UPDATE: G20 says "No" to IMF request for $500 billion

UPDATE By Kevin Carmichael, February 26, 2012
The onus on solving the European debt crisis has shifted almost entirely to Germany after the Group of 20 rejected contributing to a bailout until Europe’s wealthier countries put more money on the table.By Kevin Carmichael, Globe and Mail, February 25, 2012

“Europe has substantial resources and has sufficient resources to fund the necessary firewall,” Finance Minister Jim Flaherty said at a press conference at the end of a weekend meeting in Mexico City. “We expect the euro zone countries to step up to the plate.”

Richard Waugh, chief executive of Bank of Nova Scotia and a prominent figure in global financial circles, is backing Canada’s hard line against an international rescue of Europe, highlighting the contentiousness of a debate that will dominate a Group of 20 meeting this weekend.

Finance Minister Jim Flaherty has been a vocal opponent of a boost for the IMF, which the Washington-based fund says it needs to ensure it has access to enough cash to guard against a worst-case scenario of a series of sovereign defaults triggered by the European debt crisis.

Canada and the United States oppose an increase in IMF resources because they say wealthy members of the euro zone such as Germany and the Netherlands have the means to build a financial backstop for Europe on their own.
The opposition of Canada, the U.S. and others is impeding a resolution of the European debt crisis, which is feeding uncertainty about the prospects for global economic growth and roiling financial markets. Despite that, Mr. Waugh, who runs the Canadian bank that does business in more countries than any other, said he saw no need for the IMF and the non-G20 countries to deepen their financial exposure to Europe.
“European countries have enough to settle the contagion issues,” Mr. Waugh said in an interview Friday in Mexico City, where he is attending a conference hosted by the International Institute of International Finance. “There is a lot of money in Germany; there is a lot of money in other northern European countries. I don’t think it’s an IMF issue. It’s a euro zone issue.”
While certainly not an economist, nor a financial expert, nor someone who is really an expert in financial matters, I strongly disagree with the position of both the Finance Minister and the CEO of the Bank of Nova Scotia, in calling this an "euro-crisis".
While that may be the case today, there is a serious possibility that the crisis could grow, encircling more economies than circumscribed by the European Union. And, in strengthening the IMF, the G20 countries would be taking a substantial step toward achieving an international, collaborative and sustainable agency to ward off any serious default, for the moment by an EU member, and in the longer term, the spill-over into other countries like Canada, U.S. and others.
The attitude of both the Finance Minister and the bank CEO seems a trifle parochial, perhaps needing a little tweeking to look beyond their job descriptions, which, no doubt, require them both to put their first priority on their respective "clientele"...in the first case the Canadian taxpayers and in the second, the investors of the Bank of Nova Scotia.
However, these are different times from normal. They are so different, in fact, that the world community, including the financial community, has to begin to see the world differently.
We see the request from the IMF through the lens of a longer term perspective that sees the world needing stronger, and more muscular and more financially and politically stable institutions, including the IMF, quite possibly an enhanced World Court, certainly enhanced international judicial chambers in which arguments, for example, pitting the scientific community's interest in disclosing the research behind a lab-generated virulent virus in the Netherlands using U.S. money, and the international security establishment that seeks to keep that information out of the hands of terrorists.
Since the current front-page crisis is primarily financial, and since the IMF is at the nexus of its potential solution and also its potential for spreading, the developed world, including both Canada and the U.S. must examine their options carefully, and consider seriously the request to amp-up the IMF funds, as an insurance policy, if for no other reason. And that would include the Bank of Nova Scotia, apparently the Canadian bank that does the most business of all Canadian banks in other countries.
Whether or not there is "enough money" in Germany and in the northern European countries is really not the question. Containment may simply not be possible, given all the factors in play, by those EU members most exposed to the potential crisis.
And the prevention of defaults that could impact many other countries, by considering the IMF request could and would go a long way to enhancing the perspective of all political and financial leaders in all countries.
Just as on global warming and climate change, so in the current financial crisis, "we are really all in this together"....and the sooner we come to that awareness, in real terms including in dollar terms, the sooner we will reach international protocols to which all countries must subscribe, for their own interests and the interests of their peoples.