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G-20 Assessment: Good For the Developing World, Stimulus Not Addressed
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This post on the G-20 was originally published on the New American Contract blog, Value Added:
After watching Gordon Brown on the live webcast of the London G-20 Summit, it appears that leaders have made some serious headway on one of the two major criteria laid out by Martin Wolf at the New America Foundation last week - a significant increase in resources to help developing countries.Specific measures they agreed on total $1 trillion and include: tripling the IMF's usable resources, selling $50 billion in IMF gold (the proceeds of which will go to developing countries), and issuing $250 billion in SDR. The proposal for SDR issuance was strongly supported by speakers at New America Foundation last week including in this interview with Martin Wolf and in this speech by George Soros.
On the second major issue facing the G-20 - boosting fiscal stimulus in surplus countries - the G-20 has failed to reach consensus. Knowing that this would be an area of interest at the press conference, Gordon Brown was armed with the statistic that $5 trillion new dollars have been set aside by countries around the world.
Brown's estimate of the fiscal stimulus is a gross exaggeration. The only way he could have reached that figure is if he included international measures to stabilize the financial system.
If one looks exclusively at the fiscal expansion, as this IMF paper does, stimulus in the nine largest economies (who have born the brunt of the stimulus efforts) have averaged .5%, 1.6% and 1.3% of GDP in 2008, 2009 and 2010 respectively. If every economy was stimulating at the same rate as China, US, Germany, and France (which they aren't) the global stimulus would only equal $2.1 trillion for the years 2008-2010. Even this $2.1 trillion figure is an exaggeration. Smaller economies are stimulating far less, even as a percent of GDP, than the major economies of the world.
My largest concern with the G-20 meetings was born out. Merkel and others who resisted stimulus largely for domestic political reasons, did not allow President Obama to set the agenda for the summit. As a result, deficit countries will lead stimulus efforts and continue to spend and borrow, and surplus countries will inadequately stimulate their economies and continue to save and accumulate reserves. For those who believe that macroeconomic imbalances were a principal cause of the crisis, the failure for this G-20 to get surplus countries to stimulate is a serious concern.
-- Sam Sherraden
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Reader Comments (9) - post a comment
Canadian Prime Minister Harper was unable to make the photo op pictured above because of an unscheduled appointment with the toilet according to the British Media. They're howling with laughter about it, those tasteless, tactless, boorish British news hounds.
Harper is claiming to have been in consultations with his advisers at the time. (Sure thing - like any politician would ever deliberately ignore a photo op of these global proportions...)
He was supposed to stand beside the German Chancellor. ...Oh well...
Sometimes it's no fun being a Canadian.
Then there's moments like this.
Does anyone know who the inappropriately dressed woman in the bottom right hand corner of the picture represents?
arthurdecco--Cristina Elisabet Fernández de Kirchner, President of Argentina. I would have thought that, given the circumstances, more people would have avoided Wall Street business attire...
The nine largest countries SHOULD pay more. Their economies are the engine of momentum, they have larger vested stake.
You want to flat tax all the poorer or developing countires instead?
Fruit don't fall far from the tree for fiscal neocons....
arthurdecco - harper is a buffoon and a complete joke... i hope he continues to be the brunt of more jokes... i am a canuck and he is an embarrassment to anyone who isn't interested in being a first class bootlicker like him.... maybe he was involved in something else in the bathroom that his neo con buddies to the south often time get caught up in! i want him out and it can't happen soon enough..
It is well known that Stephen Harper
eats babies.
Bah, my link was deleted.
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20060502
/toronto_commuters_060502/20060502
Meanwhile FASB is relaxing accounting standards to facilitates banks' ability to lie about the value of their toxic assets.
http://www.washingtonmonthly.com/archives/individual/2009_04/017575.php
Just when we need to get to mark-to-market, FASB and the financial industry is going backwards. Instituting mark-to-myth isn't going to help us or the banks. It will deepen and prolong this re -- depression.
The stupid, it burns. Haven't these people learned their lesson yet? To wit:
"There is a perception that we are yielding to political pressure," one board member, Lawrence W. Smith, said as he voted for the changes.
"We are an independent standard setter, and it is important that we maintain our independence," Mr. Smith added. "At the same time, how can we ignore what is going on around us?""
Hilzoy:
"You maintain your independence by refusing to act against your better judgment in the face of political pressure, that's how. If you have to ask how you can ignore that pressure, then you forfeit the right to claim independence."
http://www.nytimes.com/2009/04/03/business/03fasb.html?_r=1&em
These people are making fools of themselves. At a cost of billions.
Your link didn't work, Ben Rosengart.
What was the story REALLY about? I mean, we all know Stephen Harper eats babies - that's not news.
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