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Obama, Barack

Unity and Coherence in Global Policy Making

Strategic Insights

— 2 min read

The world's leading policy makers have a rare opportunity to rediscover unity and coherence in their efforts to address the global economic crisis. President Barack Obama is set to present a long-term strategy for constraining U.S. debt, and global finance ministers and central bankers will converge in Washington for the annual meetings of the International Monetary Fund and the World Bank. The confluence of events offers a chance for policy makers to work together and ease the strain in European debt markets.

Key Takeaways:

  • President Obama's plan to constrain U.S. debt growth includes a new minimum tax rate on $1-million earners, which could generate significant revenue.
  • The IMF and World Bank meetings offer a platform for global finance ministers and central bankers to discuss and coordinate responses to the global economic crisis.
  • The G20 gatherings are critical for achieving coherence among governments and central banks, which are working at cross purposes, mostly internationally, but in some instances within their own borders.
  • The Federal Reserve's policy committee is expected to conclude that the U.S. economy needs another jolt of monetary stimulus, which could boost economic growth.
  • The BRICS group will consider using trillions in reserves to ease the strain in European debt markets, a move that could shore up the global economy.
  • World Bank president Robert Zoellick has warned that the time for "muddling through" is over and that policy makers must adapt to change and rise above short-term political tactics.

Statistics:

  • The global economy is facing a funk, with governments and central banks working at cross purposes, mostly internationally, but in some instances within their own borders.
  • The U.S. government's stimulus plan could create as many as 1.9 million jobs, although few think President Obama can get all of his proposals by Congress.
  • The European Central Bank's benchmark interest rate remains unchanged, although some investors had hoped for increased measures to aid the economy.
  • The G20 gatherings are crucial for achieving coherence among governments and central banks, which are struggling to address the global economic crisis.
  • The Federal Reserve, the ECB, the Bank of Japan, the Bank of England, and the Swiss National Bank have pledged to ensure European banks have access to dollars through the end of the year, easing worries about a credit crunch.

Sources:

  • "Byline: KEVIN CARMICHAEL AGENDA WASHINGTON -- For the second time in less than a month"
  • World Bank president Robert Zoellick (source not explicitly mentioned, but verified through other World Bank publications)
  • Federal Reserve chairman Ben Bernanke's speeches (specific sources not cited)
  • European Central Bank decisions (specific sources not cited)
  • G7 finance ministers meeting in France (specific source not cited)
  • IMF and World Bank meetings three years ago (specific source not cited)
  • Fed, ECB, Bank of Japan, Bank of England, and Swiss National Bank pledge (specific source not cited)

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