ANALYSIS-Will “It worked” come back to haunt G20?-Reuters

ANALYSIS-Will “It worked” come back to haunt G20?

Sat Sep 26, 2009 3:43pm EDT  

By Emily Kaiser

PITTSBURGH, Sept 26 (Reuters) – The G20 may face a “mission accomplished” moment akin to former President George W. Bush’s premature declaration of victory in Iraq unless leaders quickly make good on pledges for substantive financial reforms.

Leaders from the Group of 20 rich and developing nations were so confident they had succeeded in tackling the global financial crisis and recession that they included in the preamble of their final statement on Friday this bold, two-word declarative sentence: “It worked.”

“It’s hubris,” said Simon Johnson, a former chief economist of the International Monetary Fund.

Johnson, who is now a senior fellow at the Peterson Institute for International Economics in Washington, listed possible pitfalls including growing losses on commercial real estate loans, the need to recapitalize European banks, and stubbornly high unemployment in most developed countries.

Any of those has the potential to trigger an economic setback serious enough to force a re-thinking of policy.

Even though G20 leaders insisted they were on guard against complacency, Johnson said they may have assumed success too soon, much like Bush’s infamous May 2003 Iraq speech on an aircraft carrier in front of a banner that read “mission accomplished.”

via ANALYSIS-Will “It worked” come back to haunt G20? | Reuters .