Sunday, July 03, 2005

 

The global economy and national politics

There is some agreement in the press that this week's G8 economic summit won't be allowed to tackle serious problems in the global economy.

"It is, however, the global picture that is more worrying even though it is likely to get scant attention in those G8 communiqu├ęs. Central banks are increasingly concerned at the worrisome medium-term trends in fiscal policy in the majority of industrial countries." Scotland on Sunday

The worrisome trends include the slowing of the global economy because of continuing increases in the price of oil. National politics might be tempted to print even more money as a result.
But what are the chances of the Bank for International Settlements, that alliance of central banks, being allowed real independence? About the same as financial audit?

Saturday, July 02, 2005

 

Change

More thoughts in the media on how to address the serious imbalances in the global economy.

The FT's Martin Wolf wrote a piece this week that elicited responses from many websites, including those of Brad De Long and Brad Setser.
http://delong.typepad.com/sdj/2005/07/vain_hopes_for_.html http://www.roubiniglobal.com/setser/archives/2005/06/more_wisdom_fro.html#comments

One way forward, MW thought, was for China to be fully involved in forum discussions. Also "reform of the International Monetary Fund, to make it relevant to today's world, and a radical restructuring of the increasingly absurd Group of Eight. A forum must be found, together with a permanent secretariat, that makes possible serious discussion of how to proceed among the players that matter."

Both Brad's supported the comment, but thought the likelihood of institutional change was low. De Long went further and suggested a more basic problem is the lack of independent financial discipline in the United States. But, at present, people in all 191 nations won't be offered a referendum to remove powers from their sovereign governments.

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