G20 – This is Starting to Get Interesting

The story just keeps getting better.  When we last left of, yesterday, we spoke about the decision by the US President, Barack Obama, to ask the Chairman of General Motors to step down.   Yesterday, we heard more – as the president gave Chrysler 30 days to fix itself and headless GM 60 days, before deciding if he wanted to give them more money.  This news sent stocks tumbling and sent the dollar soaring as risk appetite waned and a flight to safety ensued.  “Safety” is not what I would call the US Dollar at this point in time, however this is what analysts have been saying.

Anyway, the pending G20 conference, just 2 days away, is turning out to be a pivotal moment in the lefe of this economic crisis.  Growing dissent over the British and American calls for increased spending along with an enormous rally in London is already making things interesting.  Take for instance the German Chancellor, Angela Merkel, who is on the record over the weekend as saying that a global new deal is not possible if those behind it do not have their own house in order. This is a nice way of saying “fix your own problems before you dictate to me how to fix mine.”

The fact that President Obama has flexed hi muscle with the Automakers coming to him with their hat in hand, again, is proof that he is listening to his foreign critics.  I suspect that he believes that if he shows strength in saying “no” to every conglomerate in need, he feels he might get somewhere in London later on this week.  Too little too late.  The fact is he has already spent an enormous sum of money trying to repair his banks and industry while tackling expensive pet projects like nationalized health care and green energy that he has lost “street cred” with his peers abroad.

Forex online blogs are anticipating a stalemate this week – as nothing will come pf the meeting but a declaration of unity will be made so as not to panic the markets any more.  I am guessing that the call for a global currency will be made by china and Russia in some form – and that it will be played down – but it will be out there.  

It is sad to see that the US’s biggest and closest friend (geographically) is so nice and politically correct in its criticism of the US administrations actions.  The fact is, the Canadians are in much better shape than the Americans at this point – considering that most of the cars made for GM and Chrysler are manufactured north of the border – they dont have labor union issues to deal with as the American do.  The fact that their currency is trading strong is another sign that things are not that bad in the frozen mineral and resource rich tundra that is Canada.  Now if only other major metals and commodities can go up like Gold has, Forex traders can see the Canadian Dollar perhaps become the alternative Dollar in the currency reserve world.