overall outcome and statement is about what we expected. Slow but steady progress in the right direction, mainly driven by the fact that individual countries come to the conclusion that they have no real alternative to accepting appreciation." Of course, the alternative to this Goldman desired "real alternative" now that the play is over and real life can resume, is currency and trade war. Which is precisely what is on the docket next.
1. The outcome of the G20 meeting clearly shows progress in the global rebalancing policy debate. In particular the FX relevant sections have become a lot more prominent and all the key issues have found some mention, including current account positions, protectionism, capital controls and exchange rate flexibility.
2. At the same time, this is not a Plaza-style statement that signals a broad agreement on the role currencies have to play in the global rebalancing. Just taking the first sentence of the FX bullet (copied below), the language is not tight enough to impose anything on anybody. The Chinese Authorities surely think they already are "moving" towards "more market determined exchange rates" and they probably also think that the US should "refrain from competitive devaluation".
3. Nothing specific is said about Asian surplus countries, including China, to allow more trade weighted appreciation. That is the kind of language the G7 used to use when getting impatient (see for example the October 2007 Washington statement). Even a commitment to refrain from policies that prevent appreciation in surplus countries would have been a much bigger deal than the actual statement. Instead the statement explicitly puts the following item on the agenda for the Seoul G20 summit, which suggests a wide range of opinions on capital controls still: “Further work on macro-prudential policy frameworks, including tools to help mitigate the impact of excessive capital flows.”
4. We continue to think the speed of progress depends largely on how quickly key NJA countries realise that there are no other sustainable solutions to their problems - excessive reserve accumulation in particular - than FX appreciation. The G20 meeting was surely helpful in this broader process and there is plenty of good-will, but it was not a great leap either.
5. Bottom line: The overall outcome and statement is about what we expected. Slow but steady progress in the right direction, mainly driven by the fact that individual countries come to the conclusion that they have no real alternative to accepting appreciation.
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G-20 Communique, Seoul October 21, 2010, Section 3, Bullet 5
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Specifically we will [...] move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies. Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates. These actions will help mitigate the risk of excessive volatility in capital flows facing some emerging countries. Together, we will reinvigorate our efforts to promote a stable and well-functioning international monetary system and call on the IMF to deepen its work in these areas. We welcome the IMF’s work to conduct spillover assessments of the wider impact of systemic economies’ policies.
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Amazing that anyone legitimately believes a weakened dollar will actually cure the trade deficit.
"Together, we will reinvigorate our efforts to promote a stable and well-functioning international monetary system and call on the IMF to deepen its work in these areas."
The dollar is losing the international community's trust. I have to believe countries are actively pursuing alternatives, beyond and including those already discussed/revealed. One world currency (bitchez)?
Waste Paper
America's Biggest Export
Devalue that dollar, kick that export into high gear. Remember, it's official policy to double our exports within the next 5 years.
Waste Paper.
officially sanctified insanity.
"Can't buy or sell without it " - Just like American Express . Just gotta have a mark and yer good to go.
One world currency (bitchez)?
My thoughts exactly, except a more sinister plot. The world governments use SDRs while the people have dollars ..similar to the early '70s, where the governments exchanged gold, but people had fiat. This way each individual country could devalue it's currency and enslave its population, while keeping it "real" for those in the know, our exalted master leaders and those with "most favored corporate" status.
"This way each individual country could devalue it's currency and enslave its population, while keeping it "real" for those in the know, our exalted master leaders and those with "most favored corporate" status."
That's pretty much it. G20 in a nutshell.
The SDR is composed of over 50% Dollars. It is a basket of currencies, not a defacto currency to itself. It was created as a relief valve so the US would not have to devalue its currency in response to demand for it as a reserve currency while we were on a gold standard. Instead it has become a sink hole of excess dollars as the ratio of dollars in the SDR has increased and the US Dollar is getting junked. The SDR is just an accounting construct tied to the Dollar. It will suffer the same fate as the Dollar because it is more and more becoming the Dollar. As a back door way of stuffing Dollars into countries bank reserves, it will be rejected.
Bingo! But we are still using the gold trick.
I don't know why comex hasn't fallen on it's face. But you can tell by all the forex markets that enough gold has been taken from the market that they will have to lever up way past 100 to 1. The swiss gold chart is cracking me up big time.
As if that is a bad thing.....for anyone but the US.
No alternative? How presumptuous!
How about the SCO countries stocking up on gold?
http://www.financeandeconomics.org/Articles%20archive/2010.09.27%20Gold%...
