Currency tension will continue despite Geithner’s diplomacy

This was my latest media appearance from last Friday. I spoke to Howard Green about the G-20 summit in Seoul with David Weidner of Market Watch.

You can see some of my pre-meeting comments here. While I thought US Treasury Secretary Geithner’s letter to the G-20 was good diplomatically, I didn’t think Geithner would get far with his plan because it’s just not ain anyone’s interest. Moreover, the economics behind it was very muddled as Marshall has pointed out.

Subsequent to the G-20, I would say my original expectation was about right. It wasn’t a complete waste of time as David Blanchflower says. But, not much was accomplished.  In fact, the ‘currency wars’ continue apace with US TIPS now yielding negative rates and Mexico entering into the fray (see here). I would also point out that South Korea is making noises about yet more capital controls. So, you can consider the meeting a bust.

That’s it. Here’ the video.

(click picture for the video)

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