The US and Britain, in particular, can be expected to be against capital controls, given the clout of their financial services industries. Countries are in different stages of the trade cycle -- the German central bank has indicated it will not reduce interest rates. For these reasons, the G-7 meeting produced much rhetoric, but little substance. It is becoming difficult tosustain the illusion that economic theory has the answers to the problem. When the dollar yo-yos from 147 yen to 111 in two months because of hedge-fund unravelling, and when policy advice is reduced to guessing about what measures will help retain investor confidence, conventional economics gets short shrift.Economics is yet to evolve a theory to fit the new realities of instantaneous global financial flows.When the advisors themselves are all at sea, little wonder governments do not know what to do. What remedy, for example, is prescribed for countries like India and China, threatened with export contraction because of competition from the severely depreciated countries of south-east Asia? It was precisely conditions such as these which precipitated the retreat to protectionism in the 1930s.