Geithner shifting focus from 'currency war' to trade
U.S. Treasury Secretary Timothy Geithner delivers a press conference in Beijing.
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JEREMY HOBSON: Now to that G-20 finance meeting that's going on in South Korea. It's being dominated by talk of a currency war. Meaning countries are trying to devalue their currencies so they can boost their exports. For more, we go live now to Chris Low, chief economist with FTN Financial.
CHRIS LOW: Good morning.
HOBSON: Chris, Treasury Secretary Tim Geithner has asked the G-20 members to limit their trade surpluses and trade deficits to a percentage of their economic output. Why does he want that? And does it have anything to do with the global currency war people are talking about?
LOW: Oh absolutely it does. But the reason he's shifting the conversation is a currency war is so abstract, but trade is concrete. You know, trade is one of the few places you have a zero sum game in economics. If someone's running a big surplus it means that someone else has to run a deficit. And of course the biggest trade deficit is here in the U.S. where it took away three percentage points from GDP growth last quarter. So that's why he wants to shift the focus in that direction.
HOBSON: And quickly Chris. Do you think these other finance ministers are going to listen to Secretary Geithner? Do they have anything to gain here?
LOW: Absolutely no. He's already got traction. The other G-7 developed countries are in the same boat we are, so they're already on board. But he's also getting support from emerging markets because even though all of them gamed their currencies, nobody's as good at it as the Chinese. And so countries like Brazil, Chile, Argentina -- they'll come on board because it'll put them in a more competitive place, because it will put actual constraint on Chinese trade.
HOBSON: Okay, Chris Low thanks so much.
LOW: You're welcome. Thank you.
HOBSON: Chris Low is chief economist with FTN Financial.