Goldman’s Take On G-20: “The Conclusion Is Countries Have No Alternative To Accepting Appreciation”

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homeDARPAcontributorsnewsforumszh-tshirtstoredonaterssmanifesto I Dare Paul Krugman To Debate Austrian Theory Posted by: Econophile Post date: 10/23/2010 – 15:34 Paul Krugman doesn’t know anything about Austrian economic theory but he feels competent to criticize it. He has refused to debate the topic in the past. Now a top notch Austrian theory economist is challenging him to a debate. The lure: $100,000. Will he do it? New Mortgage Crisis in Iceland: Could U.S. Be Far Behind? Posted by: asiablues Post date: 10/23/2010 – 20:48 Some scary developments in Iceland including a 41% inflation in the past three years, 63% of mortgage is underwater, and 40% of homeowners are insolvent make me wonder how far behind is the United States? Gulf Oil Spill: Mission Accomplished or Ongoing Crisis? Posted by: George Washington Post date: 10/23/2010 – 20:07 Mission accomplished … wait, WHAT??? Navigation PollsDonate To Zero HedgeRecent posts Shopping cart View your shopping cart. User login Username: * Password: * Create new accountRequest new password Zero Hedge Reads Angry BearBearish NewsBoom Bust BlogChina Financial MarketsChris Martenson’s BlogContrary InvestorCoyote BlogCredit WritedownsDaily CapitalistDaneric’s Elliott WavesDealBookDealbreakerDr. Housing BubbleFalkenblogFibozachiFund My Mutal FundGains Pains & CapitalGlobal Economic AnalysisGonzalo LiraImplode-ExplodeInfectious GreedInvesting ContrarianJesse’s Café Américain Market FollyMax KeiserMinyanvilleMises InstituteNaked CapitalismOf Two MindsOilPrice.comPension PulseShanky’s TechBlogThe Daily CruxThe Mad Hedge Fund TraderThe Market TickerThe Technical TakeThe Underground InvestorWall St. Cheat SheetWashington’s BlogWealth.netWhen Genius Prevailed Home Goldman’s Take On G-20: “The Conclusion Is Countries Have No Alternative To Accepting Appreciation” Tyler Durden's picture Submitted by Tyler Durden on 10/23/2010 18:34 -0500

International Monetary FundTrade WarVolatility

For some reason there are those who still believe today’s G-20 meeting was relevant. For them, we provide the following summary from Goldman’s Thomas Stolper which confirms that this weekend’s theater is over, and nothing has changed. “Bottom line: The overall outcome and statement is about what we expected. Slow but steady progress in the right direction, mainly driven by the fact that individual countries come to the conclusion that they have no real alternative to accepting appreciation.” Of course, the alternative to this Goldman desired “real alternative” now that the play is over and real life can resume, is currency and trade war. Which is precisely what is on the docket next.

1. The outcome of the G20 meeting clearly shows progress in the global rebalancing policy debate. In particular the FX relevant sections have become a lot more prominent and all the key issues have found some mention, including current account positions, protectionism, capital controls and exchange rate flexibility.

2. At the same time, this is not a Plaza-style statement that signals a broad agreement on the role currencies have to play in the global rebalancing. Just taking the first sentence of the FX bullet (copied below), the language is not tight enough to impose anything on anybody. The Chinese Authorities surely think they already are “moving” towards “more market determined exchange rates” and they probably also think that the US should “refrain from competitive devaluation”.

3. Nothing specific is said about Asian surplus countries, including China, to allow more trade weighted appreciation. That is the kind of language the G7 used to use when getting impatient (see for example the October 2007 Washington statement). Even a commitment to refrain from policies that prevent appreciation in surplus countries would have been a much bigger deal than the actual statement. Instead the statement explicitly puts the following item on the agenda for the Seoul G20 summit, which suggests a wide range of opinions on capital controls still: “Further work on macro-prudential policy frameworks, including tools to help mitigate the impact of excessive capital flows.”

4. We continue to think the speed of progress depends largely on how quickly key NJA countries realise that there are no other sustainable solutions to their problems – excessive reserve accumulation in particular – than FX appreciation. The G20 meeting was surely helpful in this broader process and there is plenty of good-will, but it was not a great leap either.

5. Bottom line: The overall outcome and statement is about what we expected. Slow but steady progress in the right direction, mainly driven by the fact that individual countries come to the conclusion that they have no real alternative to accepting appreciation.

