World leaders are in the US this week for the UN General Assembly and the G-20 summit.
At the second G-20 meeting in six months, it's unlikely significant action will upstage rhetoric.
It takes more than a couple one-and-a-half day meetings to agree on new international policy and establish tenets for its implementation.
World leaders traveled to the US in force this week—stopping first in New York for the UN's General Assembly then Pittsburgh for the G-20 summit. With this many international power players in town, there's no shortage of grand pronouncements and sweeping rhetoric. But will it come to anything?
Opening the UN meeting Wednesday, Secretary-General Ban Ki-moon urged action on climate change, nuclear disarmament, and combating the global poverty compounded by the recent financial crisis. And all that before lunch! Meanwhile, at the G-20 summit (attendees will represent 90% of world economic output and 67% of world population!), topics are slotted to be no less lofty.
Focus at the summit will undoubtedly be on economic growth prospects as central banks around the globe are noting signs economic recovery has begun. Stimulus exit strategies will be discussed (though globally most nations likely won't begin "exiting" their stimulus programs anytime soon as many such programs are still only partially implemented). But the big headline-making news will likely include Germany's Angela Merkel continuing her calls for stricter financial regulation. She supports a financial transaction tax to be levied on major global economies to boost public finances—in addition to establishing international "too big to fail" criteria for banks. France's Nicolas Sarkozy will reissue his support of a global standard for curtailed banker bonuses, suggesting individual pay be capped at a set percentage of the company's assets or revenue.
A supranational global committee imposing new taxes and price caps on private firms across nations is just the sort of thing that could give stocks a good whack. But these global gatherings don't tend to result in much besides photo-ops (and the occasional oddball speech from despots). First, it generally takes more than a couple one-and-a-half day meetings to get binding agreement from all parties on new international policy. Even if there were agreement (and this can happen), delegates return home, submit their expense reports, and their nations tend to continue acting in their own self-interest—feel-good global policy promises be darned. Plus, the G-20 lacks an enforcement arm, leaving individual nations to decide how (and if) to carry out any policy agreements.
As the summits progress, pronouncements will grab headlines. But we're not sure why—typically, we hear the same grand platitudes spouted at every global leadership gathering, but see little action. This meeting shouldn't be too different—with the only material action happening on the streets.