Posted by: Armel | June 6, 2010

Angela Merkel to Tim Geithner: GTFOH !!

Geithner to EU: “Step up consumption”. Merkel: GTFOH !!

Portfolio Managers are going to make new allocation adjustments starting NOW due to recent developments affecting these turbulent markets. 

The Treasury Sec. Geithner went to his counterparts mostly in Europe and asked them to increase their domestic consumption, because the US could n0 longer carry the bulk of G20 consumption margins. The US was hoping to get Euro Zone Finance Ministers to understand that without rebalancing of domestic policies, global growth was going to stall. The message was not received by the Euro most important member: Germany. Angela Merkel just responded with what sounded like a rebuttal by announcing  large budget cuts, along with a tightening of entitlement spending. Without looking deeper into the line items, this should send a stronger signal to France to follow suit. 

In all, US and Germany (for now) are going in opposite directions to contain the sovereign debt crisis. Just 3 days ago, one more EU member came under scrutiny on fresh doubts over published economic data, and it all adds to the pressure felt everywhere in the G20. One has to wonder what will be next…

Armel Njeunou

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