CAMBRIDGE, Mass. -- Financial globalization is exploding. Yet, as the world's leading finance ministers and central bankers convene in Washington this month for the semiannual International Monetary Fund board meetings, policy paralysis continues.
There is simply no agreement on how to address glaring problems such as America's increasingly fragile trade deficit, or financial dysfunction in a number of emerging markets. This paralysis has three layers:
* First, rich countries are deeply reluctant to embrace any collective plan that might impinge on their own domestic policy maneuvers. The United States is the worst offender. U.S. Treasury secretaries have always loved to lecture their foreign colleagues on America's economic perfection, and why every country should seek to emulate it. Never mind that this logic is now in danger of unraveling along with the U.S. housing market.