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Forbes reports that this weekend’s G20 Summit in Washington made important strides on the road to tighter regulation of global financial markets. G20 said in an official statement that their attempt “to address persistently large imbalances” was successful. “We now launch the second step of this process with an in-depth assessment of the nature of these imbalances and the root causes of impediments to adjustment.
But as Harvard economist Martin Feldstein points out, this could not have involved much more than deliberation over the obvious. Says Feldstein, “It hardly takes a team of IMF economists to answer these questions. Anyone who has taken a first-year undergraduate course in economics would have no difficulty in identifying the countries with the largest trade surpluses and deficits. The United States wins first prize with a trade deficit of more than $650 billion in the most recent 12 months. No other country comes close enough to be awarded second prize.”
Feldstein is right about that - this particular summit may have underutilized the skills of the G20 central bankers just a bit. However, the group may redeem itself next summit, over which they have announced that they will design a 2011 Action Plan heavily centered on global financial regulation by the IMF. If this plan focuses on speculative capital trade between the G20 nations, the world could perhaps avoid another financial crisis a la 2008.