The genocidal joo, Kissinger, once said eurasia's economic development and integration is the only real threat to the banksters' imperium.
correction:
Actually, it was Brzezinsky who said that. What the genocidal (multiple credible accusations in multiple countries) joo said was:
"Control the oil and you control whole groups of countries or regions (Iraq and Afghanistan which just happens to be between China and Iran's resources); control the food and you control men (Monsanto's nonreproducing yet more lucrative seeds?); control money and you control the world (the Rothschild dollar!)".
How's that for Machiavellian?
Guillotines, bitchez!!
(junk away, evil Matrix-loving slaves)
Wag the dog.
They are ginning up a little fake trade war, as a sort of cover, so the lap dog media will have someone to blame for the economic tsunami that is about to wash over us.
IT'S OFFICIAL. QE2 WILL BE $100BILLION PER MONTH FOR 12 MONTHS STARTING MID-NOVEMBER ACCORDING TO PIMCO. THAT'S $1.2 TRIILION STIMULOUS TO THE EQUITY MARKETS--BUT TO WHAT EFFECT"?
Do the WS banks cash in their bonds and sit on the cash and try and ride out the losses for as long as possible?
So the money doesn't get into the economy, it's just another bailout.
I still haven't heard exactly who sells the bonds the Fed is buying. Just Primary Dealers?
Yes, I've wondered this.
Hey, Ben! I've got some bonds here for you to buy!
Does anyone actually read the treasury statement? There are ~$8 trillion of bills/notes/bonds issued. China owns about 10% of them. What of the remaining 90%? If you shuffle through the straw men, the Social Security Trust Fund (remember that commitment to the integrity of the trust fund we got around a decade ago?) owns the biggest steamin' pile. IOW, in the minds of those highly functional sociopaths in DC, they don't really owe that money; they can just gradually stiff the simpletons until inflation catches up.
Wayback - Mr Peabody needs a link please?
1.2 Trill to equities? ! Not ! 1.2 Tril to buy MBS and stash em in the sheeples money markets via magical Rev Repo's (Loooong term )
Right, Pimco is the official PR agent of the Fed.
And I'm junking your post because it's all caps.
Credibility Deluxe.
All rise for the New World Gubamint.
Turn in your expense vouchers here.
Does anyone know the cost of this G20?
Just curious to compare it to Canadas recent billion dollar fiasco. Considering the security risk of the meeting being a stones throw from the DMZ, I guess the cost would be much higher...but then again, what do I know?
I suspect that the cooperation we saw between many central banks and governments from 2008-2010 will be much more difficult to muster once our slip back into recession (depression) is acknowledged.
Just as currency debasement will be sought by many (which is not a cooperative strategy as once thries to get there before the other), so too will "leaders" try to distance themselves from what "didn't work through cooperation", as the attention span at least of the West wears thin.
Slow and steady progress in the right direction is not really what we have experienced. It has mostly been reshuffling, and not very well.
Michel Chossudovsky breaks it all down in plain English! >> 2009
The Centre for Research on Globalization presents Michel Chossudovsky: "More IMF 'Economic Medicine' Is Not the Solution"
http://www.youtube.com/watch?v=9Ej-HeSgFJk
The surplus countries need to accept appreciation as this is the natural course of trade.
Their insistence on perpetual surplus and export/job growth at the expense of Western debt while then simultaneously complaining about the size and scope of the debt used to FUND THEIR EXPANSION is idiotic. There is no freaking free lunch.
China should have learnt from the last time they refused to permit free trade and to deal with export surplus.
I agree with you for the most part, particularly in regards to countries like China that are actively manipulating their currencies. On the other hand, the US actively debasing its (reserve) currency downwards by simply printing many more dollars is such a ham-handed approach to an industrial policy. And with oil being a part of our trade deficit, a debased currency will offset some of the hoped-for surplus impact...
Not sure why this got junked. I junk things that ar hostile, bigoted or spam. Not things I disagree with.
Most relevant comment here so far - lots of uneducated haters out for the junking.
The direct mechanism which relies on a countries surplus or deficit is the exchange rate. Why did did GER have such a strong currency before the EUR? Why did the US have such a strong currency after WWII?
In today's case, China, being pegged to the USD, is basically giving a 'fuck you' to natural laws of supply and demand by not allowing their currency to appreciate for fears of exporting power loss. Everything typically does in the long run come back to a balance, why China is prolonging the inevitable is similar as to why the Fed keeps printing money. You cannot only see one side of the coin (China is bad or USA is bad). Both are equally guilty of manipulating their exchange rates, even though i believe China is the much larger and relevant issue.
The reports are trying to downplay the political aspect of G20.
