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G20: The big money decisions

Robert Peston | 11:32 UK time, Thursday, 2 April 2009

Okay, here's some news (well, sort of). The leaders are close to agreement on the big money questions.

There will be a significant increase in the resources of the IMF, the emergency rescue service for ailing economies. The increment in funding for the IMF could be nearer $500bn than the $250bn already pledged as a minimum.

For me, the fascinating question is how much of this increment comes from the soon-to-be superpower, China (I'm sad like that).

There could also be commitments of several hundred billion dollars of trade finance, to lessen the painful slump in world trade that's impoverishing so many countries.

And the question of the IMF providing financial support for developing countries through an arcane mechanism ("Special Drawing Rights" - don't ask) is apparently "open".

On protectionism and all that, there will be a commitment to name and shame countries that breach free-trade rules with protectionist measures.

LONDON, ENGLAND - APRIL 02: World Leaders including U.S. President Barack Obama, British Prime Minister Gordon Brown, Australian Prime Minister Kevin Rudd, French President Nicolas Sarkozy, Chinese President Hu Jintao, German Chancellor Angela Merkel, Italian Prime Minister Silvio Berlusconi and Brazilian President Luiz Inacio Lula Da Silva pose for a family photograph at the G20 summit on April 2, 2009 in London, United Kingdom.

But there will be no formal timetable to restart the Doha negotiations on further liberalisation, because President Obama has not yet got his domestic ducks in a row on what is a highly contentious issue in the US.

Finally, it's still slightly unclear whether the leaders will announce a policy of publicly humiliating tax havens that don't co-operate on disclosing the identities of potential tax dodgers.

Apparently the Chinese don't like the idea that Macau and Hong Kong could be named and shamed.

Update 12:37: The amount of trade credit being promised is $200bn (up from the $100bn minimum pledged in the finance ministers' summit last month).

And there will be an increase of $250bn in Special Drawing Rights from the IMF, the biggest increase ever - which is a mechanism for channelling funds to poorer countries.

The Special Drawing Rights increase is big stuff - and I haven't properly explained the significance.

The record $250bn increase in SDRs is shared between all IMF countries, broadly according to their size (on a quota basis).

Broadly the increase boosts every country's reserves and thus their liquidity.

It's particularly valuable for cash-strapped poorer countries or emerging economies.

But it's really the equivalent of creating money for all economies, including ours, or for the global economy.

Update 13:59: Stephanie Flanders tells me that the £250bn increase in the general allocation of Special Drawing Rights represents a ten-fold increase (or perhaps more) in the current stock.

As she says, that's particularly useful for poor, reserve-starved countries - because it allows them to borrow (in a world that won't lend to them) at the US official interest rate (which is as close to zero as makes no difference).

Update 15:21: A chap who knows a lot more about this Special Drawing Rights stuff tells me that it's not very useful for very poor countries in sub-Saharan Africa.

They won't be allocated more than a few billion dollars, and even the low interest rate on this de facto overdraft facility makes the money too expensive for them.

We in the rich West probably won't use the facility at all (we don't need a new overdraft facility - or at least not right now, touch wood).

So it will be most useful for middle-income, emerging market economies. Many of them are feeling very financially stretched, so the new borrowing facility should make a serious difference.

If it helps to prevent a domino-effect collapse of these emerging-market economies - well, we'd all benefit.

Comments

  • Comment number 1.

    Today the Footsie has bounced back over the 4000 mark.
    Sorry, guys....yesterday was April Fools Day.
    The joke's on you.

  • Comment number 2.

    So, Robert, more or less a status quo. Tell me again, how much has this cost? As for The IMF bailed out by China, Brown's work here. He needs the IMF.

  • Comment number 3.

    2. Expect $500bn extra for the IMF and $100bn specifically to free up trade finance. Paul Mason at 1030! lol

  • Comment number 4.

    You say "it's still slighly unclear whether the leaders will announce a policy of publicly humiliaitng tax havens that don't co-operate on disclosing the identities of potential tax dodgers.

    Apparently the Chinese don't like the idea that Macau and Hong Kong could be named and shamed. "


    I would have also thought that HMG and the City of London aren't too keen on the coterie of in-house and ex-colonial fiscal paradises (IOM, Channel Isles, Caymans, Gibralter etc) suffering the tin-opener either....

  • Comment number 5.

    It looks like a good day all round doesn't it, Robert? The market is close to 4100, house prices are rising for the first time in 16 months, and manufacturing in the last quarter seems to have bottomed out. As they say, things can only get better. Could GB have been right when he said the UK was better placed than most to ride out this recession?

  • Comment number 6.

    Robert, China already is a superpower, if you like it or not; and we all help(ed). Christian

  • Comment number 7.

    I like the slogan in the picture on your blog, we just can't see it all.

    Stability:Growth:Jobs

    Savior of the world.

    You're kidding!

  • Comment number 8.

    "could be named and shamed."

    How does naming a Tax Haven make it ashamed?

    Switzerland, Cayman Islands, Jersey,...

    I think the names have been known for some time.

    Maybe it's a bit like an ASBO; it's a badge of honour to be named.

    If you look at the capital structures behind many structured instruments you see they have a charity based in an offshore tax haven as their basis; maybe cleaning up the use of charities should be added to the agenda.

    e.g. The Jersey based Trustees behind Northern Rock's Granite issues.


  • Comment number 9.

    Phew! What a relief for all the UK SME's that cant seem to get bank loans at a sensible or even any price.

    Are they going to deal with the one person tax haven - Sir Fred Goodwin?

