Pittsburgh’s Delicate Work

The decor has changed since the last G-20 summit. Whereas in London it all looked like extinguishing a fire, Pittsburgh is remaining relatively calm.

Six months have passed since the first G-20 summit that took place in London. Six months during which the economical background has changed radically. In April, everything was faltering: recession was striking three quarters of the world, states and central banks were trying to rescue a banking system that was threatened to suffocation, most car manufacturers were close to bankruptcy and factory closures were following each other at an alarming rate. Today, some signs of stabilization are emerging; banks partly have stabilized their assets and are making profits again, whereas the stock exchange markets sound happy again and keep soaring.

No one will complaint about this change. However, there is a risk hovering over the G-20 summit: whereas in London, it all looked like a fire needed to be extinguished, in Pittsburgh all is relatively calm. Why rush and impose new rules when things are all getting back to normal already?

This is the trap that world leaders, despite their disagreements and varying interests, have the duty to avoid. First of all, because the economic progress is still quite relative. Numerous experts doubt the economy’s strength and fear a worse future. Although there is an uncertainty about the future, the necessity to encourage economic activity is more important than ever, just like the necessity to resist any form of protectionist measures.

The bank system is not totally healed from the disease that almost caused its death last year. It is getting back its profit margin assuring the smooth operation of the financial networks thanks to a generous influx of cash from central banks. This exceptional situation will not last. Nevertheless, before unplugging this oxygen mask, it is imperative to establish a new regulation framework to enable strict control of risk. A limitation on bonuses – this surely is not the only thing in need of reform – is the logical step. On the same level, accounting norms must be reviewed because they distort the banks’ balances and have widely fueled the crisis. As Christine Lagarde (The French Finance Minister) says, all the systems demand “lace work.” Undoubtedly. Nonetheless, concrete results must be achieved, starting with the Pittsburgh summit.