The world keep on turning. Plaza accord was an attempt to marshall support for the faltering Atlantic and Pacific alliances and bring about an accord under the US umbrella.
That's not going to be feasible in 2010. Although US hegemony is far from over, there have to be more concessions and the US economy has plenty still to prove. A global currency? Many are hedging and adding to their hedge. That's gold-bullish.
Tonight's America's Most Wanted broadcast:
"Tonight we need your help. Interpol warns that bagmen and consiglieri from 20 international gangs (G20) are meeting this weekend in a secret location to try to avoid open warfare and going to the mattresses. Tips to Interpol suggest the meeting could be in Seoul, Korea or Greenwich, CT or in a sound-proof room deep in the bowels of 200 West St or at the old estate of Joseph "Joe the Barber" Barbara in Apalachin, NY.
"The G20 are notorious gangs of international money launderers, counterfeiters, currency manipulators, loan sharks, Ponzi princes, short changers, three-card Monte operators, turnstile jumpers, pension robbers, widow rapers, and multi-level marketing operators. The G20 is a loosely-knit cartel dividing the world into 20 territories savagely guarded by each gang. Interpol believes that underworld accounting practices have led to a break-down in discipline and cooperation between the G20 gangs.
"Interpol believes G20 choose to meet this weekend because it is near Halloween and so gang members can disguise themselves in costumes. Tim Geithner, a notorious bag man for the Wall Street mafia, is disguised as Pinnochio. But do not approach Pinnochio Tim as his nose can spring out like a swithblade and poke you in the eye.
"Also look out for Ben Bernanke dressed as Joaquin “el chapo” Guzman and his crew of FOMC mobsters dressed as the Sinaloan drug/money laundering cartel. This Holloween promises to be the scariest Halloween in America's history as Ben and FOMC gang knock on America's door and scream "Trick or Treat?" DON'T ANSWER THE DOOR! Call 911 and AMW's tip line."
Flippin awesome!!!
Halloween is less scary than these maniacs.
"Tonight's America's Most Wanted broadcast"
tom a taxpayer
nicely said.
good trading on you.
Bottom line is that no country wants to be the "party pooper".
It's business as usual.
- More stock market bubbles (i.e. restaurant, consumer, casino, and Internet stocks going parabolic).
- Infinite spending and deficits drive down interest rates and pump up currencies (like Japan)
- More "platitudes, statements, and communiques" with no follow through, just talk.
The Perpetual Motion Machine grinds on.
The PigMen make obscene profits.
The Ponzi Pyramid Scheme/Fractional Reserve Banking/OTC Derivatives Colossus remains intact.
Just more "Wash, Rinse, Repeat"......
I think Geithner is proposing to cut China off at the BIS. They can send all they want to Walmart but he will limit how much they can get paid.
The IMF already cut China off from its probably last much trumpeted (like hundreds of times by the MSM which in itself tells you much) gold sale.
http://www.financeandeconomics.org/Articles archive/2010.09.27 Gold politics.htm
The Chinese government usually accumulates its gold reserve domestically. China is actually one of the top producers of gold and silver.
Finally found a captcha that did not require RPN or a six digit answer so just jumped on the opportunity to prove I am not a machine.
Well, there you have it. Forty years of bufoonery all patched-up at "The Weekend at Bernies!" We are so lucky to have Geithner, Bernanke, Reid, Pelosi and the anoited one working so hard for the masses. Could it be they really do have our best interests in mind? I DON'T THINK SO!
Hoser
P.s. And to think my mother wanted me to be a banker......
Is there really no alternative to accepting currency appreciation and seeing the industry moving elsewhere?
I am not a central banker, but if I would have to decide monetary policy it wold be printing that currency to prevent it appreciating and use the printed money to buy physical gold and take delivery.
Over time the price of gold will go up and indicate that someone is debasing the currency and when the market realizes that this someone will be forced to stop.
"And, with the G20 seemingly in agreement to press forward with
more domestic stimulus, I’ll assume that global central banks have no
option but to retain their steadfast backstop bid for the global surfeit
of U.S. dollars. These dynamics would appear to ensure the ongoing
monetization of enormous quantities of government debt.
