Politeía Digest

Quis custodiet ipsos custodes?

Obama Jumps Into G-20 Surplus Spat

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By Jonathan Weisman

NEW DELHI—U.S. President Barack Obama, returning fire in a heated exchange between the U.S. and Germany, added his voice to U.S. efforts to reduce the massive German and Chinese trade surpluses and increase pressure on China to let the value of its currency rise.

Tensions have flared between German and U.S. economic officials ahead of the summit of the Group of 20 industrial powers, which begins Wednesday night in Seoul. U.S. Treasury Secretary Timothy Geithner has been pressing member nations to adopt targets to lower trade surpluses and trade deficits. In return, German officials have publicly lectured Washington about the wisdom of its economic policies.

In a joint news conference with Indian Prime Minister Manmohan Singh in India’s capital, the U.S. president came close to defending the U.S. Federal Reserve’s decision to pump $600 billion into the economy by buying U.S. Treasury bonds in a bid to keep interest rates low and spur consumer demand. The Federal Reserve is independent of the administration, and by tradition White Houses have strained to avoid any appearance of collusion on Fed and administration policies.

Mr. Obama said the administration doesn’t comment on particular actions of the U.S. central bank, then said, “I will say the Fed’s mandate, my mandate, is to grow our economy, and that’s not just good for the U.S. That’s good for the world as a whole.”

Also Monday, in a speech before India’s parliament, he called on Pakistan to eliminate terrorist safe havens within its borders, a move likely to be greeted well by critics in India, even as it touches on a sensitive area in U.S.-Pakistan relations.

German officials have accused the United States of joining other countries in a currency war designed to drive the value of currencies down, cheapen their products and boost exports. German Finance Minister Wolfgang Schäuble lashed out at U.S. pressure on Berlin to rein in the country’s surging exports, accusing Washington of hypocrisy and telling Der Spiegel magazine, “the American growth model … is stuck on a deep crisis.”

“It doesn’t add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank’s printing presses, artificially lower the value of the dollar,” he said. Read more in The WSJ.

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Written by Theophyle

November 8, 2010 at 4:40 pm

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