The Left and Right Should Get Their Own Nations

The country is deeply divided. The split seems irreconcilable; the two sides are just too far apart on an ideological basis. The rhetoric is loud, increasing and hardening positions.

Barack, Divider in Chief, is fanning the flames, deepening the divide, pitting Democrats and against Republicans, the successful hard working class against the entitlement class, the young against the aging.

What can we do about the stalemate? Is it inevitable that we turn into Europe? Albeit without the charm! Are we doomed to loath and fear nearly half of our fellow countrymen?

Two Americas

Why not split the country into two? It may sound radical but why not explore the possibility of dividing the country into two distinct nations where each could manage their economic and social matters according to their beliefs.

The tensions would evaporate and the race to see what 'model' works would be on.

The liberals can have states like New York, New Jersey and California while the conservatives can claim Texas, Florida and Virginia. We could give each 'new' nation a share of sun-belt and rust belt states and split those states with unclear majorities.

Doing this would discount the growing authority of Washington and leave it to the new nations to decide whether they want more control at the local level or a growing central authority.

Conservatives trapped in liberal states and left wingers in right wing states would have a type of 'passport' for citizenship in the nation where their hearts lie but not be forced to move.

Trade and commerce between the new nations would not change and future barriers prohibited. Matters of national defense for example or other former federal responsibilities that could not be reasonably handled alone would be funded by the two new nations based upon the population count. No more unfair subsidies. Easements and rights of way would remain as they are but States within the new nations would be given back the responsibility for education, welfare, health etc.

I realize it is a delicate subject but I am stunned no one is talking about an option like this. It's revolutionary but I believe we need to look at it. It would cause a lot of dislocation and take a long period of time to assimilate but does anyone really believe the current environment we find ourselves in will resolve itself fairly and peacefully?

I would love to hear your ideas to move this debate forward.

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G-20 Nations Split Over Geithner's Trade Plan - Bloomberg

Timothy Geithner, U.S. treasury secretary takes part in the reception for the G20 Finance Ministers and Central Bank Governors' Meeting in Gyeongju. Photographer: Tomohiro Ohsumi/Bloomberg

Oct. 22 (Bloomberg) -- David Woo, head of global rates and currency research at Bank of America Merrill Lynch, talks with Bloomberg's Lisa Murphy about China's currency policy and the meeting of Group of 20 finance ministers in South Korea. (Source: Bloomberg)

Oct. 22 (Bloomberg) -- Australian Treasurer Wayne Swan talks about the G-20 meeting in Seoul and the outlook for the Australian economy. He speaks with Gary Cook in South Korea on Bloomberg Television's "The Pulse." (Source: Bloomberg)

Oct. 22 (Bloomberg) -- William Cohen, chief executive officer of the Cohen Group and a former U.S. defense secretary, discusses the implications of China’s economic expansion for U.S. foreign and military policy. Cohen speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

Oct. 22 (Bloomberg) -- Derek Halpenny, European head of foreign exchange at Bank of Tokyo-Mitsubishi UFJ, talks about the G-20 meeting in Seoul and the outlook for the dollar. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)

Oct. 22 (Bloomberg) -- Kit Juckes, head of foreign-exchange research at Societe Generale SA, talks about the impact of Federal Reserve monetary policy on global currency markets. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)

Oct. 22 (Bloomberg) -- Richard Franulovich, senior currency strategist at Westpac Banking Corp., talks about the outlook for the dollar and the Group of 20 finance chiefs' meeting in South Korea. Franulovich speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Oct. 22 (Bloomberg) -- Michael O'Rourke, chief market strategist at BTIG LLC, discusses the meeting of Group of 20 finance chiefs in South Korea, the dollar and Federal Reserve monetary policy. O’Rourke speaks with Betty Liu, Adam Johnson and Sheila Dharmarajan on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

Oct. 22 (Bloomberg) -- Sebastien Galy, a currency strategist at BNP Paribas SA in New York, talks about expectations for this weekend's meeting of the Group of 20 finance chiefs in Gyeongju, South Korea. As G-20 financial leaders begin talks today, China is deflecting foreign pressure to fast-track the yuan’s gains after limiting them to about 2 percent against the dollar since a June vow to embrace more flexibility. Galy speaks from New York with Rishaad Salamat on Bloomberg Television's "First Up." (Source: Bloomberg)

Group of 20 finance chiefs conclude talks today with the U.S. running into resistance as it pushes targets for current account imbalances as a new way of prodding China and other Asian nations to let their currencies rise.

G-20 finance ministers and central bankers are meeting in Gyeongju, South Korea, after weeks of accusations that countries from the U.S. to China risk sparking a trade war by relying on weaker exchange rates to spur economic growth.

