The Global Economy in Turbulent Times

CHAPTER 4 G-20 Summit, Pittsburgh 2009: Has “It Worked”?¹

Amid cooled-down expectations that G-20 leaders face waning enthusiasm for bold measures, decisions at the conclusion of their summit in the last weekend of September were within expectations. The preamble to their communiqué declared “It worked.” In their response to the global economic crisis: “Our forceful response helped stop the dangerous, sharp decline in global activity and stabilize financial markets.”² That sounds rather presumptuous! Sure, there have been some successes. And this has been an unusual period of desperate cooperation. But, the process of repair and recovery remains incomplete even though the “Leaders’ Statement” included this bold two-worded declarative sentence: “It worked.”³ There were many promises and more have since been made. For many nations, unemployment is still too high; clear signs of recovery in private demand are not here as yet; then, what real regulatory bank reforms since April 2009? Anyway, possible pitfalls that can trigger setbacks include growing losses on commercial real estate; need for the recapitalization of European banks; continuing reluctance of banks to lend; work on how to make global economy less susceptible to crisis (or a second dip); uncertainty about the needed political will back home to push the global agenda; restructuring global payments imbalances remains a serious problem.

G-20 Promises . . .

The G-20 leaders now promise to do much more, including (1) ...