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R K

The G-20 Misses Its Sputnik Moment - El-Erian

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http://www.bloombergview.com/articles/2016-02-28/g-20-fails-to-address-threats-to-global-economy

The global economy needed this weekend’s Group of 20 meeting in China to produce a “Sputnik moment.” Instead, and despite growing awareness of the risks to growth and financial stability, the gathering concluded essentially with a reheated version of previous policy statements. This is a far cry from the individual and collective actions that G-20 members must take if the global economy is to avoid even more disappointing growth and greater financial instability.

Meeting in Shanghai, the ministers of finance and central bank governors of the largest economies seemed a lot more worried about the prospects for global economic growth, and understandably so. They also recognized that the policy mix being pursued in many of their countries remains highly imbalanced, perpetuating an excessive reliance on central bank experimentation.

It was hoped, though not expected, that this increased awareness of danger would jolt policy makers, as was the case in 1957, when the Soviet Union’s successful launch of Sputnik shocked the U.S. and united it behind an invigorated approach to the space race.

The growing concerns about the global economy and markets, however, haven't resulted in much more than the reiteration of past policy commitments that have struggled to gain traction.

Judging from publicly available information, there is little coming out of the G-20 to suggest major improvements in the policy mix of the most systemically important countries. Instead, rather than using “all policy tools -- monetary, fiscal and structural,” as stated in the G-20 communique, these countries will continue to be constrained by political realities and will remain inclined to continue to rely excessively on increasingly exhausted central bank policies, whose effectiveness is being undermined by greater threats of collateral damage and unintended consequences.

The G-20’s call for collective responsibility and action was equally muted, given the risks facing the global economy. Lacking the urgency of immediate crisis conditions, officials came nowhere close to what they achieved in April 2009 in London, when an impressively coordinated policy approach helped avoid a multi-year global depression.

With little hope for major policy changes, global economic growth will continue to struggle, the trifecta of national inequality (of income, wealth and opportunity) will worsen, and financial volatility will increase. These conditions will set an even more worrisome context for country officials when they next come together in April in Washington for the spring meetings of the International Monetary Fund and the World Bank.

Should financial leaders fail to seize that opportunity for a Sputnik moment, the world would take another step toward the point when low growth could give way to recession, bouts of financial volatility could evolve into more damaging financial instability, and worsening inequality could fuel greater political dysfunction that undermines future generations along with ours.

G-20 - Fur coat, no knickers.

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Should financial leaders fail to seize that opportunity for a Sputnik moment, the world would take another step toward the point when low growth could give way to recession, bouts of financial volatility could evolve into more damaging financial instability, and worsening inequality could fuel greater political dysfunction that undermines future generations along with ours.

This concept of 'financial leaders' sits strangely with the kind of free market fundamentalism that guys like El-Erian were spouting not so very long ago. Back in the day the mood music was all about how the politicians should stay out of the way and let the market do it's thing- but now it's as if the entire Wall street establishment have been sent to a reeducation camp and come back as born again state interventionists.

I guess it's true what they say- there are no atheists in foxholes.

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The global economy needed this weekend’s Group of 20 meeting in China to produce a “Sputnik moment.” Instead, and despite growing awareness of the risks to growth and financial stability, the gathering concluded essentially with a reheated version of previous policy statements. This is a far cry from the individual and collective actions that G-20 members must take if the global economy is to avoid even more disappointing growth and greater financial instability

Face it if the economic collapse from 2007/2008 didn't produce a "Sputnik" moment then some self servers on a G20 jolly to work out how to rip off the general population some more isn't very likely to,

Edited by billybong

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Are there STILL inflationistas amongst us who say invest in shares and steer clear of USTs? :lol:

You are lending money to US government at less than 2% nominal?

So you are guaranteed not to earn more than 2% nominal for next 10 years?

Youre a genius. Why didnt I think of losing money like that.

Edit: FTSE up 12% in last 2 weeks. But since you said & I quote "I would rather drink my own blood than own equities" you missed out. Never mind. Enjoy your financial repression.

Edited by R K

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This concept of 'financial leaders' sits strangely with the kind of free market fundamentalism that guys like El-Erian were spouting not so very long ago. Back in the day the mood music was all about how the politicians should stay out of the way and let the market do it's thing- but now it's as if the entire Wall street establishment have been sent to a reeducation camp and come back as born again state interventionists.

I guess it's true what they say- there are no atheists in foxholes.

Well PIMCO werent. Theyve been spoutin fiscal/infrastructure investment & "new normal" for years before it became trendy.

Whenever a financial meme hits the mainstream and enters the everyday lexicon it is guaranteed to be nearly over.

Some people actually believe govt bonds paying negative nominal are "safe assets" for example. I know, incredible isnt it.

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If the Sputnik moment is negative i.r.'s and the Chinese govt engineering another panic in the Shanghai housing market then all I have to say is:

"Me no Laika."

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If the Sputnik moment is negative i.r.'s and the Chinese govt engineering another panic in the Shanghai housing market then all I have to say is:

"Me no Laika."

+1

Indeed - it's also like having to listen to 12 hours of Sputnik.

Edited by billybong

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