The governments of twenty of the largest economies in the world walked into the London summit asking many of the right questions, but walked out with an action plan that takes the world three giant steps backwards in terms of what is needed to make the shift from casino to healthy economies.
Leading up to the London summit, there were serious discussions about the need to do three big and positive things:
1. A global green stimulus: The U.S. government, after passing a huge economic recovery bill that is getting resources to millions most hurt by the crisis and which is finally beginning to create some “green” jobs in this country, called on nations to coordinate large green stimulus plans.
2. Global regulations to close down the casino: The German and French governments rang the alarm bells about hedge funds and the volatile financial instruments that have turned banking and finance into an unregulated casino, and they called for a new international regulatory framework.
3. A North-South transfer: Governments in rich and poor nations alike acknowledged that a crisis that began in richer Northern countries had spread like wildfire to poorer Southern nations and that there should be North-South resource transfer to help poorer nations adapt.
In many ways, governments were asking the right questions. Yet, they walked out of London after failing to advance the first two objectives and picking the worst possible institution to carry out the third.
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