Wednesday, September 23, 2009

A reader for the Group of 20 (G20) Pittsburg-financial summit

The Group of 20 (G20) financial summit convenes in Pittsburgh, Pennsylvania, from September 21 to 25, 2009. According to the The G20 Pittsburgh Summit Press Room, the selection of Pittsburgh as the site of the G20 summit is due to the city serving “as a model for economic and environmental transformation in the United States and abroad. The city has reinvented itself by building a balanced, innovation-driven economy based on its strengths in advanced manufacturing, financial services, information and communications technologies, health care and life sciences, education and research, and energy and environmental solutions.” The accomplishments of the city of Pittsburgh serve as a precursor to the critical issues confronting the G20 gathering.
For those unaware of the many issues confronting the G20 Pittsburg-summit, what follows is a short list of essays and interviews, including transcripts, that address several of the critical issues confronting the world's financial representatives and leaders that have come together in Pittsburg to discuss economic policies and address the global financial crisis.

The listing, though there are many other informative sources available, includes a list of informative and insightful interviews and essays from both the Brookings Institution and Peterson Institute for International Economics.

From the Brookings Institution:

G-20 Summit: Recovering from the Crisis

To enhance global coordination and to implement effective financial recovery policies, Brookings experts provide recommendations on how the G-20 can overcome current global governance and economic challenges.
Introduction » (PDF)
by Kemal Derviş
, Vice President and Director, Global Economy and Development
Download the full report » (PDF)


The G-20 and the World Economy: Sink or Swim » (PDF)
Eswar Prasad
recommends that the G-20 maintain momentum on reforming the international institutions and advance international regulatory reform for the betterment of the overall global economy.

Confronting the Protectionism Spawned by the Crisis » (PDF)
Chad P. Bown makes the case for re-affirming the G-20 economies’ commitment to the World Trade Organization and curbing trade-restricting policies created by the crisis.

The G-20 and IMF: Their Future Roles in the International Monetary System » (PDF)
Domenico Lombardi proposes that the G-20 should focus on supporting effective measures to reform the International Monetary Fund.

To the G-20: Don’t Overlook Africa During the Recovery » (PDF)
Ernest AryeeteyMwangi Kimenyi and John Page assess the impact of the financial crisis on Africa and urge the G-20 leaders to support African economic recovery and growth. 

Welcome to the New Era of G-20 Global Leadership » (PDF)
Colin Bradford and Johannes Linn assess the effectiveness of the G-20 summits and how to move the G-20 forward as the global steering body.

International Financial Redesign: A Latin American Perspective » (PDF)
Mauricio Cárdenas calls for international financial regulatory reform in order to address Latin America’s need for greater financial development and to prevent future crises.

The G-20 and Climate Change: Achieving Comparable Effort Through a Carbon Price Collar » (PDF)
Warwick McKibbin, Adele Morris and Peter Wilcoxen propose G-20 leaders to focus on the challenges associated with climate change negotiations leading up to the United Nations climate conference in December.

From the Peterson Institute for International Economics:
audio  Peterson Perspectives: Interviews on Current Issues

Simon Johnson says the Obama administration is not doing much to fix the financial system, and the G-20 summit may do even less.

Nicholas R. Lardy, analyzing the origins of the dispute with China over tire imports, warns that the fight could imperil future US-China economic and political cooperation.

Morris Goldstein says that Treasury Secretary Geithner's proposals for regulatory reform are a step forward that could be endorsed in principle at the G-20 summit in Pittsburgh.

See also Peterson Institute Update: Global Economic Prospects, Commentary on Pittsburgh G-20

Michael Mussa The United States and the world economy have embarked on economic recoveries that will gather strength in the second half of 2009 and proceed fairly strongly through next year and into 2011. These recoveries may not be quite as vigorous as earlier postwar recoveries following deep recessions, but they will surpass almost all current forecasts on the upside and will once again illustrate that steep recoveries tend to follow deep recessions. While most economic forecasters expect a tepid recovery, and some fear a "double dip" in which economies fall back into recession at an early stage, Mussa expects "a V-shaped recovery" to be the most likely course. He forecasts that real GDP growth in the world will be 4.2 percent in 2010, spurred in part by greater than anticipated growth in developing countries and emerging markets. Real GDP growth in the United States will be 4 percent by the end of next year. The US unemployment rate in 2009 peaks at or a little below 10 percent but will fall below 9 percent by the end of 2010. China and India, which have been leading the global recovery, will register growth rates of 8.3 and 6.4 percent, respectively, in 2009 and 9 and 7.5 percent, respectively, in 2010. Mussa's forecast for 2009 is modestly above corresponding forecasts by the International Monetary Fund (IMF) but considerably higher than the IMF forecasts for 2010. Economic performance over the next 16 months will reveal whether Mussa's "conservatively optimistic" view is correct. 
Read full paper [pdf] 