  • Comment number 10.

    Let's hope that "agreement on the big money questions" doesn't translate to "hold another conference at some unspecified future date" out in the real world.

  • Comment number 11.

    I'm losing the will to live. If they are successful we go back to boom and bust. One day we will not survive. We need a fundamental change. They are wasting time and money.
    The stockmarket likes it but sheep always will.

  • Comment number 12.

    Is it just my head that is spinning?

  • Comment number 13.

    Oh goody. That's the easy bit out of the way then... big money is now safe.
    Turning our attention to small money now.
    State pension levels;
    Proper pension protection from parasitic companies
    Job seekers allowance to reflect the fact that we are in a depression and we should not be closing the door on people after 6 months (live off your savings you anti-social person - be punished for not borrowing and creating your own debt mountain). Its taken 6 months to sort out the mess that put them there (unemployed)in the first place. So the decent thing to do would be to re-start the 6-month clock (and fund the cost by re-instating the waste of time VAT cut)
    Government short-term jobs created as a result of the additional spending announced only being available to those with 'experience in Government'. Do they really think there are a wadge of people out there who are ex-government.

    What is needed to boost the economy and to make the pay-back pain less enduring for all is to get the additional 1m unemployed in a position where they can spend (reasonably) again. You don't do it by making the job eligibility criteria so tight that these people are effectively excluded.

  • Comment number 14.

    Obama doesn't like Tax havens..... Maybe its all that unfair competition for Delaware - which does a healthy trade in tax planning

  • Comment number 15.

    so nothing that we didnt already know...was it really necessary for these heads of state to spend time and money just to be photographed with the queen and Gordon? a couple of phone calls and perhaps a video conference could have saved millions.....We all know the "final" communiqué was written days ago, and we all know that no matter what they all sign up to that they will implement only the bits they want.....

  • Comment number 16.

    Naming and Shaming?

    We do that back here in UK and no one resigns, stands down or admits to any wrong doing. Jackie Smith is a good example along with many MPs fiddling the tax payers by outlandish expenses.

  • Comment number 17.

    I'd disagree and say Obama knows exactly how the ducks need aligning. A reversion back to this pre credit crash where trade continues to be slanted towards big exporting countries just is not sustainable. Nor is it feasible for the common good that some countries take more inteventionist measures whilst others step aside and seek to benefit from those measures.
    At last the US has a president with a brain and the will to use it. Never was it needed more.
    We've got Opec a cartel for oil. We have large exporters like Germany and China wanting to keep their status (monopoly) in the gloabl economy. It's about time the US ,UK and indeed any other major consuming nation formed theirown coterie to protect their interests in this mix.
    If this smacks of protectionism to some I think that's a mistaken view. It isn't ,it's step to try and get growth and the trade balance of the world to where it needs to be if it is going to be sustainable.
    Jobs and revenue can't keep heading in one direction ,it isn't anymore complicated than that ,because eventually there will be no more to give up and in fact we've probably hit that point.

  • Comment number 18.

    Well done, at least you are not boring us all with details of your bus journey to work.

  • Comment number 19.

    Tax havens are a red herring. Close down one and another will spring up overnight.

    Tax systems for all countries should be constructed in a similar manner. It is ridiculous that an American or Canadian working in other countries have to pay all taxes on income and wealth to their mother countries.

    When I worked in Brazil I did not pay tax to the UK, it went to the Brazilian government. If all countries adopted the US formula then all expatriates working in the developed world and paid high incomes, the benefit in the tax pot would not accrue to that developing country. In other words that underdeveloped would stay underdeveloped and stay poor.

    The UK's attitude to tax havens is deeply hypocritical, not just because so many havens are UK dependencies or ex colonies but also because of the large numbers of billionaires living in London whoi do not pay tax in the UK or their native countries. e.g. Russian oligarchs that are also wanted in Russia for their criminal activities.

    Tax systems need also to be simplified, so everyone understands them not just elite lawyers and accountants. Problem is who could put it together? I can think of one person who is honest and capable - Frank Field. And that's the rub all politicians detest honest politicians, so it will not happen.

  • Comment number 20.

    Have to say I think this naming and shaming tax haven business is a real red herring.

    I'd much rather name and shame bank directors, bosses of hedge funds and private equity companies and of course members of governments that fail to properly support their indigenous industries. I'm also especially keen on exposing those who declare to the FT that they don't believe in economic patriotism.

  • Comment number 21.

    As long as the coverage of the summit doesn't focus too much on the problems for journalists getting into the building, I am quite hopeful. Symbolism is really important both in diplomacy and in creating confidence about the future of the economy. A summit which everyone can agree is successful will, by self-fulfilling psychology, be successful.

    http://www.knowingandmaking.com/2009/04/self-feeding-economics.html

  • Comment number 22.

    Hello,

    It has been said: Mrs Merckel and Mr Sarkosy are delivering a message to London and Washington that will be popular in France and Germany.
    Of course as President they are here to represent the thoughts of their country so they are simply doing their job.

    Mr Peston is saying: the French President made a tantrum .
    By making a strong point and said he might leave the summit, President Sarkosy is just saying if this main idea is not respected, this summit is not going to do his job so it has no point to exist.
    Where is there a tantrum in trying the hardest you can in making a better world?

    Yann

  • Comment number 23.

    restarting Doha was the critical peice to this, so it will be a shame if they can't even agree to have another meeting

  • Comment number 24.

