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G20 over, now what?


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As another G20 dog and pony show comes to an end, people are left wondering what was the point of that.  The summit started off with the US accusing China for purposely undervaluing its yuan.  China rebutted by accusing US’s QE2 program for printing massive amount of money from thin air.  Of course, both parties denied the accusations.  I still cannot believe that world leaders are not willing to work together to get out of this global economic mess. The only way to deflate the bubbles and get the economic engine running properly again is for China and all the developing countries to start importing and consuming goods from the West.  It’s clear that the US does not have the capacity to consume like it did before the credit meltdown.  Its credit bubble needs to be deflated, but for some reason, the US government is still in denial.  This is also true in Europe where sovereign debts of the PIIGS are ticking time bombs.  Ireland has the potential to add another shock to the system which can cause further damage to the fragile recovery.  All I can say is China’s oblivious decision to keep its yuan undervalue and rely on the US consumers is going to be a dangerous gamble.

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3 Responses to “G20 over, now what?”

  1. November 15th, 2010 at 8:10 am

    Felix says:

    Like. It’s been a while since you posted!

  2. November 15th, 2010 at 12:27 pm

    Anonymous says:

    Nice post, man.

    I’m curious what you think of this idea. Due the labor rate differences between US and China (also India among other countries). Someone suggested that the US should slap a tax on imports to equalize that difference to prevent work from leaving the US. I think it’s a damn good idea since US is still one of the world’s largest consumer market and should not deter imports too much. This will also allow the government to gain some revenue.

    I think it was a rich Canadian multi-million that suggested this.

    Matt

  3. November 17th, 2010 at 8:26 am

    cybermat says:

    Tariffs is a common weapon countries use during a trade war. In the long run, it will do more damage than good because your trading partner will also set tariffs on your imports. Right now, the US needs India and China to open up their economy so that they can start consuming and not blocking.

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