Below are excerpts from the “Declaration of the Summit on Financial Markets and the World Economy.” My comments appear in italics:
From item 1. …cooperation… to restore global growth and achieve needed reforms in the world’s financial systems.
Cooperation is possible only when it is absolute, like in one family.
From item 2. …reform to help to ensure that a global crisis, such as this one, does not happen again.
It’s unclear what kind of reform they are thinking of, because they still haven’t pinpointed the real cause of the crisis – egoism.
From item 2. …market principles… and effectively regulated financial markets…
Forced regulation will only push the system deeper into crisis (as it happened under the Soviet regime). This measure is incomplete.
From item 5. …actions… to stimulate our economies, provide liquidity, strengthen the… financial institutions … unfreeze credit markets
This does not correct the mistakes – it doesn’t even attempt to correct the mistakes, since this kind of stimulation only further develops the causes that led to the crisis.
From items 6 and 7. …Economic momentum is slowing substantially in major economies… Many emerging market economies … are still experiencing good growth … a broader policy response is needed … to restore growth … and support emerging market economies and developing countries.
Sounds great, but who thinks of others!?
From item 7, bullet point 1. …stabilize the financial system…
Or in other words – keep pumping it with money, which will lead to inflation.
From item 7, bullet point 3. …Use fiscal measures to stimulate domestic demand…
But whatever benefits the people, hurts the state.
From items 7 and 8. Ensure that the IMF, World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the crisis …strengthen financial markets and regulatory regimes… Regulation is first and foremost the responsibility of national regulators…
It’s a refusal to create a common financial regulator! They aren’t discussing the creation of a single financial institution, common financial instruments, market transparency, and a change in the management of IMF.
From items 8 and 12. …support market discipline … commitment to free market principles…
Stated simply – they’ve gone bankrupt!
From item 13. …within the next 12 months, we will refrain from raising new barriers to investment or to trade…
In other words, they won’t limit the outflow of capital. (in the month of October, $50 billion were taken out of Russia alone!)
From item 11. …we will meet again by April 30, 2009…
Additional Comment: Obviously, I’m not a banker, and these are my impressions. Regrettably, the declaration that was agreed on, lacks understanding of the true cause of the crisis, and hence it lacks the correct solution to it. Nevertheless, it reveals an underlying feeling of not understanding what is going on, of being interdependent, and of needing to search for the answers together. This feeling will continue to grow as the problems will keep increasing. The world really lacks knowledge of how global and integral it is, and of the law of absolute interaction!
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