A Viewer’s Guide for the G7 (Crisis) Meeting Today

For the reasons I laid out last weekend, the G7 meeting of finance ministers today could be pivotal.  The G7 and their close allies are the epicenter of the global crisis, and they most definitely have the financial resources and combined brainpower needed to turn things around, starting with bold, decisive action today.

They cannot do it with a Business-as-Usual approach, and there are already signs that some of them (US, UK) are inching in a more dramatic and even coordinated direction.  It would be unreasonable to expect them to make one gigantic leap today to a complete solution.  Even if major players now think this is the only sensible way to go, such a sudden move would be inconsistent with how G7 governments operate internally or interact with each other.  Nevertheless, there will be unmistakable signs today, in their communique and related communications, regarding how long we will have to wait for decisive action.

Here are three things to look for:

1. The extent of recriminations.  These are obviously unproductive at this stage.  If the German finance minister (Peer Steinbrueck) can refrain from saying negative things about the United States, that would be encouraging.

2. Statement of the problem.  Jointly and separately the language used to describe the severity of the situation is important.  In the Business-as-Usual approach, officials hate to use negative language about the direction of the economy, for fear it would be self-fulfilling.

3. Detail on next steps.  Ideally, there will be a road map, with a timetable on when different countries will adopt various kinds of measures.  If all they can agree on is a vacuous statement of principles, we are in trouble.

Update (by James): PRI’s The World led off Friday’s show with a discussion of the G7 and IMF meetings, including an interview with Simon.

4 thoughts on “A Viewer’s Guide for the G7 (Crisis) Meeting Today

  1. 1. Close the markets – freeze them

    1.5 Congress get to work!

    2. Pass legislation that no business with consistently good credit can be refused credit – either from banks or from Fed

    2.5 The $700,000,000,000 must be used for people, not institutions – to cover deposits and mortgage assistance

    3. No money to investment banks. You risked, you lose.

    4. Stop banking mergers. This allows poorly positioned large banks to siphon off funds of smaller banks merged into them.

    5. Legislate usury laws. No one should have to pay more than 15% interest.

    6. Freeze foreclosures for single family homes. Speculators get to lose and so do those who enabled them. Tough Love!

    7. Freeze cash holdings of banks to cover depositors. If the bank is short, divide the cash by depositors and pay them. The FDIC will have to cover the rest according to rules. Pay out can be over time; however, no depositor can be denied enough funds/month to cover expenses thus risking their own mortgage payments and credit standing.

    It seems simple to me. Shore up the foundation of the economy – the people and businesses in good standing.

    The market economy and the private investors will have to clean up the rest of the mess.

    People shouldn’t suffer for the irresponsible behavior of high rollers betting billions WITH NO MONEY!

    GET REAL! The G7 isn’t going to buy in to pouring money into sinking ships!

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