Posted by Marcelo Perez

Via WSJ (HT- Doug Terry):

WASHINGTON — The U.S. will press world leaders to boost emergency government spending to lift the global economy, risking a rift with European nations more concerned with revamping financial regulation.

U.S. officials, who could receive support from China and other countries with big stimulus programs, contend additional government spending is needed to reduce the depth and length of the downturn.

Simply put, running this country does not constitute running the entire world. We risk alienating our allies once again, by trying to force our policies on other countries. Countries should implement policies that are appropriate for their own economy, not that of trade partners across the pond. If they choose to fight the downturn in other ways, like increased oversight and/or financial regulation overhaul, that is their choice.

The shift in priorities urged by the U.S. is especially at odds with Germany, which has tried hard to balance its books in recent years. In January, Germany approved a €50 billion ($63.19 billion) stimulus. But Chancellor Angela Merkel has expressed skepticism about using heavy borrowing to solve a global crisis she says was caused by irresponsible behavior from private-sector players and governments alike.

Germany is keen to limit government borrowing in the European Union out of concern that countries with weaker finances are running up unsustainable debts, and the EU will be forced to bail them out. Ms. Merkel’s spokesperson, Thomas Steg, said the chancellor believes regulation and market supervision “should play a very prominent role” at the summit. He said expanding Germany’s fiscal stimulus package “is not in the plans.”

What we have today is a global economy rife with fear and stricken with debt. President Obama may believe that deficit spending - adding more debt - is the answer, but it certainly isn’t a universally accepted cure. Furthermore, there are cultural diffences which may make it difficult for some countries - Germany obviously - to pursue the same path.

Stimulus Spending - Estimates For G20 Countries

The G-20 meeting should be about agreeing on broad principles concerning exchange rates, regulation and trade. It should not be seen as an opportunity to lecture the world.