Editorial in the Telegraph: London summit must avoid the spectre of 1933
Few international gatherings have been so laden with expectation as next month's London summit of the G20 countries. Its stated aims are to agree coordinated action to revive the global economy, to reform financial sectors and systems and to restructure the big international financial institutions, notably the World Bank and the IMF. It is not a modest agenda and for this we have to thank the host, Gordon Brown, who sees the gathering as the pivotal moment of the global economic crisis. If the summiteers get it right, he seems to be saying, then the recovery will begin.
Yet the omens are not propitious. The previous G20 gathering, in Washington last November, achieved little, though that was largely due to the fact that the full impact of the banking crash was still being absorbed and the US was led by a lame duck president. Regrettably, the intervening months have seen not a greater degree of common purpose between key participants, but the opposite. As the crisis has deepened, so the strategies for dealing with it have diverged. In particular, Washington wants to focus on a global stimulus package to generate consumer demand so that stricken economies can start growing again. Yet in Europe, France and (particularly) Germany are hostile to such action, arguing it will burden them with debt and fuel inflation. At the same time, European powers have become fixated with new regulatory regimes, arguing that the crisis has been above all else a failure of supervision. But over in Washington, Timothy Geithner, the Treasury Secretary, has yet to produce detailed new rules for American banks, let alone hatch plans for global action.
Mr Brown may therefore find himself astride two circus horses as he tries to reconcile these conflicting positions. This weekend, the G20 finance ministers will gather in London to finalise the agenda and could usefully focus on lowering expectations. They should be guided by three paramount concerns...
Read entire article at Telegraph (UK)
Yet the omens are not propitious. The previous G20 gathering, in Washington last November, achieved little, though that was largely due to the fact that the full impact of the banking crash was still being absorbed and the US was led by a lame duck president. Regrettably, the intervening months have seen not a greater degree of common purpose between key participants, but the opposite. As the crisis has deepened, so the strategies for dealing with it have diverged. In particular, Washington wants to focus on a global stimulus package to generate consumer demand so that stricken economies can start growing again. Yet in Europe, France and (particularly) Germany are hostile to such action, arguing it will burden them with debt and fuel inflation. At the same time, European powers have become fixated with new regulatory regimes, arguing that the crisis has been above all else a failure of supervision. But over in Washington, Timothy Geithner, the Treasury Secretary, has yet to produce detailed new rules for American banks, let alone hatch plans for global action.
Mr Brown may therefore find himself astride two circus horses as he tries to reconcile these conflicting positions. This weekend, the G20 finance ministers will gather in London to finalise the agenda and could usefully focus on lowering expectations. They should be guided by three paramount concerns...