G-20 meeting expectations headed south

Once-lofty expectations for the upcoming Group of 20 meeting are heading south in a hurry. U.S. and European policymakers are having trouble agreeing on the proper combination of bank bailouts, economic stimulus, and so on. It’ll be interesting to see how the markets react (in early trading, “risk aversion” trades — stocks down, bonds up, dollar up, and so on) as we get closer to the gathering.

More from the Wall Street Journal …

“It was supposed to be the inauguration of a Global New Deal, in the hopes of British Prime Minister Gordon Brown, a comprehensive policy response to the world economic crisis, a root-and-branch effort to reorder the way capitalism itself works.

“But by the time the much-heralded Group of 20 meeting of heads of government ends Thursday, it may be difficult to spot a new world order.

“Six months ago, Mr. Brown, who will host the summit here, called for “a new Bretton Woods — a new financial architecture for the years ahead,” evoking the New Hampshire site where, in 1944, American and British officials mapped out the post-World War II economic order.

“It is already clear that the summit will mostly fall short of Mr. Brown’s original lofty goals. Over the past few days, European leaders continued to insist they wouldn’t agree to U.S. and British calls for further fiscal stimulus for their ailing economies. According to a draft of the communiqué set to be released when the meeting adjourns, the G-20 leaders will tout a global bailout totaling up to $2 trillion, though that includes a host of measures already announced.

“White House officials over the weekend sought to back off their once high hopes for coordinated global action. They played down fiscal-stimulus targets they were urging on Germany and other European nations earlier in the month and instead focused on more modest objectives, such as new rules for tax havens and international coordination for financial regulation.”

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