G-20 to Coordinate Exit Strategy Rhetoric: Sources

Published: Friday, 18 Sep 2009 | 3:30 PM ET

By: Reuters

Leaders of the Group of 20 nations are expected to agree at their summit in Pittsburgh next week to coordinate their public statements on exit strategies, G-20 sources preparing for the meeting said on Friday.

"Leaders will agree to coordinate on any talk of exit strategies going forward. They will agree to use the words 'exit strategy' more and more,'' one source told Reuters on condition of anonymity.

The term "exit strategy" refers to the eventual unwinding of fiscal and monetary stimulus steps worth hundreds of billions fo dollars that were introduced during the global economic crisis.

Financial markets are sensitive to any talk of exit strategies by G-20 nations. If stimulus steps are removed too fast, the global economic recovery could falter, but if they are left in place to long the global economy could face a surge of inflation.

The source added that the timing of exit strategies and their nature would not be discussed in Pittsburgh but would "be left, most likely for detailed discussion at the next G-20 summit in around six month's time.''

The sources said leaders would not discuss currencies, notably the role of the U.S. dollar as the global reserve currency, in Pittsburgh.

"It is something for a later date and certainly not on U.S. soil,'' a second G-20 source said.

"G-20 leaders will not discuss interest rates or any other monetary policy at the summit. It's a political discussion without any central bankers present.''

Future governance of the International Monetary Fund will be discussed in Pittsburgh, but detailed talks will not be held on issues such as voting rights and quotas, the sources said

Current DateTime: 07:31:39 19 Sep 2009
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Personal opinion : Then exit strategy mignt start around mid 2010 or in the third quarter of 2010 , i expect interest rate to pick up significantly at that time and inflation should start showing some significant increase prior to that time signaling the way for the exit strategy and the means to be undertaken .

Depending on how inflation hits the different economies we might then witness divergence in the way exit strategy will be plan in different part of the world especialy between Europe and the US .

Gold should then see some significant increase for most part of 2010 , it also means the housing problem is far from over if interest rate push mortgages aroud double digits . As many have predicted this crisis will linger for still many years to come .

Tec