Obama Ain't Got No Seoul
Obama and his posse rolled into Seoul looking to regulate on some currency moves. To create a consensus of nations to push back on China for their currency manipulation and to push back on Germany and others for running trade surpluses. By their own doing, Obama, Geithner and Bernanke have failed. The US has been weakened and credibility, authority have been lost. Obama transformed the G-20 meeting into the G-19 vs. 1 meeting.
With the ink still wet on Bernanke's freshly printed $600B, Obama was successful in turning the G-20 meeting into the G-19 vs. 1 meeting. Pushbacks on Obama were far ranging. Brazilian President Lula suggested that the BRIC countries should start using fewer US dollars while trading among themselves. Brazilian Fiance Minister Guido Mantega followed with "the time of the US dollar as reserve currency is over." These comments were softer in terms than a reported statement from a European central banker who accused the US of "treason."
Brazilian Finance Minister Guido Mantega adds " The possibility of a currency war absolutely exists."
In a direct pushback to Obama's and Geithner beliefs that the recovery is too "fragile" to force haircuts on investors in sovereign bonds, Germany's Angela Merkel said " “Let me put it simply: in this regard there may be a contradiction between the interests of the financial world and the interests of the political world,” Dr Merkel said. “We cannot keep constantly explaining to our voters and our citizens why the taxpayer should bear the cost of certain risks and not those people who have earned a lot of money from taking those risks.”
Clearly these statements go against the grain of Obama/Geithner/Bernanke's belief that it is the citizens, the taxpayers obligations to bailout these financial entities at any costs in order to save "capitalism." Maybe that's why Obama dislikes Merkel.
Christen Lagard, the finance minister of France echoed Merkel's comments " investors must share in the cost of safeguarding sovereign debt." Stephen Major, global head of fixed-income research at HSBC Holdings Plc in London in response to Lagarde's statement " Lagarde’s comments mentioned restructuring, and that’s another nail in the coffin” for so-called peripheral nations’ debt. There’s still a big constituency of investors and traders who have not recognized until now that restructuring could happen.”
Though forcing haircuts on investors, the restructuring of debt, is the right thing to do, the outcome will be unfortunate for the citizens of Portugal, Ireland, Italy and Spain, the so-called PIIGS. After the crisis, governments in the developed nations, including the US, did not force restructuring of debt onto financial speculators nor did they prosecute any leaders of the global too big to fail banks. Now, the originators of the crisis have amassed such great fortunes and power, that not being guaranteed to be made whole from any losses due to speculation in sovereign debt, nations will be forced to pay a higher premium to attract investments and reduce domestic spending. This will cause further cuts in social services, healthcare and jobs. Expect to see much more civil unrest and rioting in the years ahead in European countries that have been thought of as stable.
Pay no attention to the communique that came from the G-19 vs. 1 meeting. It means nothing. Also, evidently Obama and Germany's Merkel just don't like one another. "This a very typical G20 compromise. The leaders come together, and are some pressure to produce an outcome that looks like an agreement, at least for a day or so until people have a chance to look at it, and think about it. The fact is that the G20 members are deeply divided about the causes and consequences of the financial crisis, that Germany vetoes any policies that constraints its export surplus, that the US vetoes any policy that reduce its room for manoeuvre on domestic policy, and as FT Deutschland has pointed out in an article this morning, that Merkel and Obama just cannot stand each other on a personal level. Who cares about what’s in a communiqué?
Great Britain, China, Germany and Brazil all rebuked Obama's strategy of stimulating growth before focusing on the deficit. They also accused the US of printing dollars, manipulating the value of the US dollar, in order to force the US's growth problems onto the rest of the world. It appears only Obama and Bernanke prefer to continue printing dollars instead of making the hard choices that need to be made.
Obama and his Treasury Secretary Little Timmy Geithner were brutally cut off at their knees by a mentor of Geithner's, former Fed Chmn. Alan Greenspan. Greenspan wrote the US is "pursuing a policy of currency weakening." Greenspan made these comments as Obama and Geithner were telling the rest of the world that the US would never use currency devaluation as a way to increase trade. Clearly, Greenspan like the G-19 have very little respect for Obama and Geithner nor do they grant them any credibility.
More thoughts, reasoning on the erosion of US credibility:
The New World Order is one in which the United States has lost credibility on the political and economic stage. Really? Oh, yes. In fact, that credibility went out the global economic window when Bernanke’s Fed decided to further experiment with our currency as a means of supporting our domestic economy. While we here at home may not feel the immediate impact of that experiment, emerging markets are feeling it quickly in a rapid rise in prices in a variety of products. China yesterday reported an increase in its consumer price index of 4.4%. Chinese markets fell over 5% overnight on fears that its central bank would raise rates in order to head off further inflationary pressures.
The bruising series of meetings suggested that as America struggles to exit its economic downturn and emerging economies continue to post big growth numbers, the ability of U.S. leadership to push through big agendas on the world stage has been clipped to some extent.
President Barack Obama headed toward the close of the Group of 20 summit, weakened by an anemic economic recovery and an election drubbing that have left world leaders questioning U.S. authority.
