Sunday Reading: G20
Over the weekend, the finance ministers and central bank managers of the G20 (19 of the world’s largest economies plus the European Union) met in London to talk about the current economic crisis. Though pledging to do “whatever necessary,” the ministers refused Obama’s suggestion of a coordinated global stimulus package and instead left all the work, for the time being, to the IMF. The leaders of the G20 members will meet again in London on April 2 to talk further on these issues. For today’s reading I give you some major news events in the current “in-crowd” countries that will factor heavily into the decisions made in April.
- Japan: The Japanese government, trying to keep the world’s second largest economy afloat, has heeded Obama’s call for more government spending and passed another round of injections that will hopefully be in place by the April meeting.
- France: France may have rejoined NATO last week but, given that Sarkozy rejected a coordinated spending/tax cut plan by UK Prime Minister Gordon Brown, he clearly isn’t looking to compromise much more.
- Germany: Germany’s charismatic new finance minister meets with Treasury Secretary Geithner today to reaffirm that his government will bailout Opel, GM’s German division, as long as none of the money flows back into GM’s failed US operations.
- Italy: Instead of just a straight monetary injection, Prime Minister Berlusconi has proposed infrastructure changes and capital injections, but his new bank lending regulations are coming under much criticism as he seems to believe banks are the sole cause for the crisis.
- US: Despite Economic Advisor Larry Summer’s reassurances about the bailout and stimulus package to the Brookings Institute on Friday, many doubt whether or not the US economy has hit the bottom yet.
- China: The Chinese Premier Wen Jiabao is beginning to express doubt in the safety of the billions of US Treasury debt his country holds, a fear which Obama addressed personally and immediately.
- India: India’s protectionist policies and cheap and informal labor markets have kept its trillion dollar economy relatively safe from the economic crisis, making international cooperation and anti-protectionism policies difficult for other leaders to accept.
- South Korea: As the next chair of the G20, South Korea has decided to be more deliberate in its economic recovery policies, starting first with tax incentives instead of spending, hoping toxic companies will voluntarily restructure.
- Brazil: The main South American country in the G20 prefers that the IMF run the global recovery package because it does not have the capital to introduce its own stimulus.
Website of the Week: G20.org. Follow all of the London Summit’s April events on the G20′s own website.