Frank's Musings

U.S. Push for Global Stimulus

That Europe and the U.S. take contrasting approaches to resolving the current global financial crisis isn’t surprising. One seeks to correct the irresponsible behavior of private-sector players and governments that is blamed for having caused international economic disorder, while the other seeks to begin by ameliorating its effects. The former are dirigistes for whom the most important objective is to maintain order (How long the memory of financial chaos following WWI lingers on!). The latter, whose camp of free-marketers apparently includes the IMF, believes that it is crucial to prevent the misery of a worldwide depression before searching for reforms that will insulate us from a recurrence of the credit and securities collapse.

The G-20 will do well to adopt a compromise common policy at its summit next month. Such an outcome could result if President Obama uses the opportunity to display the leadership and commitment to change that he promised in his election campaign last year.