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Wednesday, October 22, 2008

Is a Global Economic Summit the Answer?

It was announced on October 22 that the U.S. would join other nations in a series of global economic summits, with the first one being held in Washington on November 15.

As the Associated Press reported: “The summit will bring together leaders of the Japan, the United Kingdom, France, Germany, Italy, Canada and the United States, the European Union, China, Brazil, India, Russia, South Korea and other major economies. [White House spokeswoman Dana Perino] said the White House would seek input from the winner of the U.S. presidential election who will take office on Jan. 20. Perino said countries would come to the summit with different approaches about what's needed to fix the system. ‘I don't believe that you'll have any details coming out of this meeting in terms of things that everyone agrees to at the first meeting,’ she said.”

Among U.S. political leaders, everybody seems to like the idea, with President Bush hosting, presidential candidates Barack Obama and John McCain being supportive, and Senate Majority Leader Harry Reid (D) endorsing the idea.

Does this make anyone else feel as uncomfortable as I do?

Getting political leaders together from around the world to dream up ways to “fix” the economy and our financial system will only serve to inject more uncertainty and concerns into markets that already are deeply rattled.

AP reported: “At Camp David, Bush warned that any international effort should preserve what he calls democratic capitalism — free markets, free enterprise, and free trade.”

That would be nice, but it is hard to believe -- especially given the recent massive, unprecedented intrusions by government into the market -- that this would be the case.

Buckle up for more uncertainty and costs created by government.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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