Before each meeting, the finance chiefs get together to actually work out deals to make their bosses look good later.  They are meeting today and tomorrow.  This is very important!

There is a credible rumor that Brazil and China might be willing to backstop a new IMF facility to deal with the European crisis.  This arises from the fear that Europe cannot deal with it alone.  This would effectively end the European crisis.  Of course, the IMF always requires certain behavior changes, and it is not clear if that plan will work for the seventeen national personalities of this European Union.

Originally, it was thought that the U.S. was too weak to be a prominent player in this argument.  But then, the U.S. Senate passed a trade bill that puts tariffs on imports from nations that maintain an artificially low currency exchange rate.  Read:  CHINA!  An unintended consequence of this action is to infuriate the Chinese when Europe needs them most, making the U.S. a prominent player only because we may have forced the Chinese to demand even more protection.  In other words, we made it worse.

From our standpoint, the artificially cheap Chinese Yuan makes their exports cheaper for Americans to import, which creates jobs there and kills them here.

From the Chinese standpoint, the central government is barely holding onto power, with a highly-restive population, who are mounting public demonstrations with a frequency that was unimaginable a few years ago.  Now, the U.S. wants to increase Chinese unemployment!  The action in the Senate is a direct threat to the Chinese central government.

No news will come of the meeting of finance ministers this weekend, but lots of rumors will.  I’ll be listening carefully.