Economics/Cliff Taylor:Each time the Group of Seven finance ministers meet, they issue a communique. This is billed as telling the world what happens at the gathering although, of course, it rarely does any such thing.
Most of it will have been written by officials well in advance, designed to be as anodyne as possible. The Irish Times can offer a sneak, exclusive preview of the communique to be issued following this weekend's meeting in Boca Raton, Florida.
'Last September the desert heat got to us all in our meeting in Dubai and we issued a statement referring to the need for more flexibility in exchange rates. This was meant to be a hint to China to reconsider its yuan link with the US dollar. However, it was merrily jumped on by the foreign exchange markets as an excuse to sell the dollar. We may be powerful, but we can't control those mad guys in the foreign exchange markets. However, we should have seen that one coming.
"This time around we are worried that the markets will use anything we say as an excuse for more dollar selling. We can just see the headlines next week: Dollar falls further as G7 finance ministers stand idly by. It's the kind of perverse logic beloved of the foreign exchange where something you know is going to happen can still provide a 'reason' to buy or sell.
"Frankly, however, as we took in the winter sunshine this weekend we weren't able to agree on much, apart from the fact the alligator was a bit chewy. We are aware that this lack of harmony may be jumped on by the financial markets, but there isn't much we can do about that.
"We all decided to put forward our own solutions as to what needs to be done - and not worry too much about the other guy. The Americans called for 'structural' measures to boost economic growth and said that these were much more important than the level of any currency at any particular time.
"The Europeans said they were a bit fed up talking about structural stuff, as they had to put up with endless guff over the past few years about the Lisbon Agenda - the EU's plan to become more competitive. The Irish Presidency was very keen on the wretched thing, they complained [once out of the hearing of Charlie McCreevy, attending in Florida as president of the EU finance ministers\]. However, John Snow and his US colleagues wouldn't be distracted.
"Any attempt by any other delegations to bring up the difficulties being caused for them by the falling dollar were cunningly headed off by an announcement that it was time for dinner/more drink/golf/marlin fishing and a quick change of subject. When pinned into a corner, any member of the US delegation questioned on the subject merely said that currencies are best set in 'open, competitive markets'.
"Naturally, the Americans pledged their support for a 'strong dollar' - a phrase now taking on the status of an oxymoron. [In the same vein, the jumbo shrimps here are lovely.\] Alan Greenspan gave a long oration on the subject of a strong currency, after which no-one was any the wiser.
"The Europeans and the Japanese suspect, of course, that the Bush administration is more than happy to see the US dollar fall. It boosts their exports and encourages economic growth - and might even help to cut that pesky current account balance of payments deficit.
"There is an issue about which currencies the dollar is falling against. Since we last met in September, the euro has taken much of the brunt, rising by almost 10 per cent against the greenback. The Japanese have intervened heavily to limit the ascent of the yen and are likely to continue doing so.
"We would all be happy if the Chinese government loosened its yuan link with the US dollar - and hope it might do so later this year.
"All in all we are hopeful that the world economy is picking up. Certainly the US is starting to fire nicely, ahead of the November election. Most indicators here are now positive and the jobs market - about which there have been some concerns - should come right as the year goes on.
"However, conditions remain fragile in the Japanese economy, despite some recent tentative chinks of light. And Europe remains a worry.
"The EU economy should benefit from the US recovery. And consumer and business confidence surveys have been picking up in recent months.
"However, real economic indicators have been slow to follow in the big euro-zone economies and even some of the confidence measures are now looking dodgy.
"Last week's German retail sales figures for December, for example, showed a 2.5 per cent fall on the previous year - hardly a sign of buoyancy. And consumer confidence in France is also on the wane.
"The Americans here in Florida can't help wondering why, with such a weak economic backdrop, the EU doesn't get on and do something about it. After all, EU interest rates at 2 per cent are twice US levels. Why won't the ECB reduce further to give the economy a boost, they wonder?
"And why, with their economies struggling, is the EU Commission challenging a decision by finance ministers not to impose fines on France and Germany for not cutting their deficits. Surely now was a time for a bit of stimulus, rather than trying to stick to a set of rules which don't seem to be very well thought out to start with.
"Some delegates report seeing Mr McCreevy nod at these suggestions, but he denied this, saying he was merely having a jetlag nap.
"The US was doing just fine through a mix of low interest rates and budget stimulus, its representatives pointed out, and humbly suggested that Europe might try this medicine. A guy called Keynes had come up with the idea, they pointed out, and it seemed to be working."
