Little offered by, but then again, little expected from global summit

EDITORIAL: "Redesigning global finance: Government leaders cannot rewrite the rules this weekend. But they can still do some useful things," The Economist, 15 November 2008.

BRIEFING: "The global economic summit: After the fall; On November 15th world leaders are due to sit around a table in Washington DC to fix finance. They have their work cut out," The Economist, 15 November 2008.

Believe it or not, I am finally caught up on my blog pile of clipped articles! We have a huge backlog of posts, which Sean will dish out over the next few days.

Got to these just now, and they're instructive to read regarding the Core's future efforts.

No, it's hard to get too disappointed about the summit, because Obama took an FDR-like pass and so nothing much could happen except for the G-20 to feel revitalized and somehow credentialized in a new manner.

And those are good things in and of themselves.

The Economist calls "nonsense" any talk about creating a Bretton Woods sequel pronto, because the original required two years of intense planning.

Still, the Economist is enthused to see the G20 step up a bit in its self-awareness, especially since the IMF is so tiny, resource-wise, compared to today's global economy.

Yes, competing rule sets lead to "regulatory arbitrage." And all those emerging markets, having stocked up on foreign currency reserves (mostly dollars) to protect themselves from speculative runs, did help trigger the global credit bubble (a one-bad-thing-leading-to-a-good-fix-and-then-a-new-problem, as I argue in Great Powers).

So rather than any great scheme, says the Economist, better to work on bolstering transparency wherever possible on inter-market financial flows. Simply put, the agenda right now is too vast and there are two many competing great powers for any one solution to apply.

So expect a boom market for new rules over the next few years, but no one great pact.

Viewed in this light, you take the meager results of the recent summit in stride.

Comments

[Matt Osborne]

Just one question: Where did this "G-20" come from? Either I'm wrong, or has the core begun to solidify, going from 8 members to 20. The financial crisis necessitated this meeting; evidently, it's necessitated a bigger body of states than before.

[farhad]

The all time Question,is always going to be,where(what direction)is the world is headed to?Brenton wood(I),U.S had more than %50 ofglobal productions,and sombody at that time wrote a book about Chineese as "water ants",64 years later,in brenton wood(II),the Chinees leader,sits with head high,and with $ 2trilion U.S notes,in front of Bush with $11 trillion debts,asking to borrow.facts;In 2006,the new core countries had %50 of the global production,and if the growth sustain this rate,by mid 21st century,we will have a similar situation like the end of 19th century,where Japan,Germany,some--what russia had against Engand.Pricewater cooper institute afew years ago estimated based on dollar,China economy will exceed U.S by 2050.Ayear later Golden sach research said it will be in 2027.Withthe recent economic crisses,don't you think we should estimate thiseven sooner. Investment banks in U.S estimate Brazil economy in 2050 to be as big as Japan,and the economy of Mexico,Andonesia,are going to be bigger than Enland & Germany,pricewater cooper'sestimation is that the economy of E7 instead of G7,by 2050 will be %25 bigger than G7.of course this will change the balance of power,lets say in East,and possibly Japan for Example will be come a third/foruth grade power.

[Tom Barnett]

No, with each recession, I would lengthen the estimate of China's advance.

Such estimates are awfully rosy, basically ignoring China's huge demographic wave and enormous amount of environmental damage that gets swept under the rug at zero cost.

Neither India nor China yet price their economic reality with any seriousness. It's all just fabulous trajectories with little thought given to hidden debts.

In that way, they represent nothing new compared to the West, the difference being they have about 1.5 billion rural poor to deal with.