    "For me, the fascinating question is how much of this increment comes from the soon-to-be superpower, China (I'm sad like that). "

    As much as their voting rights !! The more rights, the more money they will loan !! The same has been demanded by Russia and Brazil. India has enough problems of its own and an election coming up; so it needs all its cash at home and can't lend anymore !!

    The more fascinating question is - Are the Americans going to give up some of its voting rights or are they hanging on tight and wreck their economy by printing ever more dollars ??

  • Comment number 25.

    Robert never mind all that stuff, the key question is: are they to eat French or English food when they have lunch this'll give us an indication about who's got the upper hand in these negotiations. Can you quiz good old Gordon on this when you get the chance? It's an important question that needs answering.

  • Comment number 26.

    So far then this sounds like a bog-standard Westminster budget announcement, one of those that doesn't really sound like it will change a fat lot! Often termed neutral.

    Dare I wait for the rest with baited breath?

    Getting 2 politicians to agree on anything is nigh on impossible. Getting 20 to do so....well don't even tempt me.

  • Comment number 27.

    Robert -- being a little cynical -- I guess the UK should see the IMF funding increase from USD250bn to USD500bn as a positive.
    Given the huge debt burden Gordon has accumulated recently it is highly likely that the UK will need to take avantage of IMF support sooner or later.
    PS Could you ask some of your collegues to stop all the photo opportunity shots of Gordon -- that smile is getting tiresome.
    Thought Quentin sums it all up really well here:
    http://www.dailymail.co.uk/debate/article-1166498/QUENTIN-LETTS-Obama-told-joke-Brown-laughed--laughed--laughed--laughed.html

  • Comment number 28.

    Not sad, accurate China is the soon-to-be superpower.

  • Comment number 29.

    Macau and Hong Kong as tax havens? Makes sense. But the funny things is those two names only came up today. It was not on the US list a few weeks ago nor are they mentioned in newspaper reports ... until today. I think some countries and lobbyists are trying to find some convenient shields/scapgoat and to take themelves off the spotlight (eg. UK).

    Tax haven issue still need to be tackled.

    IMF as a mechanism for channelling funds to poorer countries? Robert, you must be joking. ROFL.

  • Comment number 30.

    500 billion - Big Money?? That's peanuts.

    Compared with the trillions lost in the CDS black hole.

    There is an article speculating that the trillions in CDS contracts were deliberate fraud, mainly from AIG, that artificially inflated balance sheets all around the world.

    If there is much behind this speculation then the whole business world is in serious, serious trouble.

    http://www.ritholtz.com/blog/2009/04/aig-before-credit-default-swaps-there-was-reinsurance/

  • Comment number 31.

    Background Slogan Stability:Growth:Jobs

    There can be no more growth.

    Everyone needs to get a grip of this fact.

    We are maxed out on Food, Water, Fuel and living space.


    We must come to terms with that and proceed with caution.

  • Comment number 32.

    Who's Stability:Jobs:Growth?

  • Comment number 33.

    SDR, Special Drawing Rights, are another creative way of "making/printing making"; the pot is guaranteed by all, any country has the right to use a share as a costless reserve asset.

  • Comment number 34.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 35.

    Does the G20 think the only thing wrong with the banking system is the size of the bonuses paid to bankers? It may be popular politics to blame the bonuses but surely a system that allows bankers to take unacceptable risks, whatever the motivation, must be in need of radical overhaul, root and branch.

  • Comment number 36.

    "Finally, it's still slightly unclear whether the leaders will announce a policy of publicly humiliating tax havens that don't co-operate on disclosing the identities of potential tax dodgers."

    Let's face it the elite won't want us know where their hiding all of their cash now do they!?

    If this is the extent of the solution then it seems to be a perpetuation of the status quo. This just sounds like a bigger cash injection into the same business model that is currently being used with no real radical changes. So, ultimately we'll be having this discussion at some point in the future then?

    http://www.freenation.org.uk



  • Comment number 37.

    Hong Kong isn't a tax haven. Its governed by the Rule of Law and is one of the freest and most open societies in the world.

  • Comment number 38.

    I understand that the block for a deal/no deal at the G20 is the tighter regulations of financial institutions wanted by the French and Germans. It could also be looked as the block to a deal is Brown and Obama who do not want tighter regulations. I would just like to know what the exact differences in regulations are between them (UK/US v F/D)and who would benefit and who would lose. Also if the French and Germans call for tighter regulations years ago had been implemented at that time would we still be in this mess. If not then why do we not listen to them now?

  • Comment number 39.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 40.

    Can someone please explain to me why the G20 (apparently) consists of 19 countries, and why in the 'family photo' there are 29 'leaders' (excluding the indisposed Canadian leader!)?!?

  • Comment number 41.

    So is there any good news as far as you can see? I think you sometimes underestimate the positive effect that you can have on the economy by looking for the signs of improvement!

  • Comment number 42.

    On the tax haven issue, I'd more worried about the bullying powers that would be given to the more powerful nations to extract ever more money to waste on ever weirdening schemes (New Labour Style).

  • Comment number 43.

    OK - I'm confused. How can every county suddenly have more money ?

    Did they all basically just print more ?

    Why not just make the leaf a world currency and be done with it ??

  • Comment number 44.

    I still am not sure you have explained special drawing rights adequately.

    The way it is written suggests basically that the the IMF creates 250 billion in SDR and then every member miraculously has a proportionate amount extra liquid money to spend in supporting their economies. Which kind of suggests that G20 nations give the IMF permission to create money so they can be given it as presumably the G20 are the majority of the IMF (heard 85% of the world economy).

