PHILIPPE WOJAZER/AFP/Getty Images

First things first: The G-20 conference achieved progress on areas of wide agreement, but the toughest challenges have yet to be faced.

Many have pointed to Sept. 15, 2008, as the day the global economy fell off a cliff. That was the day Lehman Brothers declared bankruptcy, sending equity markets into a tailspin and freezing up credit around the world.

But the global economy wasn't in great health prior to Lehman's crisis -- and we have yet to fix all of the structural problems that helped put us where we are today. Prior to the crisis, U.S. households saved too little and borrowed too much. Conversely, many of the United States' creditors consumed too little and saved too much. Asia and the oil-exporting countries were simultaneously running large trade surpluses (that situation is unusual: a rise in oil prices usually reduces the surplus of oil-importing East Asia). These combined large surpluses also necessarily implied large deficits elsewhere in the global economy. On the whole, money was flowing uphill, from emerging economies to advanced economies, from the poor to the rich, and from countries offering high financial returns to countries generally offering low returns.

The U.S. trade deficit, to be sure, reflected the United States' own excesses, as financial and political leaders alike turned a blind eye to a housing bubble. Nor did U.S. regulators prevent financial leverage from rising as investors sought to maintain returns as yields fell.

But America wasn't solely to blame. A host of emerging economies maintained policies -- such as China's de facto dollar peg -- that pushed up their trade surpluses and thus their capacity to finance the United States' deficit. Absent this strong demand for "safe" U.S. debt from central bank reserve managers, U.S. interest rates would have risen, and the housing bubble might never have reached such dangerous proportions. Private investors, after all, wanted to finance deficits in the fast-growing emerging world, not deficits in the (relatively) slow-growing United States. The unnatural uphill flow thus wasn't a market outcome; it stemmed entirely from an unprecedented increase in the foreign exchange reserves of a host of emerging economies.

Even as capital was flowing uphill globally, it was flowing downhill inside Europe. That created a different kind of imbalance: Private investors in wealthy countries with high savings in Europe's northern core financed large deficits on Europe's periphery, whether in the west (Ireland), southwest (Spain), or east (nearly everyone). The external deficits of a host of European countries were actually far larger, relative to the size of their economies, than the United States' external deficit.

Many hoped the G-20 would directly address the world's main macroeconomic imbalances. After all, that seemed like a worthy objective for a gathering of all the world's major economies. But in practice that wasn't the case. The main achievement of the London summit -- and make no mistake, it was a real achievement -- was to expand the resources available to the International Monetary Fund (IMF). This will allow the IMF to lend more to cash-strapped Eastern Europe and still have a bit of money left in its coffers should additional problems develop. Other key issues were set aside. As Columbia University economist Jeffrey Sachs observed, "Exchange rates were hardly mentioned, despite the fact that exchange rate adjustments are surely needed to smooth the elimination of large and unsustainable global trade imbalances."

Why? Three reasons. First, Eastern Europe's financial difficulties required an immediate solution. A $250 billion IMF was too small to serve even as Europe's monetary fund, let alone the world's piggy bank. Give the United States credit: It indentified a problem, proposed a solution, and built consensus around its call to provide the IMF with $500 billion in additional money. That is leadership. More has been done to redefine the IMF's global role in the last three months than was agreed in the three years of discussion that followed the Asian crisis.

Second, the collapse of worldwide demand reduced the urgency of finding a solution to global imbalances, particularly as the shock from the crisis was bringing them down. The U.S. trade deficit will be about half its peak level in the first quarter, thanks largely to the fall in oil prices. Japan's surplus also has disappeared, as demand for its manufactured exports has fallen faster than its commodity bill. Only China still runs a large surplus.

The world's leaders opted to focus on the immediate challenge of arresting a synchronized fall in global demand, even if that meant that deficit countries such as the United States risked doing more than their share of the heavy lifting while surplus countries didn't do enough. White House economic adviser Lawrence Summers was quite explicit about this, telling the Financial Times last month: "The old global imbalances agenda was more demand in China, less demand in America. Nobody thinks that is the right agenda now. ... There's no place that should be reducing its contribution to global demand right now. It is really the universal demand agenda."

Third, key countries still don't agree on the problem, much less the solution. The United States thinks that the surplus countries aren't doing enough to stimulate the global economy. The United States and Britain -- two countries with current account deficits -- will be running fiscal deficits of between 8 and 10 percent of their GDPs in 2009. On the other hand, Germany and China -- two countries with current account surpluses -- will run fiscal deficits this year of 3 to 4 percent of their GDPs. Conversely, the surplus countries think the United States is doing too much to stimulate its own economy. Germany hasn't exactly hid its opposition to a fiscal stimulus. China is worried that U.S. macroeconomic policies may dilute the value of its dollar reserves.

And then there is the vexing question of exchange rates, above all China's dollar peg. China vetoed any mention of its peg in the November leaders' communiqué. Beijing thinks its peg had nothing to do with the rise in China's trade surplus. Many other countries think that China's link to the dollar left its currency undervalued when the dollar was depreciating, and thus contributed to the development of China's large surplus. However, the fact that the crisis led the dollar -- and thus the renminbi -- to appreciate meant that a weak renminbi wasn't a pressing issue. China's currency actually rose far more against a trade-weighted basket of currencies after China repegged to the dollar than it ever did when China's currency was slowly appreciating against the (then depreciating) dollar.

The underlying issues remain. A successful U.S. fiscal stimulus could push the U.S. external deficit back up, particularly if other countries don't implement a comparable stimulus. And the last few years suggest that dollar appreciation shouldn't be counted on to drive renminbi appreciation.

Bottom line: The urgent trumped the important, and the world's leaders, hungry for success, opted to focus on the areas where they agree, not those where they don't.