by Calculated Risk on 4/16/2005 01:58:00 AM

With global imbalances becoming more serious, the G7 will meet in Washington this weekend. Unfortunately, once again the US seems out of step with the rest of the World.

While the US is calling for "immediate flexibility on renminbi", Japan is saying the G7 will not press China for flexibility.

And US Treasury Secretary John Snow is calling for reforms in Europe and Japan saying: "They [Europe and Japan] clearly need to grow faster. They need to get rid of impediments and obstacles to growth in those economies. They have to grow faster. That is absolutely certain and that will be my principle message to my G7 colleagues."

But Jeroen Kremers, the Dutch IMF director stated: “Global external imbalances are caused by the US and Asia, not by Europe. Involving Europe in the call for action to correct external imbalances confuses the issue and has provided an excuse for inaction in the US.”

Perhaps the only area of agreement is that oil prices are too high and that better transparency of oil stocks is needed. Of course the Europeans think the US encourages waste with low taxes on oil. And the US thinks European taxes are too high.

And finally, I believe any discussion of global imbalances needs to start with the burgeoning US fiscal deficit, so it is no surprise that Mr. Snow has rarely mentioned it. To say the least, I'm not sanguine.