Gordon Brown has a plan, a "Global New Deal" indeed. He told President Obama of it on Tuesday. He repeated it to the US Congress yesterday. And he constantly reiterates it to anyone who will listen back at home.
The question is, will anyone listen and, in particular, will the major economic powers listen enthusiastically enough to sign up to the plan when Brown hosts the G20 meeting in Britain early next month? Judging from Obama's studied refusal on Tuesday to refer to international action, except in only the most generalised terms, international agreement is still a long way off.
And no wonder. The constant demand in Britain for Brown to say sorry for his part in bringing on the economic crisis has frankly become something of a bore. He is not going to do it; nor, at this point, would it have much impact if he did. What is worrying is just why he apparently feels so self-justified. In Brown's mind, this has been a crisis brought about entirely because of the problems in the financial system, originating in the US sub-prime mortgage market. The solution has to lie in everyone joining together to support the financial institutions (the banks) and to regulate them on an international scale.
Leaving aside the question of whether this analysis is entirely accurate (the US economy was slowing down before the sub-prime crisis hit), and side-stepping the even more contentious issue of Britain's part (we were grossly over-borrowed on housing without America's example, while the City of London was the originator of just as many exotic instruments as New York), this still begs the question of what you do about it all.
For Britain and the US, the centres of the international financial system and the home of the "shadow banking" which Brown now so deplores (he didn't at the time), the health of their banks is the major issue. But for many other countries, including those who, like Sweden, Japan and Spain, have had banking crises before and largely reconstituted the sector, finance is not the main problem. The problem is the collapse of demand in virtually every major market and with it, world trade.
The peculiarity of this crisis is that it has punished the virtuous more than the guilty. Those consumers who chose to save rather than borrow, and those countries who preferred to export goods rather than spend their money on houses and consumption, have been hit hardest. For them, if there is a problem of finance, it is up to the guilty pair of the US and the UK to solve it.
For those who, like Germany, have followed constrained policies on borrowing and government debt, the answer to a crisis of over-borrowing is not to do more of the same, but to concentrate on counter-cyclical investment for the long term. It is easy enough to castigate Europe for its lack of unity, but the reality is that there are huge differences between the Poles and Czechs with sound money and the spendthrifts such as Hungary without.
However much it may make sense to economists, to democratic politicians asking their citizens to throw away the benefits of their own virtue to bail out the imprudent is a step too far, especially when most of the measures taken so far seem to have made little difference. This is not to argue that there is no room for international, co-ordinated action. The case for a reformed, international regulatory system is obvious; so is the benefit of countries co-ordinating their reflationary packages so as to avoid at least competitive devaluation and, even worse, protectionist measures.
But that doesn't amount to the kind of Global Plan which Brown has gone out on such a limb for, and which he proposes as a dramatic action that could calm the market and restore lending. Toughening up regulation for the future will not do anything for the recession of today, while the markets will take more than words to convince them that happy days are here again.
If it is results you want, then the two most effective actions would be a revival of demand in the US and a cohesive plan for support and reflation of Europe. America is already set on its own course and is not going to take instructions from anyone else. Europe is just not ready to accept the leadership of a Britain whom they regard as the progenitor of their woes. It is not just to the British public that the Prime Minister needs to show humility, but to the other countries in the G20. Without it his, Global Plan will remain just a vain attempt at self-aggrandisement.Reuse content