As uncertainty about the world economy again seems to be growing, leaders of the Group of 20 major industrial nations meet Thursday and Friday in Cannes, France. Most famous for its annual film festival in May, Cannes this year is hosting economic fantasies in addition to the celluloid variety.
Basically, the problem is that most of these countries are trying to find some way to avoid the problems caused by their own economic foolishness. Although not a G-20 member, tiny Greece's likely bankruptcy will be the major focus of this year's summit. That's because Greece belongs to the European Union, and the European Monetary Union, whose currency is the euro.
Because of the Greek government's fiscal profligacy, the whole EU and euro system could fall apart, affecting major G-20 members Germany, France and Italy. Although Germany and France's fiscal houses are in fairly good condition, Italy's is not, and it could follow Greece down the economic path to insolvency.
The major player in this year's G-20 meeting is China, which is deeply involved in loan arrangements to keep the EU afloat. China, of course, also holds $1 trillion of U.S. government debt.
President Barack Obama will be representing the United States. He'll be calling on the other G-20 countries to address long-term debt. Of the recent deal to reduce Greece's debt, he said on Monday, "The key now is to make sure that it is implemented fully and decisively, and I have great confidence in the European leadership to make that happen." This is ironic because he has increased America's federal debt by 50 percent in less than three years, to $15 trillion — the highest amount for any country, ever.
Implementing that debt deal was made less likely by Greek Prime Minister George Papandreou's decision to let the Greek people vote on accepting further austerity measures on which hinge more EU bailout money. News of the Greek referendum sent markets worldwide into a tailspin Tuesday.
Here's a better policy than urging the Europeans to fix their mess. "The overriding message should be: We need to get our own fiscal house in order," Dan Griswold told us; he's the director of trade policy studies at the libertarian Cato Institute. "Treasury Secretary Timothy Geithner was almost hooted off the stage when he visited Europe in September and talked about debt," Mr. Griswold remembered. "Somebody from the Obama administration, which has racked up trillion-dollar deficits, coming to Europe for advice was just too much for them."