    Is this 250 billion the extra cash the G20 nations will be borrowing (US,France, Germany etc)/creating from thin air (presumably our contribution) or giving real money (China, Saudi etc.) to give to the IMF who then give it to smaller IMF but not G20 members on the quota system to improve their liquidity.
    Or is this just to allow the IMF to bail out more smaller nations as they crash in future (or is that different extra money.

    Any ideas,

  • Comment number 45.

    Please take note - these leaders are standing in front of a sign saying "Stability, Growth, Jobs" - stolen from the protestors idea of "Jobs, climate, peace".

    I think this sums up the difference between them and us - these world leaders don't give a monkeys about the long term damage they will do to the world with their waste - and they certainly are not committing to a world without continuous war - fought out in various arenas like Iraq / Afghanistan.

    Once again they are proving how out of touch they all are. I shall not weep for them when they are all ousted by their various citizens.

  • Comment number 46.

    Does exposing these tax havens apply to the criminals who pull the strings of each and every nation?

    I'm betting that their savings (or takings,call them what you like) are in some kind of exclusion from investigation list. Or perhaps I'm just cynical.

  • Comment number 47.

    Looking at the group pic of our Leaders, class of 2009, I can only ask "Would you buy a used car from this crowd?

  • Comment number 48.

    The G20 was sorted on the 26th March by those who do not a tend these Jolly boys outings and all those who do do as they are told it is the same every years. As for it being about the unpeople in the world forget it. bankers will do what they have done for years make money for themselves and the Government's of the country and those who rule and off the back of the taxpayer which we all are even those on benefits as we have to eat and wear clothes, but we come right down the bottom well now there is more of us and I am waiting for the war to kick off as Israel is after Iran well its oil really but the land will do and the countries who back them were at the meeting, we are all being blinded by science.

  • Comment number 49.

    All this money promised for the IMF and trade credit is it to be like the money promised to the Palestinian's in Gaza; or to Afghanistan or to make poverty history at the G8 at Gleneagles?

    If so I'll believe it when I see it.

  • Comment number 50.

    #19

    Dear Mr Catblogger

    If one is an american tax resident and one is employed in London, one pays tax on UK earnings in the UK. One completes UK and US tax returns. The US tax returns must cover worldwide income. The full tax liability is calulated. One gets a tax credit for taxes paid overseas. The tax doesn't get paid to the US. Its covered by the UK/US tax treaty backed up by immigration and visa consideratons. It is possible to be 'on business' temporarily in either jurisdiction and employed elsewhere but there are stricter limits on what makes one tax resident in the UK than the US.

    Nerdily yrs

    mrsbloggs13c2

  • Comment number 51.

    The 'big money decisions' seem somewhat irrelevant when you look at what is happening in the real world of consumer products.

    A quick bit of market research yesterday in Macys indicated that about 1% of the products reviewed were made in Indonesia, 1% in Vietnam, 1% in Korea and the remainder in China.

    Even the Wedgewood, branded as Waterford, was made in the far east.

    A quick look in Mrs Obama's favourite store, J Crew indicated 50% in Macau, 25% Korea and the remainder in China.

    Elsewhere, I found a tie made in Italy and a Nokia mobile phone made in Mexico.

    How any of this can be rebalanced with a communique or an increase in special drawing rights beats me

    I gave up this kind of analysis in the UK after I wrote to M&S many years ago to tell them that they ought to stop referring to UK sourcing of goods in their advertising since it didn't reflect reality.

    A quick check of the underpant drawer indicates Turkey, Morroco, Sri Lank and yahoo, the UK. Unfortunately the UK ones are the elderly comfortable ones.

    Nevertheless, a young friend of mine tells me he has an interview at a clothing manufacturer in Bow. This indicates that there must still be a rag trade there. Clearly it isn't supplying the big retailers.

    Maybe, the answer is to shop small, shop local.

  • Comment number 52.

    It doesn't make any sense that dollar kidnaps the currency of each country around world! Currency rule can't be made by a single country, even this country has powerful military forces!

  • Comment number 53.

    One positive thing from the G20 conference is that the leaders are calling for proper financial regulatory controls to be put in place.
    Brown can no longer deny that he has failed over the last 10 years to properly manage the financial companies.

  • Comment number 54.

    If the new dosh is from China does this relate to their desire for a new currency?

    I am also suspicious about the small amounts involved as, for instance, if the Brown "spend spend spend" policy doesn't get us out of grief I assume we will not be credit worthy enough to be able to pick up a trillion or so from the IMF?

    Does Brown really believe this is a dark cloud that will largely dissipate by 2010?


  • Comment number 55.

    "Apparently the Chinese don't like the idea that Macau and Hong Kong could be named and shamed. "

    Hong Kong a tax haven ??? Any one who thinks that needs his head examined !! I know plenty of people in Hong Kong who are actively seeking a tax haven. BVI (British Virgin Islands) spring to mind !! Hong Kong as a laundry is a different kettle of fish altogether !!

    And Macau is the world's biggest Chinese laundry !! Unfortunately, there's no law against gambling and winning !! A tax haven ?? Don't even think of it !!

  • Comment number 56.

    "But it's really the equivalent of creating money for all economies, including ours, or for the global economy.

    Update 13:59: Stephanie Flanders tells me that the £250bn increase in the general allocation of Special Drawing Rights represents a ten-fold increase (or perhaps more) in the current stock.

    As she says, that's particularly useful for poor, reserve-starved countries - because it allows them to borrow (in a world that won't lend to them) at the US official interest rate (which is as close to zero as makes no difference)."

