G-7 Optimistic

In a statement released after this past meeting, the group said that global economic recovery had significantly strengthened since their February meeting. Even Japan who has been a bit of a laggard in recent years has a rosy outlook. The group, along with the IMF, now believes that by 2005, global economic expansion will be the fastest in over a decade!

The group did point out some deterrents to strong progress such as rising oil prices and of course the problem of Chinese monetary policy. The G-7 came to a startling conclusion...they agreed that oil prices are too high and should come down. Wow! This conclusion is earth shattering. I think any 16 year old with a driver's license could tell you this.

If oil prices continue to rise, fears of inflation and economic stagnation will loom large. Further increases in energy prices will undoubtedly cause the brakes to be applied at a time when global recovery is in its infancy. The group did not discuss pressuring oil producing nations into increasing output but, in G-7 style, they did use rhetoric to make their point.

Other great concerns include China's policy of a pegged yuan. Continued pressure has pushed China closer to floating her currency but they say they will do so on their own schedule. The use of strong rhetoric has worked somewhat on China but continued politicking is needed.

Since China has become such an immense economic power, American officials are now asking China to get more involved in the groups meetings with the possibility of future membership. China would join the US, Germany, France, Japan, Italy, Great Britain and our northern neighbor, Canada--making China the only communist nation in the club.

It's unlikely that China will be admitted until her messy fiscal situation is cleaned up and her currency is freely traded. Beijing has said it will begin instituting a more flexible currency policy within a year but this cannot be done until her banking system is secured.

Once again, the US has taken the lead in global economic development. US Treasury Secretary John Snow has said America is leading the way to a world wide economic recovery. After carrying the world economy on our shoulders for the last 3 or 4 years, foreign economies are beginning to grow.

Snow used the G-7 meeting to promote tax cuts in other nations citing President Bush's tax cuts as the fuel for world recovery. He, along with other logical economists, believes global tax cuts will provide substantial economic growth along with significant global job creation... as is happening here in America. Viva tax cuts!

Luke Hodgens is the editor of
Powerhouse Profits a conservative investment newsletter.
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