G20 – The dawning of a new world order.

The thing about big conferences involving world leaders is that everyone is so proper and polite in front of one another. British Prime Minister Gordon Brown is lobbying the world for a new world order along with President Barack Obama. They are proposing a 1.7 Trillion Dollar global stimulus plan for the world to follow, the trouble is over the weekend news broke that the world is not into that idea. France, Germany, Spain, Russia, China, have all made statements questioning the idea of such a global spending effort – some classifying it as counterproductive.

The Canadian Prime Minister was on American Television on Sunday being very diplomatic in his discourse. He said that he needed to review the proposal and that certain things needed to be ironed out before a “meaningful discussion could be had on the issue” – in plain English, the G20 will not yield any fruit on Brown and Obama’s plans. The few things needed to be ironed out are this – FIX YOUR BANKS FIRST, SHOW US THAT THEY ARE GOOD AND SOLVENT, THEN MAYBE WE CAN TALK ABOUT YOUR IDEA.

The Online Forex world knows this to be true. And the erratic trading on the dollar and pound have proven that there are many skeptics out there with regard to the G20 and what it will produce. Aside from some smiley pictures, a few days in cloudy London and some good old Scotch, what can these leaders say they came home with? I do not believe they will come home with much.

It is going to be a slow week up until the summit on Wednesday – light volumes and erratic swings will be the norm (unless someone big makes a gaffe like Geithner or Brown did last week). I also believe that the world is in for a shock when they see what all the spending and currency manipulation has done to the two staple currencies, the Pound and the Dollar. The Pound used to trade at over $2 to the Dollar and now it is hovering around $1.40 – this is a big drop. And the US Dollar is almost at parity with the Canadian Dollar – this used to be the butt of many jokes about Canada back in the day when I first started out. But now the two are neck and neck – it used to be .60 cents on the dollar for the Canadian currency. Perhaps we are in for a new world order. Perhaps we are in the midst of history in the making.

Hang on.

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Be Afraid – The end is near

The Bank of England is screaming at the British Prime Minister to cease his policy of spending. In fact, they have gotten so vocal for an organization that usually conducts its business behind closed doors and through confidential memos, that every newspaper in England – and most across the world, featured this story on the cover. The Times of London has a picture of Mervyn King, the BOE governor with a headline that reads “No more stimulus” – while online versions of the story have titles – “Stop, we have no more money”. It is interesting to see that the fiscal policy of England is beginning to rattle cages over there. It is worthwhile to note that the Prime Minister, Gordon Brown, is on a whirlwind tour in advance of next weeks G20 summit, trying to garner support for his and US President Obama’s “global stimulus” – and in his home his central bank is saying they cannot even afford it.

Oh, the similarities between the two – US and England – spending silly in the name of recovery while the debt goes higher and higher. There is one difference though, no one is screaming to Obama to stop. IN fact, Treasury Secretary Timothy Geithner just blew another Trillion yesterday and asked the US Congress for powers to seize “troubled companies” in the non-financial sector as well. Sounds more like Soviet style economics to me – but it all came in the name of being able to address an issue before it becomes one. So essentially, a business can be taken over by the US Treasury and its assets sold to other companies if the Treasury secretary (in coordination with the President and Federal Reserve) decides so. In my day we used to have something called a bankruptcy procedure – which required that a company who was in trouble go through the legal system to do the same. Secretary Geithner plan seems to do away with that process – I am not sure that is legal in the US, but have no fear, Congress will pass a retroactive law making it legal.

The world is getting worse – and China and Russia as I spoke about yesterday calling for the world to adopt a global currency in lieu of the dollar just the tip of the iceberg. The UN is doing the same. And while there has been these ideas before, we are entering a period of fear driving decisions, where the irrational becomes the rational in order to save us all from economic disaster. I fear that the UN will get their way now – posing this idea which china and Russia now back as a solution to a problem. I fear a global currency system – as it will destroy the capitalism that has made so many wealthy – and allowed for free markets such as the Forex. IT will kill the Online Forex and commodity industries and turn us all into socialist sheep, following instead of leading and thriving. Be afraid – be very, very afraid.

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