Economic Summit Begins Saturday in Washington

The economic summit of the G20 nations scheduled to begin in Washington this Saturday will bring conflicting ideas and philosophies to the negotiating table. Normally such a meeting would not take place during a change of administrations like the one taking place in Washington but the economic situation is grave. Most of the industrialized world is in a recession and emerging market economies have slowed dramatically. Despite several measures by governments credit markets remain frozen and forex opportunities are somewhat limited.

US Advantages

The crisis was triggered by irresponsibility on Wall Street and much of the world has laid the blame for the current global recession squarely on the United States. Political leaders almost everywhere are unhappy with the present international financial system, which exempts the custodian of the system (the US) from key elements of its discipline. The US can run up huge deficits without having to face the same penalties and self correcting pressures that other countries do when they run up huge deficits.

Leaders Say US Has Inadequate Regulations

The US has the advantage of being able to borrow in its own currency avoiding exchange risk and at the same time having its own currency used as the world’s reserve currency giving the US what some see as an unfair advantage. Many world leaders accuse the US of having inadequate regulations and failing to supervise its domestic financial system. The repercussions of this failure are global and have adversely affected the performance of global markets and stifled some Forex opportunities in currency markets.

Europeans Pushing For Drastic Reform

Many European leaders are pushing for a drastic reform of the world’s financial system putting them at odds with the free marketers of the Bush administration. Some world leaders are suggesting that the dollar be replaced as the world’s reserve currency which is unlikely because nothing can be accomplished without the cooperation of the United States. The US has de facto veto power over the introduction of a new reserve currency system and, unfortunately, a return to the pre 1971 gold standard is not economically feasible.

Watch For New Forex Opportunity

While the G20 meeting is important it is the beginning of a very long process. The summit has been compared to the Bretton Woods meeting of 1944 where the allied governments created the global financial system that is in so much trouble now. Markets are likely to react to any news, positive or negative, coming out of the summit and investors should watch carefully for new Forex opportunities.

Quick Forex Tip: The International Currency Trading market has no central exchange like stock and commodities markets. Currency markets are dispersed throughout the world and the primary trading centers are, in order of importance, London, New York and Tokyo. The geographic dispersal means that markets are always open somewhere in the world and traders can jump on the internet and hopefully make very profitable trades at any time of the day.