Treasury Secretary Tim Geithner along with Wayne Swan the treasurer of Australia, and Tharman Shanmugaratnam, the finance minister of Singapore have put together a “plan” for the G-20 in an op-ed piece in the Wall Street Journal.
Please consider A Four-Point Plan for the G-20
The deep economic challenges left by the crisis in the established economies and the prospect of rapid expansion in emerging economies necessitate a new agenda for international economic cooperation. We are past the point where public policy around the world was directed exclusively to averting an economic depression. We now face diverse transitions to a sustainable path of growth led by the private sector.
This two-track recovery will dominate the global economy for a long time to come. And it brings more varied risks and challenges than those of the past two years of managing crisis.
Four objectives define this new agenda for global cooperation.
First, we must work together to strengthen global economic growth.
The main risk for the world is not inflation in the advanced economies, where inflation expectations are stable at relatively low levels, but that the advanced economies underachieve on growth. Those economies must look for ways to strengthen underlying foundations of long-term growth, including fostering innovation and developing higher skills in the labor force, removing impediments to market entry, and providing stronger incentives for labor force participation.
Second, because of this risk, we need to strike a balance on the pattern of growth across countries. Balance matters not for its own sake, but because it is critical to strong and sustained growth globally and to future financial stability. Ultimately we are trying to lift global growth, not just shift it—so as to deliver strong, sustainable and balanced growth.
Third, to help smooth these transitions, we need a new framework for cooperation to allow exchange rates to reflect economic fundamentals and support needed structural reforms.
And finally, we need to continue to keep our markets open and work to expand trade and maintain a level playing field across countries.
Was that a Plan or a Wish-List?
A statement praising motherhood and apple pies is not the same as a plan to bake pies.
In my admittedly old-fashioned way of thinking, a plan involves putting together details on how to get from point A to point B. Pray tell what is the plan here?
Geithner, Swan, and Shanmugaratnam did not put together a “plan”. They put together a no-details “wish-list” that relies on miracles from an “Economic Fairy Godmother”.
I hate to break this stunning news but there is no “plan”, and there is no “Economic Fairy Godmother” that will grant Geithner his wishes.
The G-20 would have been far more successful had it blown sky high in a series of disputes than to put out garbage like this and call it a plan.
Mike “Mish” Shedlock
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