Issue of the week: What did the G-20 accomplish?

Amid the uproar over Iran’s secret nuclear site, it was easy to forget that the global economy was the main item on the agenda at last week’s G-20 summit in Pittsburgh, said Bob Davis and Jonathan Weisman in The Wall Street Journal. Yet President Obama, Britain’s Gordon Brown, France’s Nicolas Sarkozy, and the other leaders of 20 of the world’s largest economies managed to overcome the Iranian distraction long enough “to establish an elaborate structure to coordinate economic policies.” They did not, however, create a mechanism to discipline any country that doesn’t cooperate. And though the leaders promised to limit pay at financial firms and require banks to shore up their capital reserves, they left the details—and enforcement—to each individual country.

The G-20 missed a crucial opportunity to strengthen the financial system, said Jennifer Liberto in CNNmoney.com. A distinguished group of academics and regulators known as the European Shadow Financial Regulatory Committee warned G-20 participants that their agreements “are not likely to substantially reduce the likelihood of future crises.” In fact, the summit may have “worsened our predicament” by delaying the vital task of recapitalizing the banking system, said Simon Johnson in The New Republic. The Obama administration wants U.S. banks to build up their capital before the next crisis hits. But Obama “seems to think that we need to bring others with us,” fearing that foreign banks will flee the U.S. if it’s too strict about capital. Well, let them flee. Let’s recapitalize our own banks and make clear to foreign institutions that “if you want to play in the U.S. market, you need a lot of capital.” Banks that prefer “reckless, high-risk activities” are welcome to take their business elsewhere.

Obama couldn’t talk too tough about bank capital because America’s economic weakness reduces its leverage, said Rob Shapiro in Huffingtonpost.com. “The biggest, unspoken disappointment” at the summit was the consensus among participants that the U.S. cannot “help pull the rest of the world out of its ditch.” Before the financial crisis, rip-roaring consumer spending in the U.S. helped sustain the global export boom and “keep employment up in most other large economies.” Now, though, American consumers are cutting spending and boosting savings, while businesses continue to lay off workers. That’s “hardly a recipe for a recovery strong enough to lift U.S. incomes or the prospects of other economies.”

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All the same, the two-day summit was worth the time and effort, said Ted Anthony in the Associated Press. Summits like the one in Pittsburgh give world leaders a chance to meet informally, face to face, without “the pomp and pressure” of state visits. And the mere sight of presidents and prime ministers talking together gives people hope that their leaders are hard at work on the world’s most pressing problems. A net increase in the global supply of hope is no bad thing.