Friday, November 12, 2010

G-20 ...that could have gone better.

Got to watch the road show that is the post-November-2nd American Presidency a bit closer this week. The Ind(ia) and Ind(onesia) legs of the tour went pretty much as expected. The Big Sell in India and the Big MakeNice in Indonesia... both more befitting a Chirac-led French industrial promotion exercise, but mostly positive at least in small ways. But then, the road show got to South Korea for the G-20 round.


Mister Popular is now Mister Not-So-Keen.

It probably would have helped if the U.S. Federal Reserve hadn't been initiating its second round of willful devaluation quantitative easing at the same time President Obama was voicing his unhappiness with countries manipulating their currencies. That just didn't go over well at all.

Waving around "trade imbalance" issues at the same time also smacks of a real lack of understanding of the details. Helpful hint: While the PRC is probably the prime example of a country running up a trade advantage by gaming the exchange of its currency (not that the Renminbi is really able to be converted in any free market sense), it might be wise to note that the other big manufacturing-based trade imbalancer is... Germany. Yeah, the same Germany that sits in the middle of the Eurozone. The one where the Euro currency is currently significantly above parity with the US$ in valuation.

All that, and the side discussion about closing the ROK-USA Free Trade Agreement went nowhere.

On the local news front, it should also be noted that Japan did a whole lot of nada about the fact that the major cause of the run up to the en (Yen; JPY) is that the PRC has been shoveling formerly US$ assets into JPY in massive quantities; while there is a certain "safe haven" logic to doing so, the other effect is to undermine any Japanese export advantage to the US market at just the time that the PRC is hoping to move upscale in what it sells. There may be some nemesis being summoned up there, though... with the Renmimbi virtually pegged to the US$, forcing other currencies to appreciate sends echoes through the still-US$-denominated raw materials markets that China depends on to fuel its growth. Still, it all smells of the PRC trying to pass along its bad hand on the US$ to other countries' injury. The Japanese delegation really missed an opportunity to raise the matter where it might be noticed.

G-20 is a wrap. A whole lot of not much good.

Gee, what joy awaits us this weekend at APEC here in Japan, ne?

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