The G20 summit.

Baseline Scenario publishes an interesting post and triggers a wise comment.

Regular readers of Learning from Dogs will know that we greatly admire the job done by Simon Johnson, James Kwak and others over at Baseline Scenario in debating this global economic crisis.

The comments that flow in are fascinating and often deeply educational.  Not surprising! Baseline Scenario has nearly 12,000 readers!  But many of them show the level of anger and frustration felt by so many.

Anyway, a Post published by them on September 24th reminded me that hope is so much a more profitable emotion than anger.  The Post starts like this,

The G20 Summit in Pittsburgh: should you care?

On Thursday evening and all day Friday, heads of government from countries belonging to the G20 will meet in Pittsburgh.  On paper, this looks important – 90 percent of world economic output and 67 percent of world population will be at the table: the G7 (US, Canada, Japan, UK, Germany, France, and Italy), plus the European Union, the largest emerging market countries (including China, India, Brazil, Mexico, and South Africa) and a few others.  And unlike the G7, which is really a club for rich industrialized countries, every continent and almost all income levels are represented in the G20.

And concludes,

If the G20 fails to deliver, is it really possible that we are doomed to repeat the same mistakes with regard to building up vulnerabilities in our financial system?  Amazingly, the answer is: a definite yes.  How can this happen, with so many smart people in government?  Unfortunately, it is not about having clever individuals on the job; it is about their incentives, their world view, and whether or not they really face pressure for change.

Seems like more reasons to be pessimistic.

But then up pops MC Morley in the comments saying,

In general real innovation and investment take thought, time and effort (like the regulatory changes needed in finance) – none of which fits into the schematic or the “force field” that has harnessed the liquidity injections of the past year.

In spite of all this, the G20 matters. It may have utterly inadequate capacity to make the sort of regulatory and structural change that is needed. However, it remains an important symbol of effort to share political power on the international stage. The next question is; when the intellectual and theoretical change that is needed to re-store sanity to markets finally takes hold, (why not hope this is possible?) will bodies like the G20 still be around to help keep the idea democracy alive on the international stage?
Yes – we should care.

Well said. Hope is so much better than despair. As Winston Churchill was quoted as saying, “It has been said that democracy is the worst form of government except all the others that have been tried.”

By Paul Handover

5 thoughts on “The G20 summit.

  1. As I have argued on my sites, capital has to be made public again. This means seriously regulating the fractional reserve system. First by rising the reserve capital of banks, then by introducing a deontology of banking, and making deviations from it punishable by (nternational and national)law.

    It also means outlawing derivatives, except in special, extremely regulated cases, and then with appropriate mathematics. Right now, there is a huge and first year of calculus sort of “mistake” at the root of the crazy derivative set up.

    Patrice Ayme

    1. Hello Patrice,

      I would love to add my perspective to the issue, which differs from yours in some ways at least, but perhaps I ought to first review your views in a bit more depth? If you could point me to your posts that expand upon your call for more stringent regulation, outlawing of derivative products (which would mean all insurance policies would also be illegal), and the calculus mistake?

      I’ve commented but only very briefly on this topic on my blog; I’m happy to repeat that analysis in my response to the above; or, you can check it out at

      I look forward to a lively and informative dialogue!


      Sherry Jarrell

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