Both Gillian Tett and IMF chief Dominique Strauss-Kahn make the argument in today’s FT that the G-20 leaders are in denial about the toxic assets clogging up the global financial system. (Don’t they mean legacy assets?)
Strauss-Kahn describes the problem:
The US . . . is rightly insisting on stimulus and the EU rightly insisting on regulation. They are not yet moving quickly enough in doing the cleaning up of the financial system.
Tett explains the reasons for it:
One dirty secret that hangs over Thursday’s meeting is that there is still precious little global consensus about how to tackle the toxic woes. Some countries (such as the US) are trying to persuade banks to sell their bad assets; others (such as the UK) are trying to “insure” the banks against losses instead. Meanwhile, several governments in continental Europe seem to be just holding their breath – and praying that the problem will magically disappear.