There is a deep chasm between America’s historical rebuff of G20 efforts, which seek to re-ignite trade, and markets, which remain at record heights. This rift is untenable.

Historically, Baden-Baden’s spas are famous for their healing waters, which have healed ancient Romans’ arthritic aches, Prussian queens’ rheumatism and European aristocrats’ paralyses. Nevertheless, the G20 Summit is fresh evidence that even Baden-Baden cannot do miracles.

As US Treasury Secretary Mnuchin rebuffed the push by the masters of the global finance to renounce protectionism, concerns are mounting that the Trump administration will execute its “America First” policy, even at the risk of unleashing waves of retaliation worldwide.

As world trade is frozen but markets remain close to record-heights, contraction is looming in the horizon.

(Bad) History in Baden-Baden

History was made in Baden-Baden, but not the kind of history that the world economy needs. For the first time since the global crisis year of 2008, the world’s leading finance ministers, dropped the commitment to free trade. It amounts to the most consequential shift of the international trading community since World War II.

Following pushback from Treasury Secretary Steve Mnuchin, the G20 Summit backtracked from a joint position that would have explicitly renewed the long-standing pledge to free trade.

The timing could not have been worse. Before the global crisis, world investment soared to almost $2 trillion. Today – almost a decade later – it remains below that level. The state of world trade is even worse. World export volumes reached a plateau already two years ago. World trade has stopped growing.

In turn, the third leg of globalization, global migration, is plunging or stagnating, while refugee crises escalate. In the past year, more than 65 million people – more than ever since 1945 – were displaced from their homes by conflict and persecution.