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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: bruiser98 who wrote (114045)	10/7/2010 10:00:07 PM
From: Broken_Clock	2 Recommendations Respond to of 116555

he didn't want to piss off his banker buddies. Now they have wiggle room.

To: bruiser98 who wrote (114045)	10/9/2010 3:58:31 AM
From: elmatador	Read Replies (2) \| Respond to of 116555

Developed countries should support their economies with more fiscal stimulus rather than ultra-lose monetary policies in order to prevent an escalating currency war, Brazil's finance minister said on Friday Brazil: Fiscal stimulus is solution to currency war * Finmin: Developed economies removed fiscal stimulus too fast * Loose monetary policies causing currency, trade war * Global economic recovery looking L-shaped (Adds quotes, background, byline) By Walter Brandimarte WASHINGTON, Oct 8 (Reuters) - Developed countries should support their economies with more fiscal stimulus rather than ultra-lose monetary policies in order to prevent an escalating currency war, Brazil's finance minister said on Friday. Finance Minister Guido Mantega told reporters at the International Monetary Fund that strong developed economies such as Germany acted too fast in removing fiscal stimulus, putting at risk the global economic recovery. To support their economies, those countries are now resorting to ultra-loose monetary policies to weaken their exchange rates and boost exports, which Mantega said are causing a currency and a trade war. "We need to bring back to the G20 the discussion about the recovery of advanced economies," said Mantega, who was in Washington for the semiannual meeting of the IMF and the World Bank. "That recovery should be based on their domestic markets, not on the markets of dynamic emerging economies." Mantega said he will take that discussion to the next meeting of the Group of 20 developed and emerging countries in Seoul. Brazil's growth rate has been among the world's strongest, and its economy is expected to grow more than 7 percent this year. "We were wrong about the global economic recovery," he said, adding that the recovery is looking more L-shaped than V-shaped now. The U.S. dollar has weakened steadily since the beginning of September as prospects for further monetary easing by the U.S. Federal Reserve have led investors to seek higher returns elsewhere. Many emerging economies have been adopting measures to stop their currencies from appreciating. Brazil, whose interest rates remain among the world's highest, has been buying dollars for its international reserves and, earlier this week, the government doubled to 4 percent a tax on foreign investment into domestic bonds. Mantega said that accumulating foreign reserves is not the the ideal solution for curbing appreciation in currencies, but stressed that Brazil will continue to do so to protect its economy. The minister did not spare China from criticism, saying that Beijing was also weakening the yuan in sync with the dollar. He said the United States has a large responsibility in foreign exchange markets, however, due to the reserve-currency status of the U.S. dollar. "The floating exchange rate regime, which I consider the best, is being corrupted. That will bring negative consequences for all countries," he said. (Reporting by Walter Brandimarte; Editing by Leslie Adler)