    Robert, Stephanie is it not probable that you are attending the Global Summit of the major printers of Monopoly money? Is it now your hopes also that the financial markets, leave alone the electorate will be taken in by this unproven rescue attempt that so many economists refer to as financial wizardry?

  • Comment number 57.

    The French finance minister said on BBC News 24 last night that the IMF was only asking for $250bn and that is why you should not expect it to be given more than this.

    Makes sense - so who is saying the IMF should have more than it says it needs?

  • Comment number 58.

    Dear Robert,Picking up on your earlier road trip

    There are some that say (on this blog ) that you are not concerned with events and business away from the confines of the city and Muswell hill.
    There are some that even say (despite your reported sightings in China and even Newcastle) that you have never been known to stray beyond Westminster , the City and North London not even on a fact finding tour.
    Today it has been confirmed that beyond these truly sacred confines you are lost "We long for escape from this detention camp in a wasteland on north east London" these are clearly foreign parts to you as I think you'll find that the Excel Centre is in East London albeit it is North of the river.
    With regard to Tax Havens shouldn't we be calling for transparency in all business accounts including off balance sheet items I'm sure those kindly firms that charged the treasury wasn't it £69 million for professional services on the RBS fiasco would only be too pleased to help out again.

  • Comment number 59.

    Although I can appreciate the efforts to steady the good-ship-capitalism, we have to be honest to ourselves - even assuming these measures work. The worst mistake we could make is to extricate ourselves from this tarpit, and wander off blithely without even a glance over our shoulder at what almost ended it all.

    Like a wave of nausea in the much overused debt-party-hangover analogy, we've swallowed back the rising bile and are starting to feel a little better. The worst move would be to reach for the fags, make a fry-up the n head-off down the pub. The small rise in house prices and mortgage approval gives a hint that this may be just we are about to do. Ever eager for a fast buck, the entire middle-class sits there waiting for the market to bottom-out, eyeing the figures for that sign. House prices are clearly still inflated.

    Worse still, without a firm hand on regulating these excesses, we're liable to repeat the mistakes. We might have our head down the toilet right now, praying to our god that we've learned our lesson, but we need to mean it when we get off the sauce. I see little sign of the fundamental change to a way of life that weaning yourself off a dependency requires. The first step is, as they say, to accept you have a problem.

  • Comment number 60.

    How much of teh increase in IMF capacity will be used to bail out the UK. For sure the markets are better but the real economy is as sick as a dead parrot!

  • Comment number 61.

    What the G20 should agree upon this week is to allow every economy to shape its policies for tackling the crisis in a way that best addresses its specific economic problems. Many economies may indeed choose to co-operate and trade for mutual benefit. Nevertheless, the free trade pill must not be forced down every economy’s throat. Political leaders should become more responsible to the needs and demands of their people instead of hiding behind the ‘forces of globalization’. Global solutions for a global financial crisis may sound good in theory but may not work in the reality of disparate economies with different problems and varying economic potentials. In fact, one needs to entertain the possibility that centralization tendencies in the global financial system may be at the very root of the global financial malaise. proutblog.com

  • Comment number 62.

    #40 it is G20 because it is 19 countries plus the European Union....The membership of the G-20 comprises:

    * the finance ministers and central bank governors of the G7, 14 other key countries, and the European Union Presidency (if not a G7 member)
    * the European Central Bank
    * the Managing Director of the International Monetary Fund
    * the Chairman of the IMFC
    * the President of the World Bank
    * the Chairman of the Development Committee

  • Comment number 63.

    Isn't naming and shaming tax havens that don't disclose.. er ...advertising.....the tax havens.

    I was going to go on an make a more serious point...but I can't be bothered!!

    When these country CEO's return home to their civil service and Governmental structures...where is the structure that will actually 'make happen' anything they discuss??--The IMF will make IMF things happen (Global Quantitative Easing instead of mere Country wide versions... but as for the rest of it--there just isn't any structure to do it....no building with people poised to begin rebuilding the Global economy in double quick time.

    That's why it's not only the G20 meeting that's window dressing..the whole supposed 'hard talking for 'weeks or months' behind the scenes is window dressing as well.... it's like pub genius talk about running businesses; the ideas and plans are easy.... especially if you never have to carry them out------ mine's a pint!!

    PS ..Why the extra syllable in Quantitative anyway?? Because it's a word thought up by an economist is why...tells you all you ever need to know...

  • Comment number 64.

    Some in clandestine companies combine;
    Erect new stocks to trade beyond the line;
    With air and empty names beguile the town;
    And raise new credits first, then cry 'em down;
    Divide the empty nothing into shares,
    And set the crowd together by the ears.
    Defoe (1660-1731)

    Used as the preface to the first chapter of the 1841 classic Extraordinary Delusions and the Madness of Crowds, this first chapter being Money Mania - The Missippi Scheme.

  • Comment number 65.

    Well as usual the politicians do not listen to the people that know instead they continue to take notice of their failed economic advisers. Despite any agreed announcemnt what it really means is that everyone will still continue to do their own thing except GB who will do as he is told by the Americans just as Blair was over iraq and Afghanistan.

    Anyway I am off for two weeks to a quiet corner of Euroland where I can shut myself off from this Global Crisis/Let's Save the World nonsense.

    And what about the ECB lowering interest rates do they not read what I have said about interest rates should be higher? Shouldn't complain too much as I have a euro mortgage so at least I'll be able to buy a few more beers to cheer me up

  • Comment number 66.

    #30. BillKK wrote:
    ... trillions lost in the CDS black hole.
    There is an article speculating that the trillions in CDS contracts were deliberate fraud, mainly from AIG, that artificially inflated balance sheets all around the world.
    ......

