U.S. & China -- The G 2 That Count ~ Steve Blitz Morning Notes
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Thursday, April 2, 2009

U.S. & China -- The G 2 That Count

Obama and Hu got together in a side room yesterday to, as reported in the FT

" . . . work together to renew world economic growth, strengthen the financial system, and establish a ”strategic and economic dialogue” group that would first meet in Washington later this year. . . "

China staked out its position as being upset over the amount of dollar debt they own but didn't own up to the manufacturing boom and sharp rise in employment and incomes that their "cheap yuan" policy had yielded. Everything has a cost. What we will never know for certain is whether the economic relationship between the U.S. and China these past number of years came out of a geopolitical arrangement to help China find employment for all those young men leaving the farms to seek their fortunes or at least a paying job in the cities. Young men are a powder keg waiting to explode when they have nothing to do but hang around street corners while on the dole.

Later in the article --

While talk of an emerging “G2” ignores the increasingly multilateral basis of financial diplomacy, it does reflect the reality that on a growing range of international issues, little can happen without agreement between the US and China.

It wasn't so long ago that stable global economic growth meant conversation and cooperation between the U.S. and Japan. If Japan wants to get back into the lead of shaping the world to come, look for Japan's financial institutions to aggressively eclipse European and U.S. global banks as the lead source of capital to finance the next upturn and buy some of the damaged banks as well.

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