G-20 leaders scramble to save crisis-stricken economies

Leaders of the so-called Group of 20 (G-20) have agreed to do what was virtually unimaginable just a few years ago — bat for doses of market regulation — at the “summit on financial markets and the world economy” at the US capital, amid the worse crisis to hit capitalism in recent memory.

Today, their feet are in their mouths.

The G-20 leaders are mostly, if not entirely, supportive of unbridled capitalism which we all know here as “globalization” and have focused for the past years on the policies of denationalization, deregulation, privatization and liberalization. These same policies however brought the world economy to its knees, and the world’s people to so much anxiety and uncertainty.

The US, the world’s champion of neoliberal economic policy, has privatized big companies and big banks in its effort to save its flagging economy that is already edging towards recession.

Now, the G-20 leaders want “tougher controls” on banks. The same CNN report also highlights why the summit is historic, at least in point of view of leaders of world capitalism:

The G20 meeting could test the United States’ traditional economic dominance with European leaders expected to call for tighter regulations to be imposed on banking systems and credit markets.

The summit has been compared to the Bretton Woods meeting in 1944 which laid the foundations for the post-World War II economic order by creating the U.S.-dominated World Bank and International Monetary Fund.

Now, we see the same governments that championed laissez faire capitalism make use of taxpayer money and government machinery to save companies that are blamed for the crisis, especially in the US.

In a statement, the G-20 leaders said the roots of the crisis are:

During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

Major underlying factors to the current situation were, among others, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes. These developments, together, contributed to excesses and ultimately resulted in severe market disruption.

In short, the G-20 admits that capitalism’s rapacious, insatiable greed for profit (no matter what) is what brought us to the grave crisis we are in right now.

More about the G-20 meeting in the official summit factsheet released by the White House.

Get alternative views on the world crisis from the think-tank Center for People Empowerment and Governance, Noam Chomsky, and the articles in this roundup.