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Posts Tagged ‘trade war’

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.