Posted By thestatedtruth.com on June 6, 2010

June 7 (Bloomberg) — Global policy makers are starting to clash over their individual prescriptions for recovery as Europe demands lower budget deficits while the U.S. warns against pushing exports instead of domestic demand.

At a meeting of Group of 20 finance chiefs in Busan, South Korea, June 4-5, Treasury Secretary Timothy F. Geithner said the world cannot again bank on the cash-strapped U.S. consumer to drive growth and urged other nations to stimulate their own demand. European Central Bank President Jean-Claude Trichet said fiscal tightening in “old industrialized economies” would aid the expansion by shoring up investor confidence.

Each strategy carries threats for the global rebound that the G-20 said faces “significant challenges.” Continued stimulus risks bondholder revolt over rising debt burdens, while spending cutbacks could worsen unemployment. Relying on exports leaves the world prone to trade wars and competitive currency devaluations as countries seek to give their companies an edge.

“The world may end up in a period of sub-potential growth for two or three years,” said Venkatraman Anantha-Nageswaran, who helps manage about $140 billion in assets as global chief investment officer at Bank Julius Baer & Co. in Singapore. “We need to accept that all of us cannot simultaneously grow our way out of trouble.”

The fragility of the recovery from last year’s worldwide recession was evident as the G-20’s finance ministers and central bankers gathered to shape the agenda for this month’s summit of their leaders in Toronto.

More at: http://www.bloomberg.com/apps/news?pid=20601087&sid=ajCu8.BfseQE&pos=2

Categories: Commentary, Economy, Finance, Interest Rates, Bonds, National News, Real Estate, Wall Street, World News
Tags: