The G20 Washington meeting of the leading economic powers avoided all the main issues that are really driving the international financial crisis.
Adding a fiscal stimulus, via tax cuts and increased government spending, to the measures already announced for taxpayer purchasing of bank shares is like administering a pain killer in an attempt to treat a serious disease. It might, at best, make the patient feel a little better. It does nothing to treat the underlying causes of why they are feeling so bad nor will it prevent the symptoms of the disease breaking out again.
The main driving force of the financial crisis remains that the dollar is overvalued and the US economy is over stretched to an extent that destabilises the world financial system. To stabilise the world economy there must, therefore, be a reduction of expenditure by the US.
The only way this can be achieved, without the US population suffering the consequences of this via drastically reduced personal consumption, is if US military expenditure is drastically reduced - which will involve measures such as withdrawal from Iraq. Refusal to acknowledge such economic realities is why the Bush presidency was such a drastic failure - leading first to an unsuccessful war in Iraq and then a financial disaster. However, so far, the US government shows no serious signs of understanding this lesson and therefore the US population will continue to suffer - along with the rest of the world.
Regarding reform of international financial institutions, a 'new Bretton Woods', the only way the IMF could be strengthened is to increase the voting weight of China, India and other new rapidly growing developing countries - as otherwise they will not give meaningful injections of funds. But that means reducing the role of the US - which, so far, it will not agree to. So there is an impasse on that front.
In Britain, meanwhile, the conditions are accumulating for a new financial storm. While other countries will agree to prop up the dollar temporarily for political reasons no major country sees any reason to prop up the pound. The UK therefore faces, in a more immediate form, the same choice as the US. Given the UK's real purchasing power in international terms will fall, as the pound's exchange rate declines, it will either have to cut military expenditure or reduce the living standard of the population below what is required. A fiscal stimulus of tax cuts and increased public spending will, at best, only delay that choice for a short period - and they will only be able to do that provided financial markets do not rebel. Meanwhile the government faces the immediate dilemma that the price at which it agreed to purchase shares in RBS, HBOS and Lloyd's TSB is in every case now above the market price for the same shares - threatening the taxpayer with substantial loss.
It is even clearer in this situation that only the policies of the left - reduction in UK military spending to avoid attacking the living standards of the population, targeted economic aid to those worst affected by the financial crisis to maintain consumer spending, increased state spending on infrastructure to keep up investment and improve the competivity of the economy - have a realistic way out of this financial crisis. The left's case is not only morally superior it is the only economically rational one - as the G20 meeting vividly illustrated.