Fallout: The Financial Crisis

Several world leaders meet on crisis

John Dimsdale Nov 14, 2008
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Fallout: The Financial Crisis

Several world leaders meet on crisis

John Dimsdale Nov 14, 2008
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TEXT OF STORY

Steve Chiotakis: And there they will be, this weekend in Washington, the leaders of the world’s 20 largest countries meeting to discuss the immediate — and the global — financial crisis. We’re not sure what could come of it, and here’s Marketplace’s John Dimsdale with a preview.


John Dimsdale: This weekend’s host, George Bush, told a Wall Street audience yesterday it’s time to bring the global economy into the 21st century. And that means overhauling financial rules established just after World War Two.

President George W. Bush: One vital principle of reform is our nations must make our financial markets more transparent. For example we should consider improving accounting rules for securities so that investors around the world can understand the true value of the assets they purchase.

To get a grip on the world’s financial problems, the White House expanded the invitation list beyond the biggest developed economies to include leaders of developing countries such as China, Brazil and Indonesia.

MIT economist Simon Johnson says giving growing economies a say in the solutions means they can also underwrite some of the costs.

Simon Johnson: In return for making their contributions, it is quite likely that the Chinese and maybe some other people would want changes in the governance of the IMF. That governance overweights Europe right now, and you know China and other emerging markets have been trying to reduce that representation for some time. This may be a good opportunity for China to push that agenda along.

This the first ever meeting of the 20 world leaders. But David Chavern at the U.S. Chamber of Commerce wonders whether letting them all have the stage will lead anywhere.

Each head of state is going to get something like 15 minutes to talk. That kind of event and process doesn’t lead you to a new financial regulatory structure internationally.

But Fred Bergsten at the Petersen Institute for International Economics, says even if ambitions are pared down, it’s important for world leaders to at least appear united.

Fred Bergsten: The G-20 countries have to be very careful to avoid any appearance of significant conflict between them that could undermine confidence in the very fragile financial markets.

This summit will only be a start, says Bergsten, especially since one important world leader won’t even be there: President-elect Barack Obama.

In Washington, I’m John Dimsdale for Marketplace.

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