The G8 Meeting this Weekend

If you’d like to attend the G8 Ministers of Finance meeting this weekend, the Italian Ministry of Finance has put out a handy travel guide.

Alternatively, take a look at my preview on The New Republic’s website.  Our leadership appears to be resting on its laurels after the April G20 summit – or perhaps they think the next G20 summit in September is the place for real discussion.  Regulatory reform still needs (a) to happen in a meaningful sense for the financial sectors in all industrial countries, and (b) to be closely coordinated across countries – if your bank is too big to fail in my country, whose problem is that and whose taxpayers are on the hook?  But gone completely from the G7/G8 ministerial level is any sense of urgency; all we’ll hear is self-congratulation.

And in terms of macroeconomic policy, discussed in a piece with Peter Boone on the NYT’s Economix this morning, current global early warning signs (higher oil and other commodity prices; rising long-term yields) are being interpreted by policymakers as indicators of success and return to “normalcy”.  It reminds me of official discussions in early 2007 – no matter what weakness you could point out in US housing and European banking, leading G7 policymakers were completely in denial, with articulate arguments about why they were right.

Incrementalism is the preferred policymaking culture of G7 ministries of finance and central banks, and they are very much back in that mode.  But if you put incrementalism together with refusing to really change the rules for banks and huge, unconditional support for credit that is hard to withdraw, what do you get?

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