G7 Meetings

World leaders from 7 nations will gather in Japan Thursday, October 11th, to discuss developments in global economics. These meetings will take place Thursday in Tokyo.

G7 means “Group of 7”. The group encompasses finance ministers and central bank personnel from 7 industrialized nations. These nations are: The United States, the United Kingdom, Japan, Germany, France, Italy, and Canada.

Their purpose of the G7 meeting in Japan is to discuss global issues like the Euro Zone crisis and slow growth in Japan.

The last G7 Meetings took place June 5th, 2012 and the Euro Zone crisis was in the spot light. It is probable that the Euro Zone will again be the focus of the G7 meetings.

In June, Spain seemed to be the top concern as a bailout was in sight. As of yesterday, we received some clarity from the German Finance Minister on this issue.

German Finance Minister Wolfgang Schaeuble said Spain clarified they wanted no assistance. “Spain needs no aid program. Spain is doing everything necessary, in fiscal policy, in structural reforms,” he said.

I like that solution because, throwing money at a problem usually doesn’t solve the problem, it just makes the person who has the problem rich.

An economy needs to generate wealth independent of government. Just a thought, but, maybe one reason for a poor economy is that the government is too involved in the economic front in the first place. Government’s role is to protect not provide.

Along with Spain, it possible that the $650 billion European bailout fund may be talked about of referred to. The European Stability Mechanism is that bailout fund and eventually may be used to help mend Spain’s banking crisis.

Other Concerns

“Developments in the euro area are not the only source of risks for the global economy,” says a document with European policy messages for the G7 meetings.

“Risks emanate also from fiscal uncertainty in the U.S., the decelerating recovery in Japan and slowing growth … in several emerging market economies, especially in China,” it said. (According to Reuters)

With QE3, fiscal uncertaity, and an uncoming election, any new developments on U.S. Policy could affect the market.

“We will focus very much on global growth prospects,” a senior US Treasury official stated.

With the US Federal Reserve starting a third burst of monetary stimulus known as quantitative easing, other economies fear a repeat of the previous rounds when the dollar eroded in value to the detriment of their exporting firms.

The new Japanese Finance Minister, Koriki Jojima, has been in the job just over a week and said, he may use the G7 Meetings to talk about the strength of the Yen.

“The yen’s recent one-way rise isn’t reflective of Japan’s economic fundamentals,” The new Finance Minister recently said.

Conclusion

If a formal report is released after the meetings, you can be sure many investors and economists a like will be studying the report for details on what these world leaders said. Also, throughout the day, I would keep my eyes open to any quotes released from these world leaders as they have the potential to move the market.

If we have any developments on Spain and or other Euro Zone topics, I think volatility is very probable for the EUR/USD.

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