Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Netflix - FAANG a Buy, Sell or Hold?, CME Black Swans Chasing Value in Biotech Stocks - 5th Aug 21
We Will See SPX 4600 In 2021 - 5th Aug 21
Revisiting The Excess Phase Stock Market Peak Pattern - 5th Aug 21
Dramatic Divergence between US and European Stock Markets - 5th Aug 21
Budgie Clipped Wings, How Long Before Flight Feathers Grow Back After Clipping, 4 Week Update - 5th Aug 21
Lisa Su's AMD Stock Price Rockets to the Moon! $200 Target, How to Buy for Under $78 - 4th Aug 21
Gold Jumps for Joy Only to Hit the Ceiling… Hard - 4th Aug 21
Is Wise Really The King of Online Money Transfer Services? - 4th Aug 21
Tips for Investing Your Money in Stocks - The Ultimate Guide - 4th Aug 21
Gold is the Key to Financial Wisdom - 4th Aug 21
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Global Economics and the “Baton Toss”

Economics / Global Economy Jul 16, 2010 - 09:55 AM GMT

By: HRA_Advisory

Economics

Best Financial Markets Analysis ArticleRecent conferencing in Toronto was another waypoint in the transit of global authority.  The G8 (G7+Russia) economics discussion group began broadening a decade ago with creation of a forum of economic ministries.  The western banking crisis pushed that larger forum to heads of government level.  The long planned G8 gabfest in a wealthy enclave of Ontario’s cottage country had a city centre G20 (G19+EU) gathering appended to it.  Even protest groups who claimed allegiance with emerging economies a decade ago knew G8 was but a preamble and focused on the quickly organized G20 fete.&


Oddly enough the G8 doesn’t get quite the same listen now that most of its members admit to being broke.  The G20 has become the main potentates’ club less than 2 years after its heads of governments first met to deal with the Western credit crunch.  Does this matter?

Hopefully it does.  The rise of Europe half a millennia ago has reshaped the world. Our bias as ethnic Europeans living on the Pacific Rim notwithstanding, we think that has been mostly to the good.  The reinstating of scientific method it produced in Europe has expanded our understanding of being, on a global basis.  Now seems as good a time as any to move from that to being smarter.

That would include popping the myth that cultural differences generate state level conflict.  Its actually sameness that does that.  Wanting the same resources and the same abilities to form them into comforting goods causes most conflict.  Its true that much violence happens in the name of cultural nuance, and some would be insulted by the notion that mere goods underpin antagonism.  However, even saints have to eat and the infighting tends to lighten up when there is plenty of real estate to go around.       

G20 expands the cultural context surrounding economic discussion to most of the planet.  This hopefully will mean eliminating culture as an excuse for economic differences.  It eschews the unwieldiness of the UN system, which of course leaves some feeling left out.  It is a government based forum, which leaves others feeling left out.  And without question the gathering has a large measure of photo-op that could be handled by photo-shop these days.  Even in Canada’s none too competitive telecom market a basket full of cell phones wouldn’t have cost a billion bucks.

However, realistically these forums work when they provide the fulcrum for changes actually levered by other means — they work if they can provide politicians with good photo-ops. 

What really matters with this particular gathering was that it has recognized the major geo-economic shift we are in.  This is confirmed by hand wringing from the cadre who have shaped and shaded the G8.  The nut of these cadres’ concern is that the new boys and girls don't understand how to presage the outcome, which could ruin the photo-op.  However, the “new guys” priorities are after all new, at least in this millennium.

Two of these new guys are the largest and among the oldest of functioning human cultures.  China and India are the poster cultures for modern shifts away from stagnant multi-tiered class systems by, respectively, revolution and evolution.  They know quite a bit about how cadres function.  And everyone has lots of experience with empire. 

Its entirely possible that what seemed like intransigence to the old cadres was diplomatic politeness.  The new guys are all pretty much solvent.  So they don't have the same focus on fixing the financial system G8 had.  Ensuring fixes don’t trash the investments they have made or want to make is.  A role reversal of sorts is playing out after all.   

The Toronto meet made plain who are the debtors and who are the creditors.  “He who pays the piper calls the tune” is understood by everyone.  That message is going to get repeated, and it isn't just capital cities that should heed it.   

So far there has been no real accounting for the underpinnings of the Credit Crunch.  The Crunch was preceded by much touting of the system that caused it, and was followed by ample monetary support from the creditor nations who didn't cause it.  Too big to fail was taken to heart, and wallet.  Too big to fault wasn't. 