    Your link... even if half true regarding AIG being to banks & businesses what Madoff was to private investors is absolutely scary. The french connection mentioned... is it a favour repaid that France suddenly wishes to rejoin NATO?

  • Comment number 67.

    "Many of them are feeling very financially stretched, so the new borrowing facility should make a serious difference."

    Oh dear, how very disappointing, Robert, that they didn't grasp the nettle to avoid being stung.

    They are still stuck in that pathetic money control mindset whereby they invent money and/or artificial wealth from thin air and then lend it to do its purchasing magic thus to create crippling third party debts, which they expect newbies and the undereducated and uneducated in the pantomime/charade to slave to pay back rather than enjoying the fruit of their labours with further spend, which all ends up in the System anyway.

    The Crooks still haven't learnt their lesson, have they, even though they were offered the world stage to make a change and a difference. What a bunch of Losers they are.

    Ah well, it must be a just a Distinct Lack of Intelligence for anything else would be nothing less than Evil. And as Greater Intelligence only requires more Information in the Public Domain, that will be easily fixed.

  • Comment number 68.

    Good heavens!

    If they can't organise as much as a photo opportunity, even on a second attempt....

    #31. Well said.

    Gordon says this is the day the world came together. Yeah, to watch yet another political opportunity thrown in the overflowing wheelie bin.

  • Comment number 69.

    I would send you an annotated picture if I could but in the photo of the G20 leaders on your blog there are 29 people; readers could be forgiven for thinking that there might have been only 20 leaders. I am almost tempted to say that 'counting' and in general 'arithmetic' has been a real problem in this current crisis and my suspicion is that most of the leaders haven't a clue what these trillions of dollars mean. The amounts vary so wildly with the time of day and who says what. I imagine we will never know what the new 1.1 trillion is made up and I read somewhere that like most aid, most doesn't get delivered to whom it is targetted at anyway!

  • Comment number 70.

    I doubt we will get any tighter regulations while five of the top official advisers have Goldman Sachs backgrounds.

  • Comment number 71.

    Stability, Growth, Jobs. Stability being a reference to what precisely? Continued apathy amongst society such that rebellion is avoided. Sounds like status quo. Growth is almost certainly Capitalism. That leaves jobs, but for whom? These are evaporating like puddles on a hot day.

    So we're brushing bank regulation under the carpet are we?

  • Comment number 72.

    #50 mrsbloggs13c2

    One is most impressed with one's US tax arrangements.

  • Comment number 73.

    Am I missing something here....all of a sudden there is great news on the economy.....house prices up, bank shares up, FTSE100 up above 4000 again......and more ...too many to mention...I smell a rat.....less than a week ago, a cataclismic economic forecast was the norm!....are the economic media being controlled???.....

  • Comment number 74.

    AIG... looks like its large culpability in the world's economic mess may well be true

    http://abcnews.go.com/Politics/Business/Story?id=7237477&page=1

  • Comment number 75.

    Not much point posting on a blog with a 2 hour moderation queue!

  • Comment number 76.

    Any action on short-selling to allow better control of markets ?

  • Comment number 77.

    Wake up and smell the coffee, ladies and gentlemen, it has been a jaunty jape but this is what is happening in the real world, away from the television show ..... for it is the shadow banking sector which rules and only for its principals, who have their puppets to grandstand on the public stage and lead all in the merry dance, a gay reel ....... http://blog.wired.com/defense/2009/04/helo-fiasco-us.html

    Definitely some light touch regulation going on there .... but just business as normal and not even addressed on the agenda, but then that is no surprise to anyone, is it?

    Spookily enough, a Corrupt System is an extremely Vulnerable System and Prone to Spontaneous Catastrophic Meltdowns, as we all know, which was what the present shindig was all about fixing, was it not? Ah well, another Epic Serial Fail.

  • Comment number 78.

    Do you think all those G20 leaders actually believe that printing extra money makes us all richer? I have been trying to explain why that doesn't work to my six year old. I think he gets it now - probably by the time he's seven it will be absolutely clear to him!

  • Comment number 79.

    It's good news that $250 billion dollars will go into the IMF to support ailing economies. Will there be safeguards to ensure that this money does not end up in the back-pockets of the corrupt politicians who run many of these countries?

  • Comment number 80.

    It's funny how the result of "negotiations" can be predicted so accurately.

    It reminds me of the old joke from the Soviet Union days:

    "Someone broke into the Kremlin and stole next year's election results" :-)

    Actually, with the reported postal vote scams ... I wonder? Anyone got any tips on the outcome yet?

  • Comment number 81.

    £1 trillion for world recovery eh?
    How much of this is actually 'new' money rather than money already earmarked and hastily re-assigned or relabelled?
    Where is it all coming from and what form does it take (presume lots of it will be trade credits etc)?

    I note that shares are going up and Nationwide has somewhat surprisingly registered an increase in house prices (I'd rather wait for the Land Registry figures thank you very much)- no doubt Gordon will claim this is all down to him and that he has in fact saved the world, but I can't help feeling that the elephant has now invited his family into the room as well and in a few months time, the banks and automakers will gently clear their throats and poltiely ask for more money, having realised that, err, well....gosh darn it....we seem to have run out again.

  • Comment number 82.

    Robert

    "On protectionism and all that, there will be a commitment to name and shame countries that breach free-trade rules with protectionist measures."


    Is devaluing your currency a "Protectionist measure", or is it a sign of no confidence in the government?

    Either way it seems that we will be the first to be named and shamed.

