It was fascinating to watch the gyrations of the G20 Finance Ministers and Central Bank Governors this past weekend in Moscow.
I was in Paris over the weekend and was watching much of the news in real time as it was being announced. More about France and Paris in a moment.
Every central banker and finance minister seemed to be reading from the same sheet. Each one professed to not be worried about the currency wars and did not think it was right to engage in such acts to intentionally devalue their currency.
That is exactly what each one of them has been doing for the past several years now. Do they really think we are a bunch of fools who are buying their spiel about not engaging in devaluation of their currencies? Are we that stupid that we will not notice that they say what is right to say, but do the exact opposite of what they said as soon as they turn their backs?
What is even more incredulous is the attention that bank traders and global media accords to such boondoggles. I have been following such events for a very long time and almost never been surprised at what nonevents such meetings have been. It is a real waste of taxpayer money to send our leaders to such events.
The statements were hypocritical, un-original and did not even have the intestinal fortitude to chastise Japan for the open declaration of devaluing their currency lately. No one spoke about the yen or Japan, as if it was not even happening. The gathering agreed that one should not manipulate its currencies and then walked away to do exactly what they said should not be done.
Moving on to France and Paris. I have spent last week here on business. It amazes me as to some of the world headlines about the euro when you actually are on the ground here.
While business sentiment is certainly soft here, there is absolutely no concern about the failure of the euro. Every few weeks we hear some leader or some banker proclaim that the euro will fail and that it cannot survive.
Yet, when you talk to the people on the ground in France and other eurozone folks, they look at me with amazement. While they understand the challenges, they cannot understand how the U.S. dollar is still standing.
With the massive deficits that seem like they cannot be ever brought down, the reluctance of the United States to bring about real reforms, spending cuts and make some truly austerity-type sacrifices, how can the dollar ever survive? While the euro is facing an uphill task, it has started making moves in the right direction. While the unlimited bailout by the European Central Bank is sterilized (which means each new euro being printed in bailout has to replace an old euro program), the U.S. announcement of $45 billion is new additional bailout.
So they ask me in turn, how can you be so sanctimonious when your won dollar is living on borrowed time? Unfortunately, I had no credible response to give.
Once again I was convinced about the sooner than later demise of the dollar and am happy with my non-dollar diversification strategy.
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