The G-20 is overlooking the more complex challenges that economic policy must confront as a result of the emergency measures undertaken since mid-2007. The exit strategy needs more international coordination in the form of: returning to a normal interest rate policy; shifting from discretionary fiscal stimulus to putting government budgets on sustainable paths; and withdrawing of banks' guarantees and state-ownership stakes. This type of international policy coordination is not only desirable but attainable, according to Adam Posen. He proposes that the G-20 leaders shed the notion that coordination gains are small, that the emphasis should be on discussion of policy measures and sequences, and that the measures agreed upon should consist of pragmatic steps. Working toward a pact on an exchange intervention standstill instead of a scheme for ongoing surveillance will ensure the G-20 gets through the exit from this crisis safely while providing the foundation for a more sound future regime. 
Read full op-ed

Simon Johnson The United States has been in a bubble-bust-bailout cycle since the late 1920s. During the most recent crisis, Ben Bernanke saved the financial system in the short term while exacerbating the long-term pattern of bubble-bust-bailout. A proposal unveiled by Treasury Secretary Timothy Geithner to reduce the number of agencies carrying out regulation and giving new powers to the Fed is unlikely to work, according to Peter Boone and Simon Johnson, who cite the proposal's inability to alter banks' incentive to take excessive risks.
The authors propose a four-part solution to the bubble-bust-bailout cycle that centers heavily on making bank owners more financially responsible for the risks they take. The first part of their solution is to sharply raise capital requirements at banks so shareholders have more at stake and feel that their money is truly at risk when a bank takes gambles. Second, the managers and boards of directors of financial institutions should be personally liable up to a reasonable sum when their companies fail—losing a portion of past salaries and bonuses while seeing their pensions reduced. Third, rules need to be put in place so that regulators and public servants are not financially conflicted. Finally, we need more assertive leadership at the Fed regarding broader system issues.
Read full article

Marcus Noland While the effects of liberalized trade in goods have received much attention, research suggests that the gains from liberalized cross-border movements of labor would be much greater. But cross-border migration raises a number of economic and ethical issues, from individuals' right to seek a better situation for themselves and their families to the social externalities of increased migration both for sending and receiving countries. These issues are a source of growing controversy in countries around the globe, but the lack of a multilateral mechanism to address cross-border migration ensures that individual countries will continue to respond haphazardly to migration and its effects, while the number of migrants only grows. 
Read full op-ed 

See also from the Peterson Institute of International Economics: Pittsburgh G-20 Commentary 

America Cannot Resolve Global Imbalances on Its Own
C. Fred Bergsten and
Arvind Subramanian
Financial Times,

August 19, 2009

The G-20: An Idea from India
Arvind Subramanian
Business Standard,

August 26, 2009

Pittsburgh Priorities
Edwin M. Truman
RealTime Economic Issues Watch,
September 8, 2009

A Pat on the Back at Pittsburgh?
Michael Mussa
Peterson Perspectives Interview,
September 9, 2009

G-20 Summit in Pittsburgh, IMF Meeting: What to Expect?
Simon Johnson
RealTime Economic Issues Watch,
September 10, 2009

Ahead of Pittsburgh, Little Progress on Financial Reform
Simon Johnson
Peterson Perspectives Interview,
September 16, 2009

Making Capital Rules Work
Adam S. Posen
Welt am Sonntag\
September 16, 2009

How To Prevent an Unruly Rush for the Exit
Adam S. Posen
Financial Times
September 17, 2009

Pressures on Obama at the G-20 in Pittsburgh
C. Fred Bergsten
Peterson Perspectives Interview,
September 21, 2009

G-20 Thinking: In the Medium Run We Are All Retired
Simon Johnson
RealTime Economic Issues Watch,
September 23, 2009

Copyright © Protected - All Rights Reserved M. Ulric Killion.

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