Market Leader informed
The world has stood still waiting for the G20 summit, which is to take place in Seoul on Nov 10th -11th 2010. The financial circles start expressing concerns which may turn into panic if not dealt with in time.
The problem is that:
·Various members of G20 see completely different ways out of the crisis, which have already been announced to the citizens of the corresponding countries.
·Each member of G20 is trying to solve its own problems at the expense of the others.
Fortunately, the world hasn’t yet come down to the principle: “The worse the neighbor feels the better it is for me” (as it was on the verge of the Great Depression in the USA). However every country has been taking care of its own interests for al long time.
The mixed plan of coming out of the crisis through the eyes of the major G20 participants.
This is the way the experts of Masterforex-V Academy see the G20 members’ current plans of coming out of the crisis, which are going to be introduced in Seoul:
1.European states (Germany, France) promote austerity measures (budget reductions, pension reforms etc.) as the key means of economic recovery of the entire world and every single state in particular.
2.The US Fed Reserve System is planning to use G20 summit to implement the currency stimulation program while openly hinting at the possibility of devaluing USD even though the G20 finance ministers haveurged the governments to not devalue their national currencies so as to stop the trading wars (as the devaluation of the national currency provides the domestic exporters with extra favorable conditions)
3.The US government urges its partners to lower the global disproportions between export and import. In other words, with the help of G20 the US government wants to put into practice such conditions that would eliminate its negative balance in trading with China, other Asian counties (South Korea, Singapore, Taiwan) and Germany.
4.The world’s biggest corporations keep accumulating cash while the governments of numerous states, including the US, are trying to “deprive the billionaires of their money” in order to solve their own problems at the expense of the latter
5.The counties with big earnings (China, South Korea, Singapore) do the same that the corporations do:
·At the G20 summit they want to secure the favorable conditions for external trade, first of all with the US… and to continue earning profits.
·They accumulate gold and currency reserves. For example, China’s currency reserve is estimated at $2.6 trillion, which is the main reason for the global trade imbalance, EU representatives say.
So, according to Masterforex-V Academy experts, all the countries are trying to “legislatively” secure their own “policy of self-defense” through preserving (China, South Korea) or changing (the US) the financial and economic conditions in the world in their favor under the slogans of “global values”, “best conditions of coming out of the crisis” etc. According to the experts of “Market Leader”, over the near term the situation may lead to another wave of the global economic crisis.
The experts of Masterforex-V Academy note that major threat comes from the so-called “global trade war”, which has already broken out. What does the US really do by blaming other states for starting a “trade war” and devaluing their national currencies versus USD? The United States secretly… devalues the US dollar, using the accusations against China as a cover.
Look at the USD index chart
Analysts from the Department of studying Masterforex-V trading system note that the USD index has formed a bullish wave of the senior timeframe, a Fractal-Zigzag Reversal (FZR) for which will reverse the current mid-term trend. If the base (low) of the wave is broken through, the price will shape a shortened wave, which will need an “MF Moment of Truth” for defining the direction of the USD-index movement.
Why does the US put the biggest blame on China? They do it because China has been devaluing the Yuan for a long time (trying to provide the Chinese manufacturers with the most favorable market conditions) even heavier than the US has been devaluing the Dollar, Masterofrex-V experts say.
May G20 have a grievance against Russia? Yes, they may, however unessential, the experts explain, as Russia de facto devalues its Ruble as well. Take a look at the RUB currency rate chart, which has started consolidating a little in advance of the G20 summit.
What could eliminate the chaos around the world and what concessions will the G20 states never make?
According to Masterforex-V Academy experts, the following issues can eliminate the chaos in the international relations:
·Global standards of monetary policy need to be developed, including partial revaluation of some national currencies (first of all, the Chinese Yuan).
·It is vital to come to agreement with other countries about external trade
·If possible, it is necessary to restrain the balance of trade surplus for the states with export-oriented economies (it holds true mostly for China). Exceptions could be made only for the world’s biggest and most important exporters of raw materials, like Russia.
·To reduce the balance of trade deficit to the minimum in those countries who consume imported products (it holds true mostly for the USA). The world wants the Americans and other representatives of the so-called “golden billion” to save more. Yet it will definitely lead to a decline in the demand for the goods imported from other countries.
·To carry out fundamental reforms of international financial institutions. Of course the task is global, hard and long-lasting.
According to the shared opinion, in order to avoid another wave of the global crisis, the most powerful states should take decisive and coordinated steps. That is why the world community is looking forward to the G20 summit in Seoul.
Is G20 really able to solve the mentioned problems?
G20 is an “international club” founded in 2008 on Nikolas Sarkozy’s initiative. So what are the strong sides of G20, its possibilities and restraints?
1.G20 includes such rapidly-developing countries as China, Brazil, India, Turkey, Australia etc. It means that the share of the world powers in G20 is much bigger than in G7. So the G20 is more internationally legitimate.
2.G20 has been called the best answer to the global economic crisis: at the very beginning of its foundation it had impressive credibility.
However, according to Masterforex-V analysts, G20 has failed to come up to the expectations of the world.
1.One of the biggest disappointments is Nikolas Sarkozy himself (he is the current chairman of G20). He has offered to focus on regulating the trade in agricultural sector, which many people have considered as PR connected with the election campaign of 2012.
2.In reality G20 includes some 27 states, but it is getting more sluggish
3.The disagreements between some G20 members are becoming more frequent. Some of them start ignoring the meetings, which means that they consider G20 inefficient. For example, Brazil didn’t sent its Finance Minister (nor even the head of the central bank) to the G20 meeting of finance ministers in Gyeongju, South Korea
4.Chinese politicians and economists consider the international criticism of Chinese policies to be intrigues of the US. So they always adhere to some specific positions and very rarely accept a compromise.
In advance of the G20 summit in Seoul a number of financial authorities promised to avoid the artificial devaluation of the national currencies as the currency rates should be determined by the market participants and reflect the real economic situation.
Thereby, the intrigue continues. No one knows for sure what will be the consequences of the summit in Seoul. However it is well-known that:
·The United States will offer the world’s leading economic powers to define the maximal levels of the trade-balance deficit and surplus (4% of the national GDP for every single member of G20)
·France, Great Britain and many other G20 participants are determined to support the US
·Germany and Italy are going to oppose the offer made by the US
·The behavior of China and Japan will be fairly important
What decisions will the G20 summit result in?
Evgeniy Olhovskiy, out expert and the head of the Canadian Association of Traders and Investors, supposes that the forthcoming meeting may end up just with “big words”, which nobody is going to put into practice. So it remains to be seen what the 34 representatives (with 11 presidents among them) will decide on the burning problems. 34 is the exact number of delegations that are expected to arrive at the crucial summit. Whether its results will come up to expectations of those who feel optimistic or skeptical about the summit, the international Group of 20 will have to pass another test of survival.
Survey: What will the G20 summit end up with?
·The participants will find an effective way to solve the burning economic problems
·They will confine themselves with fumbling about the problems, at best they will sign a declaration of intention
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