Obama fails to convince world leaders to push China on currency
Posted on November 13th, 2010
() Washington – President Obama failed to convince world leaders at the G-20 Summit to back the United States over the U.S./China currency dispute while having to answer questions about his leadership after his political party took a beating in the mid-term elections.
Leaders of the world’s twenty richest nations were more concerned with self preservation than backing the United States with fears of trade protectionism and possible currency wars looming.
Since the United States’ Federal Reserve printed $600 billion in money in an attempt to boost domestic markets President Obama has had to repeatedly answer questions overseas about his strength and leadership role as the world watched the mid-term election process unravel.
In defense of his actions at the G-20 Summit, President Obama said at a news conference, “Instead of hitting home runs sometimes we’re gonna hit singles.”
Obama’s biggest loss at the G-20 Summit in Seoul South Korea was when world leaders pledged to refrain from “competitive devaluation” of currencies. World Leaders decided against a term offered up by the United States, “undervaluation”, which would had been more in support of the U.S. currency dispute with China.
Washington has accused China of deliberately keeping the value of the Yuan low in order to sell cheap goods abroad – which the United States is the largest importer of. China has refused the Obama administration’s repeated requests to rise the value and has even gone so far as accusing Washington of devaluing the dollar by flooding the market with Treasury bonds.
U.S. lawmakers have been taking a protectionist stance against China, threatening to levy import duties on goods sold to the United States. At the same time, other countries are looking at lowering the value of their currency, though politicians have vowed to fight such moves.
The entire aire at the G-20 Summit was more about protectionism than cooperation with no leaders showing a willingness to back Obama.
The last time a currency war took place was during the Great Depression in the 30s which only prolonged the economic slowdown. Investors in the U.S. are concerned over a global protectionist outlook developing with different countries using their currency to lure buyers. In the United States the value of the greenback has come down considerably and now stands nearly on par with the Canadian Loonie, the U.S.’s closest trade partner.
A weaker greenback has pushed commodity prices higher with gold reaching a new record high in November of over $1400 per ounce. Crude oil has also been on the rise and economists are growing concerned that the trade deficit will widen further still due to the large amount of imports being consumed in the United States. While inflation is looming as a result, there is also talks of slow economic improvement, though with world leaders having less confidence in Obama their willingness to cooperate with the United States was evident at the G-20 Summit, despite Obama’s insistence to the contrary.
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Tags: China Currency, Convince World Leaders, Currency, World Leaders
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