G-20 Communique, Seoul October 21, 2010, Section 3, Bullet 5

Specifically we will […] move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies. Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates. These actions will help mitigate the risk of excessive volatility in capital flows facing some emerging countries. Together, we will reinvigorate our efforts to promote a stable and well-functioning international monetary system and call on the IMF to deepen its work in these areas. We welcome the IMF’s work to conduct spillover assessments of the wider impact of systemic economies’ policies.

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by traderjoe
on Sat, 10/23/2010 – 18:50

Amazing that anyone legitimately believes a weakened dollar will actually cure the trade deficit.

“Together, we will reinvigorate our efforts to promote a stable and well-functioning international monetary system and call on the IMF to deepen its work in these areas.”

The dollar is losing the international community’s trust. I have to believe countries are actively pursuing alternatives, beyond and including those already discussed/revealed. One world currency (bitchez)?

Login or register to post comments by knukles
on Sat, 10/23/2010 – 19:14

Waste Paper
America’s Biggest Export


Devalue that dollar, kick that export into high gear.  Remember, it’s official policy to double our exports within the next 5 years.

Waste Paper.

Login or register to post comments by Pondmaster
on Sun, 10/24/2010 – 00:11

“Can’t buy or sell without it ” – Just like American Express . Just gotta have a mark and yer good to go. 

Login or register to post comments by Spitzer
on Sat, 10/23/2010 – 18:56

As if that is a bad thing…..for anyone but the US.


Login or register to post comments by zaknick
on Sat, 10/23/2010 – 20:45

No alternative? How presumptuous!


How about the SCO countries stocking up on gold?…


The genocidal joo, Kissinger, once said eurasia’s economic development and integration is the only real threat to the banksters’ imperium.




Actually, it was Brzezinsky who said that. What the genocidal (multiple credible accusations in multiple countries) joo said was:

“Control the oil and you control whole groups of countries or regions (Iraq and Afghanistan which just happens to be between China and Iran’s resources); control the food and you control men (Monsanto’s nonreproducing yet more lucrative seeds?); control money and you control the world (the Rothschild dollar!)”.


How’s that for Machiavellian?


Guillotines, bitchez!!


(junk away, evil Matrix-loving slaves)

Login or register to post comments by kaiserhoff
on Sat, 10/23/2010 – 19:08

Wag the dog.

They are ginning up a little fake trade war, as a sort of cover, so the lap dog media will have someone to blame for the economic tsunami that is about to wash over us.


Login or register to post comments by WAYBACK …..WA…
on Sat, 10/23/2010 – 19:09


Login or register to post comments by vote_libertaria…
on Sat, 10/23/2010 – 19:20

Do the WS banks cash in their bonds and sit on the cash and try and ride out the losses for as long as possible?


So the money doesn’t get into the economy, it’s just another bailout.


I still haven’t heard exactly who sells the bonds the Fed is buying.  Just Primary Dealers?

Login or register to post comments by BigJim
on Sat, 10/23/2010 – 19:28

Yes, I’ve wondered this.

Hey, Ben! I’ve got some bonds here for you to buy!

Login or register to post comments by zhandax
on Sun, 10/24/2010 – 06:16

Does anyone actually read the treasury statement?  There are ~$8 trillion of bills/notes/bonds issued.  China owns about 10% of them.  What of the remaining 90%?  If you shuffle through the straw men, the Social Security Trust Fund (remember that commitment to the integrity of the trust fund we got around a decade ago?) owns the biggest steamin’ pile.  IOW, in the minds of those highly functional sociopaths in DC, they don’t really owe that money; they can just gradually stiff the simpletons until inflation catches up. 

Login or register to post comments by Pondmaster
on Sun, 10/24/2010 – 00:15

Wayback – Mr Peabody needs a link please?

1.2 Trill to equities? ! Not ! 1.2 Tril to buy MBS and stash em in the sheeples money markets via magical Rev Repo’s (Loooong term )


Login or register to post comments by Non Passaran
on Sun, 10/24/2010 – 07:03

Right, Pimco is the official PR agent of the Fed.

And I’m junking your post because it’s all caps.

Login or register to post comments by knukles
on Sat, 10/23/2010 – 19:11

Credibility Deluxe.

All rise for the New World Gubamint. 
Turn in your expense vouchers here.

Login or register to post comments by Black Friday
on Sat, 10/23/2010 – 19:18

Does anyone know the cost of this G20?

Just curious to compare it to Canadas recent billion dollar fiasco. Considering the security risk of the meeting being a stones throw from the DMZ, I guess the cost would be much higher…but then again, what do I know?

Login or register to post comments by Cleanclog
on Sat, 10/23/2010 – 19:20

I suspect that the cooperation we saw between many central banks and governments from 2008-2010 will be much more difficult to muster once our slip back into recession (depression) is acknowledged.  