Such a scenario would seem to assure unwieldy global financial flows
and Acute Monetary Disorder. For years now, it has been a dangerous
case of using “Keynesian” policies to perpetuate Bubbles and attendant
imbalances. Today, inflationism fuels Bubble dynamics on an
unprecedented global scale. Policymakers can insist on referring to
“global rebalancing,” but the reality is more in line with desperate and
universal inflationism." - Doug Noland
"And it proved sound. It worked. In less than ten years Germany became easily the most powerful state in Europe. It worked so magically and magnificently that it sounded the death knell of the entire (Zionist) Jewish money system. World Jewry knew that they had to destroy Hitler's system, by whatever means might prove necessary, or their own [system of usury] would necessarily die. And if it died, with it must die their dream and their hope of making themselves masters of the world. The primary issue over which World War II was fought was to determine which money system was to survive. At bottom it was not a war between Germany and the so-called allies. Primarily it was war to the death between Germany and the International Money Power." -William Gayley Simpson
I know that there must be a connection between juden fetzen and their persecution. What I don't understand in the link between Rockefeller's crew and Hitler, which there certainly was. Rockefeller is one of the "elders of zion's" (Rothschild & Co. which included JPM and Rockefeller among other well known scum) pet, so why did his crew aid Hitler? Industrialists in Germany and the US financed him. IBM databased the ethnic cleansing for Hitler and Standard Oil supplied him with needed products among other business connections between the wealthy fascists here and there.
I think the answer is the zionist entity in the middle east but am not so sure.
This should help. Also, there are many tie-ins with JFK and subsequent Bush actions that are beyond criminal in scope.
http://www.mail-archive.com/ctrl@listserv.aol.com/msg33135.html
Thanks, that does help. Reading it now.
Yes Prescott Bush was a known Nazi sympathizer.
http://www.wikipedia.org/wiki/Prescott_Bush
Right, it's right there - not.
Wiki is usually good for a starting point on something, but thats about it.
There are other sources than wiki.
http://www.iamthewitness.com/img/judea_declares_war_Large.png
Nice. Iamthewitness is a very good source!
Its helpful to understand that the polity which self identifies as Zionist is not really the top level actor. The High Cabal, as Winston Churchill called it, is above, and transcends, Zionism. The events of the second world war were brilliantly orchestrated by top level manipulation of the principle actors. Lenin, and through him, Stalin were firmly in pocket from the earliest days of the Russian Revolution. Hitler was a pure creation, an actor much in the vein of a Ronald Reagan. He was very much aware that he was role playing and followed his instructions to the tee. It is possible but unlikely that he died in his bunker in Berlin. A meeting between Hitler and Carl Gustaf Mannerheim which was secretly recorded (still exists and available on web) reveals that Hitlers private personality (calm and intelligent) was absolutely nothing like his public persona. The exact mechanism of FDR's control is not known and open to speculation. He was however surrounded and advised by an unusual number of high level masons, people like Manley Hall, who were involved at a level where masonry bleads deeply into occult mysticism. Again, to point a finger at masonry and exclaim "aha, that's it then" misses the point. Zionism and Masonry are more like magnetic attractors and/or pipelines which obscure and at the same time point towards the hidden center. If you are looking for "headquarters" in the physical sense, don't look at Israel but start taking a real close look at ye olde Confoederatio Helvetica.
Yeah, I think you're right. The fact that Rothschild is one of the most powerful men in the world does not negate the fact that he would subject his own race to war and extermination just like Bush, Rockefeller and all our own fascist scum sent 60k young Americans to their deaths in Vietnam so they could continue with their heroin pipeline. They even used their bodies to ship the heroin back!
Disraeli wrote the truth in one of his novels, "Coningsby" :
Friction and war between the BOE (Rothschild bank) Axis and every other monetary system had been going on since the early 1700s, including against the Latin Monetary Union, and against the Bismarck regime. The vast Rothschild palaces scattered throughout the world didn't build themselves. Finance was a lucrative imperial business.
Don't worry the NY Fed is suing BofA to ensure that liquidity injections happen legally and for the benefit of all those mortgage holders.
Well, I guess that meetings where people fail to agree can be just as relevant in their own way as meetings where people agree.
I can't sympathize with Japan, China, Brazil, Russia or any other governments that have been buying up dollars. They are habitual currency manipulators so a spray of excess dollars in their faces is exactly what they deserve. Let's see how fast they can eat excess dollars. Could be kinda sickly fun to watch, like fat kids at a pie-eating contest.
I'm not even sure the US is being so unfair to the Europeans and others with non-dollar-linked currencies and more conservative monetary policies. Yeah, this drives up their currencies relative to most of the world. But the dollar is after all very overvalued - otherwise it would be impossible for the US to run such large trade deficits. And the Europeans et al benefit from those big trade deficits by exporting to US overconsumers. If the Europeans were saying to us, as they should: "cut your fiscal deficit you fools, this might be fun for us now, but it's a road to global ruin," then I would respect them. Anything else is meaningless, just trying to have their cake and eat it, too.
http://www.aier.org/images/stories/charts_large/ppd_lg.png
The dollar's constantly declining purchasing power relative to real goods has very little to do with whether the dollar is under- or overvalued relative to other currencies. As long as other currencies are also devaluing relative to real goods, and they are, the dollar remains overvalued relative to those other currencies.
