Sunday, March 29, 2009

12 days to G20: IMF’s spend-your-way-out-of-the-crisis recommendations are best ignored

In its predictable conclusion-first-analysis-later approach when it comes to ensuring that the interests of its key stakeholder, the US, are protected, the International Monetary Fund has cobbled together a recommendation that resonates, reiterates and reeks of the US line: spend, spend, spend.
I had pointed out yesterday how the US is pressuring the world in general, and G20 that meets in London on April 2 in particular, to mimic its policies, ostensibly to get an even response globally to a situation that’s global. This, I said, won’t work because each country is structurally different.
My warning as a result: “Some of the tensions in G20 — between emerging economies and the emerged, between US-UK and Continental Europe led by France, between US and China and among fringe groups — are because of differences like these between countries. And while domestic political pressure on leaders of all G20 countries is the same (get the economy back on track, now), expecting all economies to behave the same way under the broadsword of the same solutions through a magnified geopolitical pressure on the same leaders is going to prove counterproductive.”
We saw the first murmurs of this discontent, muffled as it was, today as EU leaders resisted calls for new spending.

Blog post on Cutting the Edge

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