Should Investors Question the G20 as an Elusive Dream?

This year’s G20 Summit lacked the unity of past meetings. On one side of the table, we saw 18 nations and the European Union. The US sat on the other side. Between them: climate change, a divide that has led many to describe the G20 as the G19 plus one.

But what exactly is the G20 Summit and how does it impact our investments? Particularly, how was the G20 Summit different this year with President Trump — the tweeting black sheep of global leaders.

What happened this year at G20?

This year’s G20 Summit marked the first time Donald Trump was attending. The big topics discussed this year were climate and trade. With President Trump’s recent decision to withdraw the U.S. from the Paris Agreement, there were a lot of deadlock talks about the group’s stance and actions to prevent climate change. In a statement released on Saturday, July 8th, the U.S. would seek “to work closely with other countries to help them access and use fossil fuels more cleanly and effectively”.

But what does that really mean when the other 19 members publicly acknowledge the US’s decision to withdraw from the Paris climate agreement that was reached just a few years ago? In her closing news conference, German Chancellor Angela Merkel, who hosted the summit in Hamburg, said she still deplored Mr. Trump’s position but that she was “gratified” the other 19 nations opposed its renegotiation.

On the final day of the summit, Trump and President Xi of China met to discuss the denuclearization of North Korea after they successfully tested an intercontinental missile that could hit Alaska. President Xi suggested that the two country’s defense secretaries meet to discuss further.

In essence, there was lots of talks, but little news. In fact, rather than progress, news centered around violence.

Hundreds of anti-capitalist militants descended on Hamburg with violent protests. Cars burned in the street. Militants looted and vandalized shops with Molotov cocktails. Violence, instead of unity and solidarity, dominated headlines. Unfortunately, it remains to be seen if the G20 Summits are still meaningful or a relic of an elusive dream for global world order.

But what role do G20 Summits play in the marketplace? Let’s take a deeper look as we continue to step towards financial fluency.

Are the G20 Summits obsolete?

The world order has clearly shifted. When the G20 Summits began, the underlying assumption was that major powers would converge around a single model of liberal international order. As they traded and interacted with each other, they would become “responsible stakeholders” in that order, sharing challenges and limiting their geopolitical differences.

Countries dreamed that the G20 would bring together nations with opposing and diverging interests and allow them to find common ground. Over time, these nations would liberalize their political and economic systems, even if some fell short of fully fledged liberal democracy. Only then could then world truly capitalize on globalization and our newly interconnected world.

Unfortunately, these dreams remained precisely that: dreams.

Since 2008, the global order has shifted from convergence to divergence. Hopes of progress in the Middle East are minimal. China and Russia have acted as if the liberal world order is a threat to their national interests. Xenophobia and isolationist policies across the Western world have replaced the allure of globalization. Globalization has benefited the entrenched elites while hindering socioeconomic growth for the bottom 80% of country’s citizens. By surrounding yourself with a greater understanding of the markets, you can continue to step closer to financial fluency.

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Originally published at https://blog.rapunzlinvestments.com on July 11, 2017.