The G20 Is Meeting. Is Anyone Paying Attention?

News out of the G20 meetings in Horsham, England highlights an essential disagreement between the US and Europe (primarily) regarding what will ameliorate the global economic crisis.

Tim Geithner has been arguing for other countries to make more significant stimulus investments.  In fact, the IMF estimates that only five countries (US, Australia, Spain, China, and Saudi Arabia) plan to spend 2% or more of GDP for stimulus activities.

The Europeans, led primarily by Germany, are insisting that the greatest urgency is to better regulate financial markets.

Both sides, of course, have a good point and fortunately (thanks in part to mediation by the Brits) they were able to make progress in resolving the differences by an old-fashioned compromise:  the G20 have committed to increasing stimulus money and developing more effective regulations.

The key priority must be restoring frozen bank lending through cash infusions and dealing with the shaky assets souring bank’s balance sheets, the gathered finance ministers and central bankers from the Group of 20 countries said in a statement at the end of talks in southern England.

[British Treasury chief Alistair] Darling also said that the G-20 had agreed to a clampdown on the supervision and regulation of hedge funds.

I couldn’t help but be struck, though, by the metaphor for the cultural differences between the US and Europe.  When facing a problem, the US wants to throw money at it, while Europe wants to increase government control of people’s behavior.  Yes, these represent stereotypes of national ethos, but there’s often a great deal of truth underlying stereotypes.

Also interesting is the way the G20 meeting has been treated in the traditional media.  It’s big news in the UK media (of course, those are the “local papers”) and has been covered by the news services, but really only the business press in the US is following it very closely.

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