I hate to say ‘I told you so’, but I told you so — I really did.
Coming to a global congregation of the world’s largest economies and hoping 18 members to blindly follow what the US dictates and the UK furthers was nothing short of a foolish expectation. High on intent, reason and morals but low on humility, persuasion and mutual respect, the audacious spend-your-way-out-of-the-crisis proposal, born in the USA, grown in the UK and parroted by IMF, was destined to die.
True, the G20 economies add up to 85 per cent of the world’s GDP. But what perhaps escapes US President Barack Obama and his chorus comprising UK Prime Minister Gordon Brown and the IMF is a simple fact: smaller they may be when measured by output, but all, repeat all, other 18 countries still carry their economic uniqueness and sovereign dignity — the credit crisis has not been able to scratch that.
Here’s what some of the leaders said, according to the Sunday Times story:
“I will not let anyone tell me that we must spend more money,” said German Chancellor Angela Merkel.
“In these conditions I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans,” said Spanish Finance Minister Pedro Solbes.
French President Nicolas Sarkozy added his two bits about reforming capitalism being more important than cutting taxes.
Talks of such a package have begun in India, but I see neither much fiscal room nor administrative force (until the next government comes into power) for it to fructify.
Blog post on Cutting the Edge