The Group of 20 meeting in Pittsburgh has been an opportunity for world leaders to say reassuring things about global trade, but without serious policy co-ordination, there is little to prevent intensified conflict.
There is still little agreement on the causes of the crisis and the responsibilities of different countries for the underlying imbalances. Without such agreement, we are likely to see more recrimination and blame rather than policy co-ordination. Since it is through international trade that the costs of the adjustments will be distributed from economy to economy, we are also almost certain to see further trade tensions.
Brussels continues to focus on promoting financial market reforms that have almost nothing to do with the underlying causes of the crisis. Two hundred years of modern banking history make it pretty clear that financial systems, however well or poorly regulated, always tend towards instability during periods of excess liquidity. Financial re-regulation aimed at preventing future crises overlooks that obvious point.
Washington seems intent on postponing as long as possible its own necessary adjustments. There may be good political reasons for boosting spending, but if the United States does not reduce the debt built up in the past decade or two, it will continue to face the same risks and constraints on growth recovery.
Beijing is so determined to reject any responsibility for problems created during the past decade that it does not even like references to 'global imbalances'. For China, imbalances were wholly caused by out-of-control US consumption, and nothing China did or could have done alters the fact.
And just as Beijing is eager to assert that China's size and importance should be reflected by an increasing role on the global stage, it is also eager to insist none of its policies has adversely affected the global economy.
But China's consumption rate is the lowest ever recorded and its trade surplus is the largest as a share of global gross domestic product ever recorded. These were almost certainly caused by policies - an undervalued currency regime, excessively low interest rates, sluggish wage growth and manufacturing subsidies - wholly under domestic control.
