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BOB MOON: Everyone from bankers to the credit rating agencies have claimed nobody saw it coming -- the global economic meltdown. There are plenty of critics who dispute that, but now, international finance chiefs have agreed to a new 'early warning system.' Money bosses from the 20 biggest economies met in Paris this weekend and came up with a plan to battle so-called "global imbalances."
Sounds a little wonky to me -- so hopefully our European bureau chief Stephen Beard can help sort it all out. He's with us live from London -- and let's start with those big, bad "global imbalances." What's that mean and why are they are worry, Stephen?
STEPHEN BEARD: Trade imbalances is what we're talking about mainly here. Countries like the U.S. importing a lot more than they export while China for example does the opposite -- exporting, for example, huge quantities of computers, electronic goods and so on, while not importing as much. The argument is this helped create the financial crisis because China who was awash with export earnings, lent billions to the U.S. and Europe which triggered a debt bubble here which eventually burst.
MOON: So will this meet in Paris keep that from happening again though?
BEARD: Well the G20 agreed to draw up a list of what they call "early warning indicators" -- things like trade deficits, budget deficits and so on. And the idea is the G20 will monitor these indicators in the different countries and when an indicator starts flashing red, the group will say to the country concerned, "Look you've got a problem." But Steve Barrow of Standard Bank points out, the countries that have a problem, can't be forced to take action, raising a fundamental question about the whole process.
STEVE BARROW: Will they feel sufficiency pressured or embarrassed if you like by having those big imbalances and do something about it? That is the key issue here.
Never the less he thinks this plan is a step forward because at least we'll have some specific targets that say if your deficit is 4 or 5 percent of GDP -- that's a problem.
MOON: Marketplace's Europe correspondent Stephen Beard. Thanks.
BEARD: OK Bob.