Recently, the G20 Summit has released the g-20 Summit Declaration, of Toronto, the Declaration said that the growth of the world economic recovery, but challenges remain, developed countries of sovereign debt crises is a significant threat, the primary task is to ensure that the G20 and the strengthening of the recovery, as a strong, sustainable and balanced growth, strengthening the foundations of risk of the financial system. The Declaration also stated that, should resist trade protection against improper means to stimulate exports.
You can see, the Toronto Summit has formed a number of consensus on key issues almost did not reach any forming opinion. For example, Canada's Prime Minister Harper's "States to 2013 budget deficit until reduced by half" and get the response in Europe, and even some written declaration, but the US reaction is not very active; Obama calls on States to continue to stimulate the economy has not been a sufficient response, on the contrary, the Europeans want to enhance the financial viability and economic growth and location. China represents the countries to be prudent and sound grasp of the economic stimulation policy exit "timing, rhythm, dynamics," and to the European Global Bank tax practices expressed objections.
We believe that the G20 Summit was a symbol of major economies on their upcoming "session." United States subprime mortgage crisis triggered by the financial crisis of the rules of the game has been out with clear overall target sequence consensus has been neutralised. In fact, not to mention the loose joint of the G20, in a deeper integration between the euro area, is also "intrigue, parallel tracks". Southern Europe because of excessive economic stimulus, unrealistic high welfare causes flooding of State loans, leading to the outside world on its formation, the market by selling, determine margins to force the debtor compliance disciplined, this is normal, because the euro zone have not Governments financial hard constraints, only by the market turbulence in the formation of a "capital hard constraints."
But the banks are southern Europe the largest sovereign debt holders, France President Sarkozy in various ways of rendering the crisis requires euro eurozone massive rescue, if Germany opposed, France threatened to quit Euro zones destroyed the central structure of France and Germany, resulting in European Division. From the results, France seems to be made larger victory, Europe has introduced trillion relief projects, Germany temporarily silence, but will gradually become a boycott. In fact, the rescue almost did not practical to reduce market risk and interest rate differentials. So, if you can understand the European sovereign debt crisis itself is a kind of "parallel tracks, infighting" process, then there is no reason for the G20 Summit was reached by the so-called consensus have any expectations.
In fact, we have been unable to Canada and Europe's "the deficit reduction programme" easily as some economies "exit strategy". Because of the economic stimulus package, namely financial and monetary services. Textbook inside spread Mondale Fleming model means that fiscal policy response to internal imbalance, with monetary policy respond to external imbalance. But European sovereign debt crisis is actually a farm market adjustment, market force the debtor to cut the deficit while making large depreciation of the euro, the dollar from the past into 1.2 1.6. Reduce the deficit of internal demand, but the currency devaluation, but let external demand soared, as the euro has occurred because of depreciation of the goods competitive improvement. External demand surge will fill the decline in domestic demand, which means that the enhancement of monetary policy to fill the fiscal policies of weakening, it cannot be regarded as an "exit", but rather the direction of the market.
Next, a new questions arise: are high debt problems of the United States if not in a position to continue to enhance the role of the demand side, the new requirements will be provided by which country? there is no doubt that the United States and Europe have hopes that China will become the "new external demand" providers, this means that you need to ask the Chinese renminbi appreciation, on the financial aspects of continuity, this means that China should disregard their own response, regardless of the economic cycle of natural adjustment, to stimulate the flow and then upgrade to meet the "hobby" in developed countries, to eliminate the so-called "second on the bottom".
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