Stand up for nonprofit news & help us reach our $150k stretch goal! GIVE NOW

Geithner shifting focus from ‘currency war’ to trade

Marketplace Staff Oct 22, 2010
HTML EMBED:
COPY

Geithner shifting focus from ‘currency war’ to trade

Marketplace Staff Oct 22, 2010
HTML EMBED:
COPY

TEXT OF STORY

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.

Good morning.

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.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.