The overvaluation of the dollar is driven by persistent foreign financial flows into the US economy, which since the crisis have gone mostly into Treasuries as a result of currency manipulation by China, Japan et al. In previous periods foreign financial flows went into our stock and housing bubbles.
So much for the deflation myths....
Inflationistas looking alot less like Cassandra and more like Moses daily.
At $100B a month or $1.2T a year, the Fed is basically monetizing the budget deficit.
There's still roll risk, but a Treasury auction isn't as likely to fail now because of the incremental borrowing required.
The PDs can buy all they want of other risk assets with the POMO proceeds.
Neat trick, if they can pull it off.
So I add the POMO to to the QE2 and I get somewhere around $125B a month, or $1.5T a year.. that's a lot.
"5. Bottom line: The overall outcome and statement is about what we expected. Slow but steady progress in the right direction, mainly driven by the fact that individual countries come to the conclusion that they have no real alternative to accepting appreciation."
CORRECTION: Should read, "The overall outcome and statement is about what we expected. Slow but steady progress in the right direction, mainly driven by the fact that individual countries come to the conclusion that they have no real alternative to accepting dollar-depreciation driven global currency depreciation."
Since commodities are denominated in dollars, not yen, euros, yuan, or rubles, every other national currency must accept devaluation when the dollar is devalued.
What else does reserve currency mean?
so basically we will be printing 150 billion every month so we don't shock and awe the rest of the world?
Don't know if it will work a mere 7.5 billion in POMO daily....
A long long time ago a billion dollars was worth something.
Charts
EUR/USD http://99ercharts.blogspot.com/2010/10/eurusd.html
USD/JPY http://99ercharts.blogspot.com/2010/10/usdjpy.html
More... http://www.zerohedge.com/forum/99er-charts
Kabuki? Noh.
Focusing on the G20 Communique and finding tea leaves there is Kabuki; what was truly important was an agreement regarding the IMF. Japanese Noh is more subtle than Kabuki.
There was a deal "to shift more than 6 percent of the IMF's quotas -- membership subscriptions that help determine voting power -- to emerging economies whose clout in the Fund has not kept pace with their economic ascent.
Europe will give up two seats on the fund's 24-strong Executive Board.
IMF Managing Director Dominique Strauss-Kahn called the agreement historic. "This makes for the biggest reform ever in the governance of the institution," he said.
As part of the agreement, China will overtake traditional powerhouses Germany, France and Britain to become the third most powerful member of the IMF, up from sixth spot now. India will also wield more power in the fund."
http://www.reuters.com/article/idUSTRE69K0Q720101024?pageNumber=2
Timmay Kowtows
(Reuters) - Treasury Secretary Timothy Geithner on Sunday discussed economic ties with Chinese Vice Premier Wang Qishan in a brief meeting in eastern China.
"China is well into a very promising and very ambitious program of domestic reforms to strengthen domestic growth because China recognized that it cannot afford to rely as it has in the past on such an export-dependent model for growth," Geithner told a news conference.
"We want to see that progress continue," he said. "Of course as a part of that, it's not ready for its exchange rate to rise more rapidly in response to market forces."
http://www.reuters.com/article/idUSTRE69N0CS20101024
IOW, China is not going to accept NOT manipulating its currency.
China also threw a far more gigantic debt-fueled stimulus at its own economy last year. Where the fuck are the calls for them to accept the global realities?
China will leapfrog Germany, France and Britain in the Fund's power rankings, with its quota share rising to 6.19 percent from 3.65.
India will be in 8th spot, Russia in 9th and Brazil in 10th, according to the Russian finance ministry. Together, the four — known by the acronym BRICs — will have 14.18 percent of IMF quotas.
Emerging markets as a whole will have a 42.29 percent share, which the G20 said was likely to rise further following a comprehensive review of the quota formula due by January 2013.
http://www.cnbc.com/id/39807921
I can see a scenario were coming out of the G-20 many more nation decide to trade in their own currency leaving the dollar out of it. This would change things dramatically for the Federal reserve. to keep credibility they refrain from QE2 and they'll have to think of some other reason to explain the S&P.
Perhaps they could say aliens are involved, that might even more believe than QE2
If one can't see how the simple (but legal, according to the WTO) process of keeping a peg to another currency is manipulation, then please review supply/demand in economics.
But maybe that's not a real solution :/