Sharp conflicts at G8 finance ministers meeting

[Hannah Bell]

The meeting of finance ministers of leading industrial countries (G8) held last Friday and Saturday was characterised by sharp conflicts over economic policy, with especially pronounced and growing differences between Germany and the US...

In particular, Germany's Finance Minister Peer Steinbrück...called for a speedy reduction of debt and declared that further stimulus programs were “neither necessary nor advisable”. He was supported by the delegates from France and Italy, which currently chairs the G8.

Italy’s Finance Minister Giulio Tremonti warned... Speculation had returned, especially in oil markets...

He was sharply contradicted by US Treasury Secretary Timothy Geithner. “...It is too early to shift toward policy restraint”, he said. Geithner was backed by IMF director, Dominique Strauss-Kahn...

Behind the apparent technical conflicts over an “exit strategy” are fundamental political issues. Washington is using the privileged position of the dollar, its military strength and its residual global dominance to offload the full brunt of its crisis onto its rivals. This offloading is being carried out through massive borrowing by the Federal Reserve and the buildup of a huge federal budget deficit.

In the first place, such measures lead to a decline in the value of the dollar, which in turn boosts the euro and undermines the European, and especially German, export industries. The latest figures for German exports are catastrophic. In April, exports were 29 percent lower than in the previous month—the most pronounced drop in the country's postwar history. The export federation BGA has estimated that the fall in German exports for 2009 will average 15 percent...

Secondly, the massive American indebtedness has resulted in the US absorbing the bulk of international private capital as well as state investment, making credit more scarce and expensive in Europe and further placing Europe, and Germany at a competitive disadvantage.

German Chancellor Angela Merkel...In a speech to business representatives in Berlin, she openly attacked the policies of the US Federal Reserve and the Bank of England accusing the US and British governments of investing billions in their financial markets before new rules could be introduced to regulate their activities. The aim of this policy, she said, was to ensure their continuing domination of world banking...

The world is once again hurtling toward economic and ultimately military war as the major powers scramble to carve out their shares of power in another re-division of the planet.

http://www.wsws.org/articles/2009/jun2009/gegt-j15.shtml

[DCKit]

1. Ha Ha! I called it yesterday.

Geithner asking for more of the same then getting schooled by the grownups who don't want to see this mess happen again in their, their children's or their grand children's lifetimes.

The U.S. didn't lead on regulation, now we're going to follow.

[elleng]

2. At least Italy recognized the on-going speculation.

Tho Prez O is very congenial, doesn't look as if he'll be able to move Merkel. Fine with me; these 2 adults know how to disagree, IMO.

[JDPriestly]

3. If you look at the video of Merkel and Obama at Buchenwald,

you will see that Merkel looked quite uncomfortable. Of course, it may have been quite chilly, and she may have been ill at ease and troubled by the facts about German history that Buchenwald presents. But, I also thought there was more behind the coolness on her part than the solemnity of the occasion. Watch the video and see what you think.

[elleng]

4. I did see that,

but there was another moment when he was in Germany that trip, they'd met, were descending stairs somewhere, essentially saying 'bye,' when I caught her reaching for his arm, somehow looked to me like reaching out to a friend, to protect one of them from a fall.

I do think they're 2 solid adults who essentially understand eachother and eachother's issues, and while they may disagree (probably WILL disagree), they won't develop lasting negatives.

[malaise]

5. Merkel is correct here

German Chancellor Angela Merkel...In a speech to business representatives in Berlin, she openly attacked the policies of the US Federal Reserve and the Bank of England accusing the US and British governments of investing billions in their financial markets before new rules could be introduced to regulate their activities. The aim of this policy, she said, was to ensure their continuing domination of world banking...