The debtor nations are going to have to get that accounting started in earnest soon.  Sound market practice was put aside to aid actors who still hold down jobs with 8 or 9 figure incomes.  They continue to be regulated by the people who were dumb enough to equate those big incomes with brilliance.   This didn't have to be a talking point to be the 800 kilo gorilla at the table.  Trust hasn’t been rebuilt.  The debtors need it — service is their main industry and customer satisfaction will determine who gets the repeat business.

“G summitry” grew out of recognition in the ’70s that coordinated regulation by the US and Europe could smooth trade in a market system.  Japan was included because its economic size.  Canada got a seat to balance one Italy got for the sake of EU peace.  Russia was added as a post Cold War olive branch.  The G8 is a trans Atlantic rich boys club, plus Japan that recreated its economy to sell into the Atlantic basin. 

G8 took kudos for the long post Cold War economic expansion.  That growth was mostly a lot of spy vs. spy clamps being removed from client economies, which we suppose does qualify as G7+ tinkering.  Overturning the anti-empire rhetoric of the Cold War didn't have to be part of the deal, but that history didn't go away either.  The G8 ought to put that reality on the table before G20 fully takes over.   

Expanding to G20 world in the late ‘90s recognized a global economy was forming, but it took the Asian monetary crisis to focus this.  The push to include growth economies was from North America since the Euro zone then thought its new currency was a panacea.  Not so much it seems. 

Conferencing is no panacea either.  But the EU experiment, which is at its root a conferencing forum, has shown it can have salve old wounds for the sake of avoiding new ones.  Those who bemoan the EU as a political forum pretending to be about economics ignore the reality that politics is mostly about how cash flows.  Governments ignoring politics is an idea we like on paper, but also dread — when politics no longer dictates, government usually does. 

No small part of China’s amazing growth story has been a changed strategy by the crowds who weren't run down in Tiananmen Square — voting with their wallets rather than their lives while those in power worried about the politics.   Twenty years later they are wealthy enough to have an audience across the street in the Great Hall of the People.  By various means the same thing is happening in the other emerging economies.  And as part of that process the denizens of those economies have been talking to, and working with, each other.  This is why we hope the G20 will matter.

The balance of this century will be about how the growth  economies that have expanded the G8 into the G20 progress.  The Credit Crunch has effectively sped up the commerce, and hence congress, between these growth economies.  For the moment there is a degree of solidarity amongst the new group.  That is left over from the old Third World concept which, not ironically, was coined by Mao as a means of creating a large enough group to force the wealthy worlds’ clubs to listen to them.  Most of that Third World grouping now sits outside the G20 gathering places.  The more things change….

Realistically there does need to be a cap on the number of voices at the table or none of them will actually get heard (see Climate Conference in Copenhagen for a reference).  For the immediate future the debtor/creditor distinctions will play a big role in defining how the new grouping operates.  The official G20 meeting for 2010 will be held in Seoul this November.  Since the shift from government stimuli to private commerce will either be working or failing by then, the elbowing in Seoul could say a lot about whether this new grouping can function.

The last vestige of the Cold War is a two hour drive north of Seoul, and it would make sense to shift the meetings to that ironically named DeMilitarized Zone.  It would remind everyone why politicians sitting down to talk about the economy makes any sense at all.  If the G20 is to be important it will be because it helps prevent the creation of more Korean type DMZs.  And it might prevent them amongst the new guys in the grouping.  That’s why the new guys wanting G20 to turn into a good photo-op is important.  Every one say “cheese please”.


Everyone talks about summer as a time to avoid the markets.  People “sell in May and go away” but the smart money doesn’t.  That’s because summer is also the time for careful bargain hunting and keeping a watch for discoveries. NOW is the time to get ahead of the market and learn about the next wave of potential winners before they become everyone else’s focus.

HRA is not a "pick of the day" service. We focus on finding the best speculations for our subscribers. In addition to companies already followed, HRA initiated coverage on 10 new companies since the beginning of 2009. The AVERAGE gain for those 10 companies to May 27th, 2010 is 290%!

CLICK HERE TO ACCESS YOUR FREE SPECIAL SUMMER STOCK REPORT!

By David Coffin and Eric Coffin
http://www.hraadvisory.com

    David Coffin and Eric Coffin are the editors of the HRA Journal, HRA Dispatch and HRA Special Delivery; a family of publications that are focused on metals exploration, development and production companies. Combined mining industry and market experience of over 50 years has made them among the most trusted independent analysts in the sector since they began publication of The Hard Rock Analyst in 1995. They were among the first to draw attention to the current commodities super cycle and the disastrous effects of massive forward gold hedging backed up by low grade mining in the 1990's. They have generated one of the best track records in the business thanks to decades of experience and contacts throughout the industry that help them get the story to their readers first. Please visit their website at www.hraadvisory.com for more information.

    © 2010 Copyright HRA Advisory - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

    HRA Advisory Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in