Good news at last
Friday, April 3, 2009 at 7:57AM COLUMN: A Rare Triumph of Substance at the Summit, By Steven Pearlstein, Washington Post, April 3, 2009; Page A12
ARTICLE: Nations Craft Hard-Fought Pledge To Repair World Financial System, By Michael D. Shear and Anthony Faiola, Washington Post, April 3, 2009; Page A01
ARTICLE: A Lifeline for Nations Both Rich and Poor, By Anthony Faiola and Mary Jordan, Washington Post, April 3, 2009; Page A10
EDITORIAL: 'We Did Okay', Washington Post, April 3, 2009; Page A18
From Pearlstein, never a BSer:
While President Obama may have overstated things a bit when he declared it a "turning point" for the now-shrinking global economy, the meeting did manage to boost the confidence of financial markets, inject another trillion dollars into the financial system and provide needed political cover for world leaders to take unpopular actions back home.
Better yet:
The push for broader, tighter cross-border financial regulation, in fact, came largely in response to the light-touch approach of the Bush administration. But whatever transatlantic tension once existed over that issue pretty much melted away last week when Tim Geithner outlined the new administration's regulatory reform proposal, which could just as easily have been written at the French Finance Ministry as at the U.S. Treasury.
In the end, yesterday's communique, with its promise of a global regulatory crackdown, was an easy win for all concerned. Sarkozy and German Chancellor Angela Merkel could declare victory over unfettered Anglo-American capitalism, while Obama now has added political ammunition for taking on the banks, hedge funds, rating agencies and private-equity firms that will try to water down his proposals. While that may constitute a turning point for Anglo-American capitalism, it is hardly the death knell.
Without a doubt, that's why I voted for Obama versus McCain: the ability to adjust to legitimate competing pressures from familiar and rising great powers.
Brown declaring the death of the Washington Consensus is truly meaningless. China's rise made that clear years ago.
But what I like: the clear supremacy of the G-20 in this process--that alone being a big change.
The best Pearlstein:
It may suit the politics of Europe to portray all this as a blow to Washington's power and prestige, but the reality may be quite different. In fact, the shift is perfectly in keeping with the new emphasis on the developing world that Obama brings to international economic policy. And if any countries are likely to lose out in the restructuring, they are those of "old Europe" that, by dint of history, now wield power far in excess of their importance in the global economy.
From the second piece, we get a sense of Obama-as-Wilson-done-right, meaning a guy who gives when appropriate but stands firm when appropriate. As Shear and Faiola note, "The consensus was remarkable given the discord that preceded Thursday's meeting." The key moment? Obama button-holes Sarkozy and Hu and gets the final pieces in place.
From the third piece, clear direction regarding the IMF as the depository of new rules for financial functioning of the global economy:
The IMF, established at the end of World War II to help restore health to the global economy and currency system, will be transformed into an agency that not only targets nations in crisis but also takes a stronger role in the surveillance of financial systems around the world. It will regularly monitor and report on stresses and faults in countries, theoretically exercising more influence over their actions.
Yes, some IMF money will be made available to richer countries, but bigger development to me is that this time China is giver and not recipient, hence the effective downshifting of the IMF's purview--as it should be.
As for the use of SDRs, I personally don't see the rise of global currency in that whatsoever. It is, as one analyst put it recently, truly the Esperanto of currencies.
I think what the move represents is merely a buying of time for the system as a whole to engineer serious alternatives to the dollar, such as the further rise of the euro and something coming out of Asia. I just don't see a great leap forward to any global currency before those developments mature, and once they do, and we have a trilateral balance, I won't see the need for it.
Finally, a good word was put in for free trade, which needs all the good words it can get right now.
Overall, I think we did better than Geithner's "okay." I think Obama passed a big test in terms of global leadership.
Reader Comments (2)
Wilson had too much emphasis on the 'best policies from academic analysis aspect. He could not adapt to domestic and foreign political and cultural factors that required starting with imperfect, but doable solutions, with fewer unintended reaction consequences.