G7 Issues Statement, But Omits Specifics

From Bloomberg:

Group of Seven finance chiefs vowed to tackle a “severe” economic downturn that will persist for most of 2009 without spelling out new steps to do so.

From Wall Street Journal:

The Group of Seven leading developed economies said Saturday they are committed to avoiding protectionist measures, and will also try to ensure that the actions they take to combat the recession don't harm other economies.

In a statement released at the end of their two-day meeting here, finance ministers and central bankers from the G-7 also welcomed China's commitment to move to a more flexible exchange rate, and said that should lead to a further appreciation of the yuan.

"The G7 commit to take any further action that may prove necessary to reestablish full confidence in the global financial system," the statement said. "We will continue to work together and to cooperate to avoid undesirable spillover and distortions."

From FT.com:

Finance ministers and central bankers from the Group of Seven industrial democracies meeting in Rome on Saturday discussed how to tackle the worst global recession in generations without damaging free trade and hurting each other’s economies.

A communique at the end of the two-day meeting hosted by Italy was expected to carry a pledge to avoid protectionism and “avoid undesirable spillovers and distortions”, according to a draft obtained by Reuters news agency.

I am pleased that the G7 nations agreed to avoid protectionism, although this is much easier said than done. It is very difficult for legislators in any country to resist populist sentiment that pushes countries to impose protectionism as economic conditions degrade over time. The part that worries me the most about this is the section of the G7 statement that said that they will "take any further action that may prove necessary". Since when have these guys accomplished anything of substance or benefit together, much less acting alone? This smells of more government intrusion to me. The track record is disastrous!