By Simon Johnson
Early Friday I went through the G20 communique for the Wall Street Journal; a marked up copy is available on-line.
It is hard to imagine how the summit could have gone any worse for the US Treasury and the president. The spin machine is now working overtime – and you’ll see big efforts to get more positive stories over the coming week – but on all fronts the outcome is very bad.
- There was no substantive progress on anything to do with exchange rates. The “indicative guidelines” to be agreed next year are just a way to kick the can down the road. The Chinese are digging in hard on their exchange rate; this is headed towards a mutually destructive trade war.
- There was less disagreement at the summit regarding the “regulation” of global megabanks – but only because this had been gutted so effectively by the bankers’ lobby and officials who bought their specious arguments. There is nothing here that will prevent or limit the impact of another major worldwide financial crisis. Continue reading
What Could the US Achieve at the G20 in Cannes?
By Simon Johnson
The April 2009 London summit of the G20 is widely regarded as having been a great success. The world’s largest economies agreed on an immediate coordinated approach to the global financial crisis then raging and promised to work together on banking reforms that would support growth. At the time, President Obama got high marks for his constructive engagement.
The G20 heads of government have met twice a year since London and in Cannes this week they meet again (November 3-4). Could this summit also help stabilize the world economy? And can President Obama again play a leading role? The answer to both questions is likely the same: No. Continue reading →
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