The G-20, an international group composed of top economic officials
from 20 of the world's most important economies, met in Toronto
weekend. Here's what they accomplished, what they didn't accomplish, and
what it will mean.
- World to Cut Deficits, Slow Spending
The Wall Street Journal's Bob Davis reports, "The
wealthiest of the Group of 20 countries said they would halve their
government deficits by the year 2013 and "stabilize" their debt loads by
2016, a signal to international markets and domestic political
audiences they are taking seriously the need to wean themselves from
stimulus spending. ... With each side pushing, the U.S., and Europe cut
what a U.S. official called a 'combo deal.' The U.S. agreed to make the
goal of halving deficits a G-20 initiative, in exchange for G-20 support
for language making growth the top priority, said a European official.
President Barack Obama has already made similar deficit commitments back
- It's Now All About China, Germany The Council
of Foreign Relation's Sebastian Mallaby explains,
"if this statement means anything, it must be that China and Germany,
the two big economies with excess savings, need to contribute to global
recovery via continued stimulus. China, admittedly, is doing its part.
It has cut its trade surplus sharply, and has begun to show some
willingness to allow its currency to rise. But Germany is a different
story. Going into the summit, Chancellor Angela Merkel was the chief
advocate of budget retrenchment--even though Germany's contribution to a
balanced global recovery should be to run large deficits so long as
global growth looks tentative."
- Failure to Produce Meaningful
Consensus The Financial Times' Mohamed El-Arian sighs,
"The outcome of the G20 is a confirmation of what many expected and
feared-namely, and in sharp contrast to the April 2009 G20 London
Summit, an inability to reconcile divergent views of the world. ... The
communique illustrates the extent to which we now live in a multi-polar
world with no dominant economic party and with excessively weak
multilateral coordination mechanisms. The result is what game theorists
label a 'non-cooperative game,' with a very high likelihood of
- ...Which Could Mean Disaster
Reuters' Felix Salmon frets, "In English, the U.S. is going to
stay on its borrow-and-spend course, while Europe sees huge fiscal cuts.
That, we could do without the G20. And it guarantees that the global
imbalances the G8 and G20 have been so worried about since long before
the financial crisis are going to get worse rather than better. There's
no solution in sight, which almost guarantees that the world is going to
see another crisis, this time surrounding U.S. interest rates and the
dollar rather than credit. The only question is when."
Bank Regulations, But Not For Years The New York Times' Sewell Chan and Jackie
Calmes write, "Giant banks, while bracing for a wave of tougher
regulation in Washington, will not have to face a new set of global
rules on capital and liquidity anytime soon. The world's biggest
economies have been developing rules that would require banks to hold
more capital and be better equipped to absorb losses when financial
conditions sour. But it became clear on Sunday at the meeting of the
Group of 20 countries that it could be years before they take effect."
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