Author: Stephen Grenville, Lowy Institute

This article is the second part of a digest of a public forum at the ANU.

Ross Garnaut’s book, ‘The Great Crash of 2008’, is an important contribution to the ongoing critical discussion of the global economic crisis.

However, it lacks in one respect: the book is written as if Australia went through basically the same experience as the US.

In the US it was an old fashioned financial crash, like 1907 when JP Morgan locked the bankers in his library and told them that he wouldn’t let them out until they had sorted out the mess. Read the rest of this entry »

Author: Stephen Grenville

There is no doubt that the current financial crisis is global. Any hope there might have been of ‘decoupling’ has long since gone. Even innocent bystanders in good shape (like Australia) have been swept into the maelstrom.

The G20 Leaders have met and urged action. Learned commentators have opined that there can be no solution without international concerted action. There are calls for a Global Prudential Regulator, and for a massive increase in the IMF’s international lender-of-last resort capabilities.

Curiously, however, just about all the action so far has been on the domestic policy front. Is this just the triage stage, with much more international cooperation to follow later? Or are most of the required responses to the Global Financial Crisis, in fact, domestic?

Read the rest of this entry »

Guest Author: Stephen Grenville, Lowy Institute

Just what is World Bank President Robert Zoellick up to? He attended the G20 meeting in Brazil over the weekend, only to argue that this is the wrong grouping and should be replaced by a more exclusive gathering. To say the least, this is an unhelpful intervention, not just for Australia (which would be excluded from the Zoellick group) but also for the urgent need to address the current world situation.

Zoellick’s attitude ignores the time-consuming negotiations of a decade ago which gathered a consensus around the G20 membership. A cynic might say that it just looks like a spoiling strategy to leave the anachronistic status quo in place, with G7 plus a few ad hoc new recruits who are allowed to sit in on the old club.

The problem with the Zoellick proposal is that it starts with the G7. The G7 is lopsided. Read the rest of this entry »

Guest Author: Stephen Grenville, Lowy Institute

The US Treasury’s former attack-dog, Ted Truman, has now got his jaws around another Inconvenient Truth: that the world’s current financial problems not only have their epicenter in the US but can be largely sheeted home to US deficiencies.

Truman wants to argue that the blame is widely spread. One might almost conclude from his piece that the US was an innocent bystander, swept along by events beyond its control. He cites Japan as having had similarly loose monetary policy as the US, blames China’s exchange rate and reserve accumulation, says that housing problems were ‘essentially universal’ and that prudential regulators everywhere were ‘consenting adults’ in their misjudgments of the situation: ‘The finance ministers and central bank governors should not blame Washington, they should blame themselves’. Read the rest of this entry »