Monday, November 8, 2010

QE2: The G20 is Now G19+1, All Against the U.S., Treason Accusations

Brazil's biggest newspaper reports today that the BRIC countries and Europe have united to require that the final declaration of the summit of the G-20 this week includes a political call for countries to abandon the adoption of measures that end up jeopardizing the other economies. The call to be proposed will be a clear message to the U.S. government, after the Fed announced the injection of $ 600 billion into its economy.
Interestingly, the G20's meeting happens at the end of this week in South Korea, but the finla delcration is being written today. Yesterday, Korean activists took to the streets of Seoul and the police had to use force and even pepper gas to disperse protesters.

Sources close to the negotiations confirmed that the call for a reinforcement of the message against attitudes such as the United States is one of the main points of action of diplomats from Europe, China, Russia, India and Brazil. The movement aims to try to force governments to coordinate their policies, and forcing many to develop recovery strategies to consider the situation of other countries.

More ironic negotiators affirm that the BRICs and Europe "finally started to understand themselves" within the G-20, albeit in a unanimous way to attack the United States.

"This is more like a G-19 to 1 than the G-20 smooth and confident that we saw two years ago," said a source close to negotiations. According to the International Monetary Fund (IMF), a coordinated action of G-20 to save the world economy could generate 52 million jobs in the medium term. But the fact is that the honeymoon in the G-20 is a thing of the past.

In fact, the pressure on the Americans began at the weekend. Central banks around the world asking the Fed's explanation of its decision. The measure, for many, strengthens the threat risk of an asset bubbles in emerging markets, as the experience over the past two years showed that the injection of liquidity in the U.S. economy is not being absorbed and resources end up heating the flow of speculative capital emerging markets.

Since yesterday, the sheriffs of international finance are meeting in Basel, a meeting that promises to be a test for voltage at the summit of the G-20, on Thursday in Seoul. "What was done must be explained," charged a senior official of the Argentine Central Bank. "There are many countries and the angry mood is not good," he admitted.

Betrayal and Treason
On the European side, bankers emphasize thatb they do not understand how the U.S. took such a course, just weeks after signing a statement from finance ministers in which it was clear that governments will be "vigilant" about the impact of its measures in the other partners. The American behavior comes to be classified as "treason." Now, Berlin and Paris insist that policies need assurances that such practices will not be repeated. "The pressure will be strong over the United States in the G-20," admitted one of the presidents of BC from a Scandinavian country.

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