LONDON — Only a dozen streets from Genoa's Ducal Palace, the protesters will be assaulting the barricades this weekend like medieval siege engineers. Inside the palace, the eight men who rule the world's richest economies — well, seven of the world's richest economies plus Russia, which is there by courtesy — will pretend to each other that they are in charge of the world's economy. But the G8 summiteers don't really control the global economy. In fact, even Alan Greenspan doesn't.
The U.S. Federal Reserve chairman has cut U.S. interest rates every month since the start of the year, but the magic isn't working any more. The world is teetering on the brink of a long, deep recession — which is, after all, what you'd expect at the end of a nine-year boom. As the International Monetary Fund said in April, in a belated admission of reality: "Experience has shown over the past several decades (that) soft landings are not easy to achieve."
True, economists have predicted 15 of the past 20 recessions. True, too, that Greenspan has pulled a number of rabbits out of his hat over the past few years. But he failed to predict the recession of the early 1990s, and his pledge to do "whatever is necessary" to avoid the recession of the early 2000s rings hollow as all the indicators turn downward. If fiddling with interest rates was all you had to do to avoid recessions, there would be no such thing as the business cycle.