Heading into the Toronto G-20 summit, what should casual observers and concerned
citizens be watching for? The Wire already covered Tim Geithner's and
Larry Summers's game plan
laid out in The Wall Street Journal. Priority number one for the U.S. is
facilitating the global recovery, with effective international
financial regulation coming in close second. But how does that square
with the priorities of other countries? What are we likely to see, as
competing policy needs collide? Here are some of the predictions from
- The Big Conflict: Austerity vs. Stimulus The Wall Street Journal's Bob Davis explains that "while
all the members of the G-20 industrialized and developing nations say
they are working together to sustain global growth and reform financial
regulation, the different letters [ahead of the summit] show
substantial differences in approaches that can turn into deep fissures
if not handled properly." Europe is focused on reducing debt, while the
U.S. is worried about a double-dip recession. For both, there are
strong convictions involved:
Essentially, the world's two
largest economies--the U.S. and the EU--are addressing their biggest
current and historical fears. For the U.S., that's a repeat of the
mistakes of the Great Depression when Presidents Hoover and then
Roosevelt withdrew stimulus too soon, which prolonged and deepened the
downturn. For Europe, it's a fear of repeating the mistakes that
produced the hyperinflation of the 1920s which gave rise to Nazism,
added to the current fear of repeating the problems of Greece
- Not a Conflict If You're a Delusional German 24/7 Wall St.'s Douglas McIntyre notes that "Germany has argued that its austerity program goes hand in hand with growth." He calls this "an odd claim."
- More Generally, a Difference in Approaches and Speeds Finance professor Arturo Bris
talks in The Shanghai Daily of fast, major change in the U.S. vis-a-vis
financial reform, but some foot-dragging across the Atlantic. "Europe
has missed the amazing opportunity that the crisis gave it to become
the financial center of the world, after the failure of what President
Sarkozy called 'Anglosaxon capitalism.' By the time Europe cleans up the mess, the United States will have established their dominance in financial markets again."
- Yet Without a Unified Front, Expect 'Pain' Timothy Garton Ash
writes in the Guardian that the "one clear impression [he's got from
conversations] is that one thing that really impresses the markets is
determined, large-scale, 'shock and awe', coûte-que-coûte
action by a single, serious sovereign--ie, a kind of power that the
bond markets themselves can never be. Examples include the US in the
financial crisis, China, and perhaps even (we shall see) little Britain
today." The E.U. hasn't been able to pull that off yet. What he wonders
is, "if even the relatively tightly knit eurozone does not convince,
how can a loose, disparate constellation of 20 states?" His conclusion
is simple and dark:
I hope for the best at the G20 summit this
weekend; I hope against hope. But if I were you, wherever you are, I'd
prepare for more pain - and watch out for another avalanche.
- Expect American Political Pain, In Particular Jacob Funk Kierkegaard of the Peterson Institute for International Economics is pretty pessimistic, too. he takes a look at the messy
politics surrounding this summit:
congressional dysfunction and haphazard inaction on all fiscal policy
matters create the worst of all worlds for the Obama administration
right now by both completely undercutting the credibility of any calls
for more fiscal stimulus by America’s G-20 partners in Europe as well
as potentially undermining the United States’s own economic recovery
later this year.
- And Expect Almost No Talk of Climate Change, adds Grist's Jake Schmidt--apparently the only one paying attention to that issue. "Climate change is just barely on the agenda as Canada really doesn't want to talk about it.
The host country gets to largely set the agenda for the G20 summits.
Canada really, really didn't want to put climate change on the agenda
of this month's summit."
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