    On the tax haven theme, don't let the Government link "small government" with "tax haven". The problem we have is BIG GOVERNMENT both in the EU and UK that wants to interfere in every part of our lives.

  • Comment number 83.

    #59 spot on. I see a bead cat bouncing. That Gordo's plan get a fake boom going and try and get re-elected before the mother of all crashs
    arrives at the party. Zanu-labours and el gordo's future depends on this.

    gordo's is playing a very dangerous game with all of our monies not for our benifit but just for his own selfish greedy reasons to win an election at all costs. And these are the same reason wh ywe got int othis mess NOT upsetting the bankers and the city etc.

    which is why IR35 was targetted against the working class contractor and was a sop to the back benches about tax avoidance, way back in 1998.
    The rich and powerful escaped , QED

  • Comment number 84.

    China the next superpower?
    Everyone says she will be (or already is).....
    I have my doubts.
    Who in the world is now going to buy all those little wotnots and oozits that they've been exporting?
    I suspect that there will be industrial collapse in China, followed by a collapse of their banking system, followed by internal dissent, followed by a long period of communist crackdown and return to centralism.
    The only superpower is still the USA.
    No nation comes anywhere near it.
    We'll see America's enormous powers of recovery when General Motors is finally broken up and its dead limbs are allowed to drop off.

  • Comment number 85.

    Late advice to the G20?

    To solve the problem of the ‘bubble money’ that has disappeared every country should print money in its own currency. That way the loss will be shared equally by everyone although their money will not buy so much. There will be inflation but not currency speculation so no currencies will be destroyed.

  • Comment number 86.

    So the the world leaders have agreed to boost export cedits! But we do not need any more encouragement to spend on easy terms. China has been giving the world far too much export credit for a decade or more and has successfully shifed a mountain of cheaply produced consumer goods.

    Look in your wardrobes. You probably have more shirts, trousers socks and underwear than you have ever had in your lives, much of it was made in China. All those LCD TVs and computers probably came from the same place. The quality is not bad, and I guess that now we are feeling the crunch, we can survive without buying any more of these things for several years.

    It is time to get our personal and national finances back on to a sustainable footing. The bubble definitely should not be re-inflated.

    Brown should recognise that we are all over-stocked, and a period of cost cutting is our best way forward.

  • Comment number 87.

    There is no real commitment to meaningful and intelligent banking regulation. If GB had stood up and said something like "Never again will a foreign insurance company, such as AIG, be allowed to set up a subsidiary in Britain, and be granted a British banking licence" I would have begun to suspect that he is gaining a glimmer of understanding of what has happened. Clearly he does not understand that the granting of that banking licence, taking AIGFP out of insurance regulation, may have been the single most costly financial blunder of all time. Tinkering with tax havens and the like, is just that; tinkering. The vital issues are what need immediate attention. Or as they used to say in the army when one got away from the main issue, "let's build the shed; we can paint the bloody thing later".

  • Comment number 88.

    #84 noninflatable

    I think we should not underestimate the Chinese on quality.


    Remember what we thought of Japanese goods in the fifties?

    That came back to bite us.

  • Comment number 89.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 90.

    Well, what did you expect. The old boy network came out with another mindboggling act of incompetence.
    Money does not solve this problem.
    The characteristics that led to these troubles still exist.
    Why can't the government use it's weight on banks it now owns / part owns to restrict the level of interest rate mark up charged for loans etc. This will introduce competition and attract firms, individuals to go to these banks for finance. Soon the others will have to follow......or loose business.
    Lowering the interest rate has had little or no effect due to excessive mark ups and heavy bank charging. (The steering wheel is not effective).
    Pumping money into the system will do nothing. You cannot buy confidence (and that's what we need) by conventional means in this situation.
    Let people feel more secure (and confident) about their outgoings by making sure the outgoings on loans etc are reduced. Lowering the price of money will solve this problem as outgoings on existing loans are reduced, people feel more secure. Security is the key.
    The banks should not be ripping us off, why should they, after all we're bailing these institutions out.

  • Comment number 91.

    Well at least George Soros was happy with the out come of the G20. We need to keep the uber rich happy even if the rest of us are losing our jobs.

    http://creditcrunchedoutinuk.blogspot.com/2009/04/soros-calls-g20-success.html

  • Comment number 92.

    I thought the key issue in this financial crisis was how to deal with bad debt on bank balance sheets?

    Ok, funds to bail out economies is a good thing and there are some benchmarks for future regulation and I'd love to see a clampdown on tax havens...if it happens.

    But looking ath the current crisis, it strikes me that the G20 agreed on a bandage to stem the blood flow rather than an operation to solve the problem.

  • Comment number 93.

    World wide creation of new money, via IMF. Oh cr*p, the inflations gonna be horrible. Still, at least our new found mega-debts will be worth less too! Do you think that's what they were intending?

    No real details yet on how the toxic debt is going to be cleaned up. I mean, what, how? Are the CDS's and debt obligations to be ripped up? No one's mentioned doing that - it's been whispered it's too dangerous. Is that because the balance sheets are full of them still, just showing as assets for different people than was originally the case. And do we really care if a a limited number of shysters go down the swanee, if it saves swathes of real industry?

    Why the focus on tax havens? Oh, I know that governments are desperate for every red cent since they've taken on such much borrowing which has to be repaid (by us), but certain countries (France, Germany) were whingeing about them long before this. I presume because they have none of their own. I can only guess Luxembourg is unhappy.

