David Prosser: Remember when we were friends?
Friday 08 October 2010
Outlook There is not much to remember fondly about the panic in the financial system that swept the world during the final few months of 2008. But we should at least applaud the way in which governments and central bankers around the globe put aside their differences as they sought to deal with the crisis. Not only was the bail-out of the banking sector co-ordinated on a global scale, but it was followed by an equally united fiscal response, which prevented recession becoming depression.
This consensus could not last. Two years later, as the representatives of the world's major economic powers arrive in Washington for the annual meeting of the International Monetary Fund, they still publicly talk the language ofco-operation. In private, however, they are busy calling those left at home, instructing them to pursue the national interest at all costs.
In an ideal world, this IMF meeting would serve as a peace summit for the protagonists in what Brazil's finance minister recently described as a "global currency war". However, there appears to be precious little goodwill on either side. Those nations which are determined to keep the value of their currencies depressed in order to protect their export industries – and it is far from only China that plays this game – are continuing to intervene in the foreign-exchange markets in one way or another. Those who worry they are being disadvantaged by such policies are upping the rhetoric. It is every man for himself.
The collateral damage in this war is the threat to the still-vulnerable global economic recovery. But although Dominique Strauss-Kahn, the managing director of the IMF, voiced exactly that concern yesterday, the Fund seems unwilling, or unable, to play the role of peacemaker or peacekeeper. Mr Strauss-Kahn warned that "the mood" was not in place to strike a deal at this meeting.
What a pity. When the threat of meltdown was immediate, the IMF's members felt able to act in unison. Now that the threat has receded, they have abandoned the collegiate approach, even though this failure to address the huge imbalances in the global economy will, sooner or later, precipitate another crisis.
Woolwich terror attack: Suspect Michael Adebowale saw friend 'literally sliced to pieces' in 2008
Emergency landing at Heathrow sparks further controversy over London airport capacity
Unrest may spread across Europe, warns Red Cross chief
EDL marches on Newcastle as attacks on Muslims increase tenfold in the wake of Woolwich machete attack which killed Drummer Lee Rigby
You want to get an Eton scholarship? All you need to do is answer four (not so simple) questions
- 1 What, let gays get married? We must be bonkers
- 2 Rocky Horror star Tim Curry 'suffers major stroke'
- 3 Exclusive: How MI5 blackmails British Muslims
- 4 EDL marches on Newcastle as attacks on Muslims increase tenfold in the wake of Woolwich machete attack which killed Drummer Lee Rigby
- 5 Farewell, Shameless. Your heirs have work to do
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Nook is donating eReaders to volunteers at high-need schools and participating in exclusive events throughout the campaign.
Get the latest on The Evening Standard's campaign to get London's children reading.
Win anything from gadgets to five-star holidays on our competitions and offers page.