G8 meets in attempt to stop meltdown

Leaders of the Group of 8 countries of the world’s largest economies are meeting at Camp David, Maryland, to begin talks on the global financial crisis.

European leaders were expected to come under pressure from the United States and Japan to moderate their savage spending cuts and adopt policies for growth – but ahead of the summit there were few signs of fresh thinking from EU mandarins.

Debt levels as a percentage of the EU economy have actually risen over the past year as pressure from Germany to lay off workers, cut pay and reduce spending has shrunk economies.

But at a stormy meeting of the UN general assembly in New York on Thursday European Commission president Jose Manuel Barroso claimed that the EU was “on the right track” and “making good progress” despite the contracting economies of Britain, Italy and Spain and the catastrophe engulfing Greece.

He dismissed the idea that new elections could change the Greek government’s disastrous austerity course, saying: “We expect the Greek government, current and future, to fulfill the jointly agreed conditions for financial assistance.”

Barroso hailed the EU’s dictation of Greek economic policy as an example of “unprecedented solidarity to member states.”

But U.S. economist Joseph Stiglitz hit back that “austerity has not worked and will not work,” pointing out that no large economy has ever recovered from recession through an austerity program.

“This decade will be the lost decade for Europe and America,” he warned.

And UN secretary-general Ban Ki Moon urged G8 leaders to “face the facts – the old model is broken. We need to create a new model for dynamic growth.”

Mr Ban said since the world economic crisis took hold 200 million people have lost their jobs and that poverty and inequality were on the rise globally.

Even U.S. Treasury Secretary Timothy Geithner has urged European leaders “to invest in public works projects, like roads and schools” and called for “a better balance between growth and austerity, a more gradual, softer path to restoring fiscal sustainability.”

But economist Jacob Kierkegaard said the G8 meeting was unlikely to make a “breakthrough,” especially as the group does not include growing economies such as China, India or Brazil.

“There will be nothing here that tackles the fundamental key questions looming over the global economy,” he predicted.

This article originally appeared in the Morning Star newspaper.