    To be fair, regulation of banking is widely agreed to be A Good Thing. Let's face it, the "free-wheeling Anglo American" version is a recent aberration anyway, the fruits of which have been enjoyed and spent furiously by G Brown since 1997, nothing put away for a rainy day, and I don't think he had an inkling it was China's trade surplus we were spending!

    Finally, there's much talk about how we're addicted to credit, and can't kick the habit. Credit, it really scr*ws you up, etc.. But is it not the case that another great mistake has been painfully exposed? That is, growth. Year on year, every year, growth. Gotta have it. But how do you keep on pulling the rabbit out of the hat. There are only so many consumers, so much money (well, until QE, that is!). Businesses do not need to have growth, not really. Markets do, though. It is their blunt instrument measure of success, and gets them their precious dividends. Since I were a lad (by gum, etc), there have been warnings about the shoret termism of the City, how it only want growth and detests investment. It's all true too, and the credit fuelled it. These two concepts are at the root of how our markets work, and because we've been giving too much rein and credence to bankers and stockbrokers for longert than most, we now have a more depleted industruial base than most, just when we need it most. This is why it will be harder for us to earn our way out of the crisis than most, because our key sector, finance, is now kaput. We're not knocking out the widgets that really pay our way any more. That's whats really stupid. Will the stripey-shirt brigade will be any good at turning metal on lathe, or making bricks or digging coal out of the ground? I doubt it, but a dose of that is badly needed.



  • Comment number 94.

    trillion dollar man ? chancellor of the world ? Dear me, time for (rupert)a goliday, for some. sing ing carols ??
    these ''Special Drawing Rights''.

    Wouldn't it be cheaper for developing/emerging countries to issue gilts instead ??

    UPDATE:

    M: You now have at least 16,000 worldwide credits.Black Crow ready again,any time you wish.
    Rocky doesn't like the Jobs advert....

    What about East Coast, USA, available end 2009 ??

    send details to my new house.the bleeding BOE.

    All Fools Day: Finding it difficult to differentiate between the real news and pranks ? Then welcome to the world of surrealism. The foolocracy's here to stay.

    G20: The markets get stronger.The army of speculators gets bigger.The only current Triple AAA rated group !!

    Paying for the recovery:

    Businesses should shoulder the bauk of the necesssary increases in tax,especially banks. It will put a brake on exuberance.If taxes rates were closely harmonised,this would reduce the threat of leaving the current domains.
    Under European law, individual countries are ''strictly''(?) controlled on subsidies for industries,and so it could be with tax rates.

    Doha: Back to the future.Gains however small should have been realised.The world population is growing fast.Faster than the agricultural reform needed to improve supply.

    ...credit crunch
    .. ..oil crunch
    .......food/water crunch.

    Q:Which is most important ??
    A;(c)

    Miscellanous:The meaning of amarantine I used: love lies bleeding.



  • Comment number 95.

    THE G20s NEW CLOTHES?

    amanfromMars (#67) It looks like the audiences (cash-cows) of choice are now children and 'young people' as they are the future (taxpayers). Older people are generally a bit too wise to this, and appear to have had enough of all the Hollywood theatrics. The 'production teams' probably know this?

  • Comment number 96.

    Sorry Mark,of(f) course I meant the WEST coast of the USA.

    G20 + : Countries that have the ''acceptable'' (harmonious/transparent/stable e.t.c.) tax regimes could always put in law a requirement for stated, existing and new companies, to stay for a minimum period. Say 20 years.

    A bit tough, but ''stops the rats deserting the sinking ship'' or ''flighty'' companies that only operate on the slimmest of margins.

    (??)The tax havens to be named and shamed, could be exempted to allow migration back to countries with ''acceptable'' standards.

  • Comment number 97.

    The Fall online post no.97 : Diamonds are forever,are forever...

    To Wheelchair Hip Priest: see China syndrome is costly.

    OK.
    Domino is your choice. i.e.Indochina Peninisuala.

    That is the way of the world. You know that.

    You have roughly 16,000 credits.

    Black Crow away.

    References:
    (1)dictionary.com
    (2)watch film French Connection.

  • Comment number 98.

    Re 6 from Christian-on the rock.

    Don't burst Pestons little bubble. Like the rest of the Western media, he is in denial. Three years ago it was reported that China would overtake the USA as the wealthiest country in the world by 2020. This was before the banking collapse and 'global' recession (not so global if you're Chinese, Brazillian or Russian), which will probably speed up the process. It already has a space programme, nuclear weapons, a military force to rival the USA, and countries queueing up to trade with it. Of course it's already a superpower.

    However, the BBC cares more about its American web viewers than fact or the British license fee payer, so continues with its proWestern elitist white propaganda.

    Interestingly, Peston does not discuss whether the Chinese, Saudis & UAEs will be receiving more voting rights on the IMF for bailling the wolrds economy out! This would in reality be a massive news story, clearly showing the tidal change in world politics from West to East. Peston comes up short again, giving China just a brief mention.

  • Comment number 99.

    @ #19
    I disagree - if all UK citizens were forced to pay UK income tax then it would be a major discentive to work in tax-free economies like Dubai, or low tax economies like Singapore. Taxing the 5million exiles would also raise significant revenue or force them to abandon their citizenship.

    The US citizens in the UK offset UK taxes by having to pay them to the US. So this hampers UK tax revenue. UK tax policy could be adjusted so that overseas taxes cannot be used to offset against UK taxes... i.e a US citizen could end up paying 20% Federal income tax to the US and 40% to the UK; rather than maybe 20:20.

    More tax for the UK. Less Americans in the UK. Win-Win!!!!

 

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