Despite reports to the contrary in major news outlets, U.S. officials are telling me privately that support is growing for Secretary Timothy Geithner's letter proposing changes to international economic policy.
In what appears to be a major diplomatic reversal, official U.S. sources now tell me that Japan, France, and Korea are "firmly on board" with Secretary Geithner's proposal.
Secretary Geithner's proposal comprises three principal policy points: 1) redressing trade imbalances through a mechanism that pegs trade deficits and surpluses to a targeted percentage of GDP; 2) preventing currency devaluation by a adopting a stated policy of refraining from currency weakening for competitive advantage; and 3) increased surveillance and reporting of G20 economic data.
The Christian Science monitor had reported earlier today Japanese finance minister Yoshihiko Noda's opposition to Geithner’s proposal. Noda specifically referred to Geithner's proposal as “unrealistic” and “difficult," — and went on to characterize the plan as "harmful to the stability of the global economy and financial system."
The situation is still highly fluid: Closed door meetings have just ended, after 4:00 a.m. local time in Gyeongju, South Korea.