The G8 Meeting This Weekend (A Viewer’s Guide)

If you’d like to attend the G8 Ministers of Finance meeting this weekend, the Italian Ministry of Finance has put out a handy travel guide.

Alternatively, take a look at my preview on The New Republic’s website.  Our leadership appears to be resting on its laurels after the April G20 summit – or perhaps they think the next G20 summit in September is the place for real discussion.  Regulatory reform still needs (a) to happen in a meaningful sense for the financial sectors in all industrial countries, and (b) to be closely coordinated across countries – if your bank is too big to fail in my country, whose problem is that and whose taxpayers are on the hook?  But gone completely from the G7/G8 ministerial level is any sense of urgency; all we’ll hear is self-congratulation.

And in terms of macroeconomic policy, discussed in a piece with Peter Boone on the NYT’s Economix this morning, current global early warning signs (higher oil and other commodity prices; rising long-term yields) are being interpreted by policymakers as indicators of success and return to “normalcy”.  It reminds me of official discussions in early 2007 – no matter what weakness you could point out in US housing and European banking, leading G7 policymakers were completely in denial, with articulate arguments about why they were right. 

Incrementalism is the preferred policymaking culture of G7 ministries of finance and central banks, and they are very much back in that mode.  But if you put incrementalism together with refusing to really change the rules for banks and huge, unconditional support for credit that is hard to withdraw, what do you get?

By Simon Johnson

8 thoughts on “The G8 Meeting This Weekend (A Viewer’s Guide)

  1. Hat tip to Kafka for a brilliant alliteration.

    “Regulation Not Revolution ! We want more red tape !”

    — chanted the surly picket-waving crowd.

  2. “But if you put incrementalism together with refusing to really change the rules for banks and huge, unconditional support for credit that is hard to withdraw, what do you get?”

    Another day older and deeper in debt? (From the song, “16 tons”)

  3. “…all we’ll hear is self-congratulation”

    When things go right (although things aren’t going right, the situation has the appearance of disaster averted, for the present) they will take credit.

    When things start falling apart again, they’ll be all, “No one could have seen this coming.” Or the classic, “We inherited this mess.”

    In the immortal words of my US Senator, Charles Grassley, I would be pleased if they would bow, publicly apologize, resign, and then… well, you know, what they used to do in Japan. Very messy, but honorable.

  4. Isn’t real reform a joke told in the back rooms of Congress and the White House. We need most to reinstate something closely akin to Glass-Steagle, which is highly improbable. It seems that only Elizabeth Warren of the knowledgable wonks is willing to stand up these days. And, the G8 will not agree on anything substantial, because the financial oligarchy is truly international, making all real reform impossible. Love you Simon — keep talking and thinking, but with no real expectations.

  5. As I recall my history, after the Napoleonic Wars, Count Metternich and his cohorts attempted to reconstruct pre-Napoleonic Europe. Since history moved slower at the time than it does now, their efforts didn’t unravel totally until 1848.

    By comparison, our international economy moves at near warp speed. If Mr. Johnson and the other critics of their efforts are correct, the efforts of the G-Whatever Ministers of Finance will unravel much quicker.

    Both groups would have done well to remember the nursery rhyme of most English speaking childhoods:

    “All the king’s horses and all the king’s men
    Couldn’t put Humpty together again.”

  6. As Italy is leading next G8, it would be interesting to know more and in detail about its proposals, apart from showing earthquake sites having moved the summit venue to the Abruzzo region from previously agreed place.
    We read that the Italian G8 Presidency plans to put forward a proposal for the establishment of an international ethical legal standard with which all countries will be bound to comply. I would be a bit suspicious of a standard which comes from Berlusconi’s government and Italian parliamnt which has a number of parliamentarians with legal cases, let alon ethical problems.

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