25th September, 2009.
This was my comment on the conclusion of the Pittsburgh G20 Summit – posted on the Huffington Post.
Today the Summit of world leaders — the G20 — ended in a spirit of good cheer. World leaders are united, they’re confident and they’re looking forward. They have looked closely at the system that crashed, and decided simply to reboot it. It appears we have all been fooled: there is no bug in the operating system that is the international financial architecture. It simply needed to be switched back on.
This they have done. Of course they didn’t just switch it on. They met first in London in April, made a statement, and threw some of our money at the problem. On Friday they made another long statement, a resounding commitment to sustain and defend ‘an open world economy based on ‘price stability’ and market principles.’ And then they vowed to throw more taxpayer money at it.
$6 trillion by the end of next year, since you ask. And just in case more cracks should appear in the architecture, central bank governors will continue to dish out free money (‘expansionary policies’) to the banks — ‘for as long as needed.’
“Taken together,” declared the G20 on Friday, “these actions will constitute the largest fiscal and monetary stimulus and the most comprehensive support program for the financial sector in modern times.”
You heard that the first time. For the financial sector. Not for suckers like you and me.
However, while G20 leaders are confident that the system is sound, they acknowledge that there is one glitch in the works. Bankers’ bonuses.
So they put their minds to what to do about bonuses, and it’s no secret: they disagreed. In the end they decided to do very little. Why? Well, news had filtered through to the conference that bankers were in trouble: they had made only $5.2 billion trading derivatives last quarter. The G20 resolved to bring them back from the brink. All mention of capping bonuses was erased from the Summit Communique.
And then they started putting their money where their mouth is.
As a small contribution to boosting the construction sector, they’re setting up a permanent new office. To cheer up their friends in submerging markets, they’ve appointed additional directors from China, Brazil, etc. Then, to show they’re serious about creating jobs, they’re hiring a few admin staff.
To help the poor of the world, they shuffled the deckchairs on the board of the International Monetary Fund. No doubt this will cheer up those families in drought-stricken Kenya whose babies were snatched by starving hyenas.
Then Gordon Brown rallied all the Mums of Africa and Asia: “We need to work together,” he said, “to make the policy and institutional changes needed to accelerate the convergence of living standards and productivity in developing and emerging economies to the levels of the advanced economies.”
So there you have it. A triumph of leadership and international diplomacy. Expect the global economy to go from strength to strength — and our leaders to go down in history for their courage, their foresight and their wisdom.
And don’t worry your little heads about bugs in the system.