G20 Happy Talk Doesn’t Hide Tears
The G20 ministers ended their meetings yesterday proclaiming consensus and pledging to cooperate in solving the financial crisis. This, despite their being very little consensus among the G20 leaders on what policies to take and no agreement being reached that will have meaningful policy impact.
As I note in my New Atlanticist roundup essay “G20 Leaders Proclaim Consensus Without Achieving It,”
While the crisis is months old and one might think the leaders of the world’s most powerful economies would have come closer to figuring out how to respond by now, that fact of the matter is that there’s no consensus within most of these countries, let alone among them. The issues are incredibly complex and for the most part unprecedented. We’re traveling in uncharted waters here. Add to that different political cultures, the disparate impact of the crisis, and all the other issues that typically make international agreement next to impossible even when the stakes are much lower, no one should be surprised.
Much more at the link.
Reuters Photo.
I see this as a much longer term cycle, than months. I read Shiller’s Irrational Exuberance in the midst of the dot-com bubble. This crisis is not so disconnected. We basically had two bubbles back to back, growing out of easy money and over confidence. Those were the parties, this is the hangover.
I picked up Shiller and Akerlof’s Animal Spirits yesterday. It is shaping up as a good read, and of course a counterpoint to the earlier Exuberance. In the intro they remind us that GW Bush offered that explanation for all this (“Wall Street got drunk”).
At this point I haven’t read far enough to really recommend the second book, but I can very much recommend the first one. You can’t understand the hangover without understanding the party.
As I’ve said here before, manias and panics are two sides of the same coin.
Yeah, but YOU should go hide YOUR wallet.
Well, this meeting was just a preliminary one anyways, and a chance to do a photo-op. The real meeting will be in two weeks.
That said, I don’t think much more will be accomplished than at the last G20 meeting. As far as I can tell, they aren’t doing any of the ground work in the weeks before that would make a co-ordinated policy even possible.