11/26/2009 05:12 am ET Updated May 25, 2011

Much Ado About Almost Nothing

The Mother of All Economic Summits held this week in Pittsburgh evokes faded images of similar conclaves in the 1930s. The grainy footage from those times showed somberly dressed men with severe expressions carved on their faces. They walked stiffly from vintage limousines to the imposing façade of some temple of finance. They returned looking even grimmer. Today, things are done with more pizzazz. Colorful ties, a parade of fashionable spouses, and big grins all around -- as if the American hosts had passed around gilded cards with the embossed message: "Look upbeat and keep a positive attitude." So they assembled cheerfully in the rotunda of the Phipps Conservatory beneath the lofty glass dome.

The cacti that normally surround the rotunda were removed. Pity. By some divine intervention, they might have pricked the conscience of the assembled statesmen -- or some other part of their anatomy that could have jump-started the palaver.

As it was, the heads of government were so exuberant in their self congratulations that they nearly O.D.ed on huge helpings of green shoots. A throwback to the 'survivors parties' the British once held in Calcutta after the monsoon season passed. All this celebration while the global economy they so badly mismanaged is still hospitalized. At the very least, Nicolas Sarkozy's glamorous wife, the chanteuse Carla Bruni, could have composed and sang the debut performance of a Rehabilitation Blues.

The scorecard for the Summit is extremely thin. It is easily summarized. Here are the highlights:
  1. Most banks but not other financial institutions will be required to increase their capital. Specifics are left to a Working Committee. Monitoring and enforcement is left to the national governments.
  2. Bank salaries and bonuses are to be restricted and made to conform to performance over a three year period. Specifics are left to a Working Committee. Monitoring and enforcement is left to the national governments. These prospective rules will not come into force until 2013, i.e. when the hunting season for 2012 campaign contributions is over. Also note the strong incentives for executives to grab as much as they can in the next four years -- thereby adding to the risk of another crash (assuming that they're truly worried -- a highly dubious assumption).
  3. Leaders agreed to work to reduce the structural imbalance between those countries that have large balance of trade surpluses and rely heavily on export trade (e.g. China, Germany) and those who have large, chronic deficits and consume too much, i.e. the United States. Specifics are left to a set of Working Committees and the goodwill of the governments involved.
  4. Some adjustments will be made in the voting quotas of the IMF to give greater weight to BRIC nations. The U.S. retains its veto.
  5. The G-20 will replace the G-8 as the primary body for global economic kibbutzing. It will meet annually instead of bi-annually. Makes sense; as Simon Johnson remarked, "doing two summits a year -- when you don't have anything to report on -- is embarrassing."
That's it, folks -- there ain't no more. Regulation of CDOs, CDSs, over leveraging, too big to fail financial institutions, etc never made it onto the agenda. The blood oaths of November and April to tackle head-on the practices that brought us to the brink of disaster evidently are gone with the wind.

The real drama of the Summit was Obama's before dinner delivery of the 'breaking news' that a new Iranian nuclear fuel facility had been discovered. In fact, the United States has known of its existence for months, conserving the information for the moment -- and audience -- when it could have maximum impact. The exquisite timing had the further benefit of distracting attention from Pittsburgh's historic non-event -- not to mention Obama's own abject failure on Palestine when Netanyahu stiffed him at the U.N.