G-20, G-7, G-zero - the changing world order

Ian Bremmer and Nouriel Roubini wrote, "We are now living in a G-zero world." No single country or block of countries have dominant power to set an international agenda. The G-7 does not make sense. The world is no longer euro-centric or western-centric. The G20 also does not make sense. The world is becoming more fragmented. The power weightings are not equally distributed among the 20. We are living in a world were no one is truly dominant. This means that very important economic decision will have to be based on multi-lateralism. Unfortunately, you will not get agreement under this type of world.

This inability to form a dominant world order has negative implications for risk premia in financial markets. It is less likely that we will have coordinated regulation around the world. It will be less likely that we can agree on forms of bail-out in a crisis. Systemic risk will not be able to be addressed through a G-0 environment. This makes the world a riskier place.