Top of the News: If you’ve never been there, Pittsburgh is a beautiful city and one that has done a reasonable job of reinventing itself after the collapse of the American steel industry. It’s doubtful Group of 20 summit members will get a chance to see any of this with the vast security cordon thrown around them. Will there also be a similar cordon throw around their mindsets?
The leaders don’t agree on “exit strategies”: Now that the economic freefall has stopped, how quickly or gingerly should nations and their central banks ease off the money and liquidity spigots? Too fast and it risks bringing on another recession. Too slow, and inflation could result.
Then there’s the issue of tougher financial regulation. Most people learned painfully over the past two years that the capital markets are far larger, more complex and difficult to monitor than they realized. Derivatives and the shadow banking system remain a clear and present danger — but one with plenty of money to lobby against reform.
On trade, RGE Monitor makes the point that “While G20 leaders are likely to repeat their pledge to support the Doha round of multilateral trade talks, real movement on removing trade barriers is unlikely in the coming months, given that trade remains weak.” Again, serious disagreements exist among the G-20, with the U.S.-China tires-and-chickens spat only the most noted.
Bottom line: For all the talk of creating “sustainable growth,” nobody seems willing to give something up to get it. China won’t abandon its aggressive export and protectionist policies. America is desperately looking for a new bubble. Europe is divided against itself. The capital markets remain broken and dangerous. And don’t even get into the future of resource competition and the consequences of climate change.
It’s tempting to say the G-20 is irrelevant. But it only looks that way in the moment. Years later, historians will muse of these leaders, “If only…”
Today’s Econ Haiku:
Here we go again
Fighting for the tanker bid