The willingness of some in the media to accept even the most vapid of statements from international leaders as evidence of major policy change provides evidence daily that reporters, like the rest of us, can let their hopes get in the way of their judgment.
A case in point is today’s editorial in the Washington Post by David Ignatius on the G-20 summit getting underway in Toronto. For Ignatius, President Obama’s recent letter to his G-20 counterparts, in which he called for restraint in easing government spending, fewer exports by everyone but the United States (this the real meaning of his call for “balanced global demand”), and market-determined exchange rates, is evidence that “the United States is once again in the driver’s seat.” Ignatius points out that in response to Obama, China has allowed a liberalization of its currency regime, a development to which he allots 5 paragraphs of his commentary.
China did, of course, make an announcement about its currency last weekend, a vague and carefully guarded statement of its intent to “further reform” its exchange rate regime. Ignatius and his liberal allies trumpeted the announcement as a major breakthrough and a triumph for President Obama. We now have a week of evidence as to what “further reform” actually means for the Chinese, and unfortunately it’s “more of the same.” The actual movement of the Chinese currency this week? A paltry four-tenths of one percent!
As for Obama’s other efforts to lead, Chancellor Merkel has firmly rejected the call to maintain government stimulus spending, and other leaders from David Cameron to Stephen Harper have echoed her calls for fiscal discipline rather than Obama’s request for sustained spending. And “balanced global demand,” no matter what China does, is dead on arrival, with the fall in the Euro likely to drive even more imbalance in the US/Europe trades.
At the G-20 this week, look for host Stephen Harper of Canada to talk about tax cuts, tariff reductions and fiscal austerity. Look for the leaders of Germany, the UK, Italy, Japan and many others to join the austerity bandwagon. President Obama, who wants to take the US in a different direction, will find little support among leaders who have been down the over-spending road, and are now desperately trying to apply the brakes.