G-20 meeting where the G doesn’t stand for growth

As G-20 Finance Ministers meet in  Turkey this week to coordinate a response to deflation and stagflation across the globe, many are looking at the US with a leery eye.

Fed chief Janet Yellen has been talking the talk on raising rates in the US by the summer. This despite US multinational companies complaining that a strong dollar is hurting overseas sales.

As an aside I do not believe the Fed will be able to raise rates this year. In actuality, I believe that as we import disinflation through crude oil, and other Asian products, the Fed may need to consider more easing in late 2015, early 2016.

Strong dollar policy is easy when all around you are deflating their currency in a race to growth or the bottom depending on your outlook.

As the Greek tragedy ( it is anything but a tragedy for the Greek people, who could never pay back all the foreign investment fostered upon them by multinational banks in 2004-2008), and as the tide gets lower you will see who has exposure to the derivatives off of these loans. Many Wall St and European banks have said they are not exposed to a default, yet they might be.

Funny thing with derivatives, you never know your true exposure to the second or third levels of debt, until it is triggered.

 

 

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