The G20 was held in Busan for a talk that all knew would be far from cheerful. But what was surprising was the candid and open way in which the attending ministers spoke about the financial crisis facing the global market. The open discussion on the major debt Europe is facing was especially surprising, as everyone failed to do the usual happy-face cover-up and denial of severity.
On the contrary, the magnitude of the crisis can be seen in the way they forestalled any brave rhetoric and downplay of the situation. It was a positive turn, in many ways, seeing how direct the entire meeting became. The communique had a very straight forward message: “Those countries with serious fiscal challenges need to accelerate the pace of consolidation.”
The big turn around discussed what the drop of the universal levy idea that would be held on banks as potential bailout funding. A very unpopular idea for many, the conceivability of it working to further economic growth was tossed aside, and the matter was laid to rest. But that does leave the question of whether or not it will become an option if the need for bailouts increases amidst alternatives failing.
Instead, tailor-made plans to reign in public spending is becoming the number one policy issue. But no major changes are set to be made, just yet. Fiscal growth is still low, and those countries reliant on that growth will have to continue the stimulus efforts until they can stand on their own. But how that support will be continued is the real issue. Especially with Greece announcing the possibility of a bailout request as they face national bankruptcy, and Hungary announcing a likely default on all loans as their economy continues to decline.
