The weekend’s G20 passed without an agreement on the key issue of the day: global trade imbalances.
While meek promises on currency controls were made, the key reason why states continue to intervene, to stimulate export markets, remains on the table.
Societe Generale have put together a list of the key trade offenders. They’re noted in red, and also include Germany.
The key opponents of the U.S. suggested trade balancing tactic were Germany and Brazil.
China, somewhat surprisingly, was in support.
Brazil’s opposition makes sense if you look at how much their currency (BRL) is being crushed by the current round of U.S. QE. The country needs to be able to devalue in order to stimulate its export of commodities, which drive Brazil’s growth.
It’s likely many of the countries are waiting for the Fed’s next round of QE before they agree to any sort of account balance pact with the U.S.