Just as currency debasement will be sought by many (which is not a cooperative strategy as once thries to get there before the other), so too will “leaders” try to distance themselves from what “didn’t work through cooperation”, as the attention span at least of the West wears thin.

Slow and steady progress in the right direction is not really what we have experienced.  It has mostly been reshuffling, and not very well.

Login or register to post comments by Atomizer
on Sat, 10/23/2010 – 19:22

Michel Chossudovsky breaks it all down in plain English! >> 2009

The Centre for Research on Globalization presents Michel Chossudovsky: “More IMF ‘Economic Medicine’ Is Not the Solution”


Login or register to post comments by trav7777
on Sat, 10/23/2010 – 19:29

The surplus countries need to accept appreciation as this is the natural course of trade.

Their insistence on perpetual surplus and export/job growth at the expense of Western debt while then simultaneously complaining about the size and scope of the debt used to FUND THEIR EXPANSION is idiotic.  There is no freaking free lunch.

China should have learnt from the last time they refused to permit free trade and to deal with export surplus.

Login or register to post comments by traderjoe
on Sat, 10/23/2010 – 19:40

I agree with you for the most part, particularly in regards to countries like China that are actively manipulating their currencies. On the other hand, the US actively debasing its (reserve) currency downwards by simply printing many more dollars is such a ham-handed approach to an industrial policy. And with oil being a part of our trade deficit, a debased currency will offset some of the hoped-for surplus impact…

Login or register to post comments by duncecap rack
on Sat, 10/23/2010 – 20:09

Not sure why this got junked. I junk things that ar hostile, bigoted or spam. Not things I disagree with.

Login or register to post comments by Caviar Emptor
on Sat, 10/23/2010 – 19:43

The reports are trying to downplay the political aspect of G20. 

The world keep on turning. Plaza accord was an attempt to marshall support for the faltering Atlantic and Pacific alliances and bring about an accord under the US umbrella. 

That’s not going to be feasible in 2010. Although US hegemony is far from over, there have to be more concessions and the US economy has plenty still to prove. A global currency? Many are hedging and adding to their hedge. That’s gold-bullish.

Login or register to post comments by tom a taxpayer
on Sat, 10/23/2010 – 19:54


Tonight’s America’s Most Wanted broadcast:

“Tonight we need your help. Interpol warns that bagmen and consiglieri from 20 international gangs (G20) are meeting this weekend in a secret location to try to avoid open warfare and going to the mattresses. Tips to Interpol suggest the meeting could be in Seoul, Korea or Greenwich, CT or in a sound-proof room deep in the bowels of 200 West St or at the old estate of Joseph “Joe the Barber” Barbara in Apalachin, NY.

“The G20 are notorious gangs of international money launderers, counterfeiters, currency manipulators, loan sharks, Ponzi princes, short changers, three-card Monte operators, turnstile jumpers, pension robbers, widow rapers, and multi-level marketing operators. The G20 is a loosely-knit cartel dividing the world into 20 territories savagely guarded by each gang. Interpol believes that underworld accounting practices have led to a break-down in discipline and cooperation between the G20 gangs.

“Interpol believes G20 choose to meet this weekend because it is near Halloween and so gang members can disguise themselves in costumes. Tim Geithner, a notorious bag man for the Wall Street mafia, is disguised as Pinnochio. But do not approach Pinnochio Tim as his nose can spring out like a swithblade and poke you in the eye. 

“Also look out for Ben Bernanke dressed as Joaquin “el chapo” Guzman and his crew of FOMC mobsters dressed as the Sinaloan drug/money laundering cartel. This Holloween promises to be the scariest Halloween in America’s history as Ben and FOMC gang knock on America’s door and scream “Trick or Treat?” DON’T ANSWER THE DOOR!  Call 911 and AMW’s tip line.”


Login or register to post comments by Cleanclog
on Sat, 10/23/2010 – 19:55

Flippin awesome!!!

Halloween is less scary than these maniacs.

Login or register to post comments by RobotTrader
on Sat, 10/23/2010 – 19:52

Bottom line is that no country wants to be the “party pooper”.

It’s business as usual.

–  More stock market bubbles (i.e. restaurant, consumer, casino, and Internet stocks going parabolic).

–  Infinite spending and deficits drive down interest rates and pump up currencies (like Japan)

–  More “platitudes, statements, and communiques” with no follow through, just talk.

The Perpetual Motion Machine grinds on.

The PigMen make obscene profits.

The Ponzi Pyramid Scheme/Fractional Reserve Banking/OTC Derivatives Colossus remains intact.

Just more “Wash, Rinse, Repeat”……



Login or register to post comments by Money_for_Nothing
on Sat, 10/23/2010 – 20:17

I think Geithner is proposing to cut China off at the BIS. They can send all they want to Walmart but he will limit how much they can get paid.

Login or register to post comments by zaknick
on Sat, 10/23/2010 – 20:33

The IMF already cut China off from its probably last much trumpeted (like hundreds of times by the MSM which in itself tells you much) gold sale. archive/2010.09.27 Gold politics.htm

Login or register to post comments by eigenvalue
on Sat, 10/23/2010 – 20:56

The Chinese government usually accumulates its gold reserve domestically. China is actually one of the top producers of gold and silver.

Login or register to post comments by sushi
on Sat, 10/23/2010 – 20:25

Finally found a captcha that did not require RPN or a six digit answer so just jumped on the opportunity to prove I am not a machine.

Login or register to post comments by f16hoser
on Sat, 10/23/2010 – 20:39

Well, there you have it. Forty years of bufoonery all patched-up at “The Weekend at Bernies!” We are so lucky to have Geithner, Bernanke, Reid, Pelosi and the anoited one working so hard for the masses. Could it be they really do have our best interests in mind? I DON’T THINK SO!



P.s. And to think my mother wanted me to be a banker……

Login or register to post comments by Gunther
on Sat, 10/23/2010 – 22:05

Is there really no alternative to accepting currency appreciation and seeing the industry moving elsewhere?
I am not a central banker, but if I would have to decide monetary policy it wold be printing that currency to prevent it appreciating and use the printed money to buy physical gold and take delivery.
Over time the price of gold will go up and indicate that someone is debasing the currency and when the market realizes that this someone will be forced to stop.

Login or register to post comments by RobotTrader
on Sat, 10/23/2010 – 22:09

“And, with the G20 seemingly in agreement to press forward with more domestic stimulus, I’ll assume that global central banks have no option but to retain their steadfast backstop bid for the global surfeit of U.S. dollars.  These dynamics would appear to ensure the ongoing monetization of enormous quantities of government debt. 

Such a scenario would seem to assure unwieldy global financial flows and Acute Monetary Disorder.  For years now, it has been a dangerous case of using “Keynesian” policies to perpetuate Bubbles and attendant imbalances.  Today, inflationism fuels Bubble dynamics on an unprecedented global scale.  Policymakers can insist on referring to “global rebalancing,” but the reality is more in line with desperate and universal inflationism.” –  Doug Noland

Login or register to post comments by liberal sodomy
on Sat, 10/23/2010 – 22:35

“And it proved sound. It worked. In less than ten years Germany became easily the most powerful state in Europe. It worked so magically and magnificently that it sounded the death knell of the entire (Zionist) Jewish money system. World Jewry knew that they had to destroy Hitler’s system, by whatever means might prove necessary, or their own [system of usury] would necessarily die. And if it died, with it must die their dream and their hope of making themselves masters of the world. The primary issue over which World War II was fought was to determine which money system was to survive. At bottom it was not a war between Germany and the so-called allies. Primarily it was war to the death between Germany and the International Money Power.”    -William Gayley Simpson

Login or register to post comments by zaknick
on Sat, 10/23/2010 – 23:18

I know that there must be a connection between juden fetzen and their persecution. What I don’t understand in the link between Rockefeller’s crew and Hitler, which there certainly was. Rockefeller is one of the “elders of zion’s” (Rothschild & Co. which included JPM and Rockefeller among other well known scum) pet, so why did his crew aid Hitler? Industrialists in Germany and the US financed him. IBM databased the ethnic cleansing for Hitler and Standard Oil supplied him with needed products among other business connections between the wealthy fascists here and there.


I think the answer is the zionist entity in the middle east but am not so sure.

Login or register to post comments by Orly
on Sat, 10/23/2010 – 23:25

This should help.  Also, there are many tie-ins with JFK and subsequent Bush actions that are beyond criminal in scope.

Login or register to post comments by zaknick
on Sat, 10/23/2010 – 23:52

Thanks, that does help. Reading it now.

Login or register to post comments by TheGoodDoctor
on Sun, 10/24/2010 – 01:20

Yes Prescott Bush was a known Nazi sympathizer.

Login or register to post comments by Djirk
on Sun, 10/24/2010 – 04:48

Don’t worry the NY Fed is suing BofA to ensure that liquidity injections happen legally and for the benefit of all those mortgage holders.

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