So the G20 isn't going to engage in the currency war that's already raging. The US wants a "strong dollar" and China "market-determined exchange rates". All countries are going to consider the Geithner imbalances plan already rejected. Is it this blog or did the G20 just hit new heights of Orwellian double-speak?
Anyway, came across this speech by BOE gov, Mervyn King, which was delivered to some Midlands merchants before he got on the plane. It's a little more honest:
At the G7 meeting in October 2008, I was part of the group of ministers and central bank governors who threw away the prepared communiqué, and replaced it by a bold short statement of our determination to work together. That spirit, so strong then, has ebbed away. Current exchange rate tensions illustrate the resistance to the relative price changes that are necessary for a successful rebalancing. The need to act in the collective interest has yet to be recognised, and, unless it is, it will be only a matter of time before one or more countries resort to trade protectionism as the only domestic instrument to support a necessary rebalancing. That could, as it did in the 1930s, lead to a disastrous collapse in activity around the world. Every country would suffer ruinous consequences – including our own.
The whole thing is worth a read to remind us of how big the challenge ahead is. This blogger must ask the question again: If the logical historical outcome is that the US is going to impose trade sanctions, then shouldn't we be supporting a break in the yuan peg now?