Group of 20 Meeting Deemed a Success

The lead story in The New York Times this morning is titled, “World Leaders Pledge $1.1 Trillion to Tackle Crisis.” The article describes an agreement to contribute substantial new support to the International Monetary Fund to assist developing countries hurt by the current financial crisis as well as less concrete steps to eliminate tax havens, avoid protectionism and other actions.

The agreement also include $250 billion in trade credits to finance world trade and regulations on hedge funds, rating agencies and compensation for bankers. Calls for international regulatory bodies and increased stimuli were largely finessed though they did create a non-binding Financial Stability Board.

Apparently, Barack Obama was a hit and delivered bigtime. It seems that the tone he created, to effect, “come let us reason together,” had a major impact on the final outcome. He soothed France and Germany, and even intervened successfully in a dispute between France and China, taking both leaders aside to resolve a dispute. I expect we’ll hear more about this incident in the near future.

The final outcome was a substantive one despite dire warnings from experts that the whole exercise could wind up in failure, just like a similar meeting in 1933. The meeting was worth having even if it did not address toxic assets or seemed to improve things on the margins.

For one thing, the majority of the world, those who struggle everyday, will be assisted by the trillion dollars donated to the IMF. A frequent quote is that while we in the United States struggle with bonuses or no bonuses as a result of the crisis, most countries are struggling with food or no food.