In private meetings with Mr. Obama on Thursday, Chinese President Hu Jintao resisted his pressure on currency revaluation. Mr. Obama also failed to secure a free-trade agreement with South Korea by a deadline he set for Thursday, a blow to a president who has pledged to double U.S. exports over the next five years.
German Chancellor Angela Merkel and President Lee "stressed their common concern" over the U.S. Fed's move in their bilateral meeting, a German official said
Not even the Brit's are willing to cut Obama any slack:
The real dispute is over Washington's allegations that Beijing resorts to "competitive undervaluation" — artificially keeping its currency, the yuan, weak to gain a trade advantage. However, the US position itself has been undermined by its own recent policy of printing money to boost a sluggish economy, which is weakening the dollar.
China and other countries are irate over the Federal Reserve's plans to pump $600bn (£370bn) into the sluggish American economy. They see that move as a reckless and selfish scheme to flood markets with dollars, driving down the value of the US currency and giving American exporters an advantage.
Foreign economies have complained the Fed's infusion of cash will devalue the dollar and hurt their exports to the United States. Those complaints come as the US pressed China to stop its policies of keeping its currency, the yuan, weak.
Nor is the AP:
SEOUL, South Korea (AP) — Leaders of 20 major economies on Friday refused to back a U.S. push to make China boost its currency's value, keeping alive a dispute that raises fears of a global trade war amid criticism that cheap Chinese exports are costing American jobs.
But deep divisions, especially over the U.S.-China currency dispute, left G-20 officials negotiating all night to draft a watered-down statement for the leaders to endorse.
Obama's performance are best summed up by Stephen Lewis, chief economist for London-based Monument Securities when he says "The only concrete agreement seems to be that they should go on measuring the size of the problem rather than doing something about it."
The Wall St. Journal has a headline "Embarrassment in Seoul" The article begins with:
Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week's G-20 meeting in Seoul? We can't think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.
The root of this embarrassment is political and intellectual: Rather than leading the world from a position of strength, Mr. Obama and Treasury Secretary Timothy Geithner came to Seoul blaming the rest of the world for U.S. economic weakness. America's problem, in their view, is the export and exchange rate policies of the Germans, Chinese or Brazilians. And the U.S. solution is to have the Fed print enough money to devalue the dollar so America can grow by stealing demand from the rest of the world.
Obama became upset at the US media while in Seoul. Facing questions regarding his weakness on the world stage and complaints from other G-20 nations regarding US policies, Obama decided to strike out at the messengers. “I remember our first G-20, you guys writing the exact same stories you’re writing now. Don’t you remember that, Sheryl?” Obama snapped at The New York Times’ Sheryl Stolberg.
Asked by CBS’s Chip Reid about complaints heard from other leaders during the summit, Obama shot back: “What about compliments?”
Reports are that Obama was thin-skinned facing questions from the US media as he accused them of being drama queens:
He appeared thin-skinned about the characterizations of his time at the summit, grumbling that nobody wrote about leaders setting the stage for financial regulatory reform at the last G-20 summit because it “wasn’t real sexy” and criticizing reporters’ “search for drama.”
Though the expectations were low for achieving any results at the G-20 meetings, the bar was not set low enough. Bernanke's in your face money printing just a few weeks prior to the meeting didn't help. Bernanke knew this but with Wall St. expectations so high for another round of money printing, if Bernanke wouldn't of printed at least the $600B, US equity markets would of sold off hard. Bernanke's actions undercut US credibility on the world stage for the sake of his minders, the wealthy elite speculators, the Wall St. cabal that with the help of Bernanke caused the financial meltdown.
Former Fed Chairman Alan Greenspan's well timed statement that the US is purposefully devaluing the dollar in order to export the US's problems to the rest of the world also didn't help. Greenspan's sentiments are shared not only by the G-19 nations but basically the entire planet. Greenspan's comments forced Treasury Secretary Geithner to respond in a feeble manner void of any credibility.
With the failure of the G-20 meeting we now head to the next stage of the currency wars. Global responses will begin soon with types of capital controls put into place in an attempt to check the flow of US dollars into their economies. If these initial actions aren't successful, trade tariffs and other protectionist measures to offset the devaluing of the US dollar and therefore increase the price of US exports will follow. With real unemployment in the US at 20%, (more on that later), these measures will force US politicians to respond in kind leading to escalations abroad and then domestically. Initially, these actions will cause pain in the US but in the intermediate to long term, they will pay rewards for the US citizens.
I voted for Obama, donated to his campaign, attended rallies and did volunteer work for candidate Obama. After his two years in office, it is very clear that Obama, for the most part is a continuation, a third term of the disastrous Bush presidency. The optics may be different but, the actions, results are very similar. No investigations of the elite bankers, the Wall St. cabal or those other that caused the financial crisis and the housing meltdown. Like Bush, Obama is consumed with arrogance. As with Bush, this causes Obama to underestimate and belittle those that don't agree with them. Be it the US media or other world leaders as they see through his duplicity. The loss of credibility, stature that was displayed at this G-20 meetings clearly shows this. I had no idea I was donating my time and money and giving my vote to Barack W. Obushma
Posted by Fatboy at 11/12/2010 06:50:00 PM