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.