Seeking a solution, U.S. Treasury Secretary Timothy F. Geithner proposed in a letter that G-20 members pursue policies to reduce trade surpluses and deficits “below a specified share” of their economies. That suggestion yesterday split the forum of emerging and industrial economies.

“Setting numerical targets would be unrealistic,” said Japanese Finance Minister Yoshihiko Noda, while German Economy Minister Rainer Bruederle rejected a “command economy” approach. Indian Finance Minister Pranab Mukherjee said caps would be hard to quantify. In interviews with Bloomberg Television, Canadian Finance Minister Jim Flaherty said the idea was a “step in the right direction” and Australian Treasurer Wayne Swan called it “constructive.”

By turning the focus to current accounts away from currencies, Geithner is hoping China will be more agreeable to accelerating the yuan’s appreciation after limiting its gain to about 2 percent against the dollar since June. Without naming any country, he said governments should not use exchange rates to seek “competitive advantage” and urged those with “significantly undervalued currencies” to allow an adjustment.

Chinese officials have countered by promising a gradual increase of the yuan, saying that a sudden move upward would cause social and economic disruption.

Broadest Measure

The U.S. recommended deficits or surpluses of no more than 4 percent of gross domestic product, Noda said. The International Monetary Fund this month estimated China’s surplus will swell to 7.8 percent of GDP in 2015 from 4.7 percent this year.

A current account is the broadest measure of trade because it includes investment and transfer income and it would be hard to achieve any correction in one without a currency shifting.

The officials seem unlikely to reach an agreement that changes the “status quo” on exchange rate and monetary policies this weekend, Giulia Comotti, a foreign-exchange strategist at Barclays Capital in London, wrote in a research report today.

“It is hard to see any significant policy changes coming out of the G-20 this weekend given that the differences between the different groupings seem especially wide and their incentives diverse,” Comotti said.

Seoul Summit

The Dollar Index fell 0.02 percent, while the Standard & Poor’s 500 Index futures added 0.3 percent. The Stoxx Europe 600 Index was down 0.2 percent after falling as much as 0.4 percent. The yield on the 10-year Treasury note was little changed at 2.55 percent.

The G-20 officials are trying to end what Brazilian Finance Minister Guido Mantega calls a “currency war” as next month’s Seoul summit of leaders nears. China’s restraining of the yuan even as it runs a trade surplus and builds currency reserves has been attacked for distorting markets as has the recent slide of the dollar as the Federal Reserve shifts toward easier monetary policy.

Nations caught in the middle such as Brazil and South Korea are embracing capital controls or intervening themselves to stay competitive with China and limit inflows of speculative cash from North America and Europe.

This has raised concern from policy makers and investors that the friction will spark a round of devaluations and retaliatory protectionism, derailing an already fragile global economic recovery.

Agreement Now

“If we fail to reach an agreement now and delay it to next time, the global economy will face a serious risk and it will unnerve people,” South Korean President Lee Myung Bak told the meeting.

The G-20 has long sought ways to rebalance the world economy away from its reliance on excess U.S. demand and Chinese savings. Limiting those talks to foreign exchange is too inflexible for nations with trade surpluses, a South Korean official said. Looking at the current account allows countries to decide on which tools to adopt to reduce imbalances, including currency changes, he said.

‘Equal Time’

“It is now clear that exchange rates and monetary policy must be given equal time with fiscal policy in the discussion on balanced growth,” said Daniel Price, a former G-20 adviser to President George W. Bush and now a partner at law firm Sidley Austin LLP in Washington. “The Seoul Summit could usefully agree targets.”

The G-20 policy makers are also debating whether to make their first joint comment on currencies since their leaders began meeting in 2008, having previously resisted remarks for fear of alienating China. A draft statement included a pledge to avoid “competitive undervaluation” of exchange rates. The final text is scheduled for release at about 5 p.m. local time.

Setting current account targets still leaves Asian economies under pressure to allow their currencies to gain, said Win Thin, global head of emerging markets strategy at Brown Brothers Harriman & Co. in New York. His estimates on the basis of purchasing power have the yuan, Thai baht and Philippine peso undervalued by at least 70 percent.

Yuan Rise Limited

China has limited the yuan’s rise since a June pledge to introduce more flexibility, forcing other countries to try and control their exchange rates to keep a trading edge with the world’s largest exporter. South Korea is discussing several measures including a bank tax or levy on financial transactions and Brazil this week raised taxes on foreign inflows for the second time this month.

Geithner’s proposal leaves questions, said Tim Adams, a former U.S. Treasury official. Among them is whether governments will detail how and when they’ll meet the goals and what happens if they’re missed. The risk is a repeat of the euro-area budget deficit targets which were violated in a third of the euro’s first decade, he said.

To contact the reporter on this story: Simon Kennedy in Gyeongju, South Korea at skennedy4@bloomberg.net

Rebecca Christie in Gyeongju, South Korea at rchristie4@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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