G20: History and fudge
Plainly the most important announcement to come out Pittsburgh today will be that the G20 group of nations will replace the G8 as the permanent council for economic co-operation and - especially in extremis - economic co-ordination.
It's a big thing that the rich nations of North America and Europe will formally acknowledge that they no longer have a monopoly of wisdom on what's good for the global economy.
In fact - and call me naive - it seems a very big thing to me, even though all we're going to get is confirmation of a power shift that in practice happened last autumn.
That Argentina, Brazil, Indonesia, India, China, Turkey, South Africa and Saudi Arabia, inter alia, are now at the top table: well, it was unthinkable until the banks and bankers of the West made their formidable contribution to the worst economic and financial crisis since the 1930s.
However, the new members of the super-elite presumably feel slightly alienated from the squabble of recent weeks between the Franco-German club and the Anglo-American axis over how much capital banks should hold as a buffer against losses and how to limit the quantum of bankers' bonuses - in that there haven't been many (or any) Chinese and Brazilian banks holding the global economy to ransom over the past year.
There will of course be a fudged agreement before the day is done.
In fact, given that all the important negotiations tend to be done in advance of these meetings and in the corridors and side rooms, most of the fudge has already been prepared.
There won't be any kind of bald incomes policy for bankers. There'll be no explicit statement that individual bonuses can't be greater than a specified amount.
But the total pot of money available for bonuses at banks that are short of capital will be dictated by regulators.
Which - many would say - is really not a great change from where we are today, in that it would be a gross dereliction of duty by regulators if they allowed a thinly-capitalised bank to pay out fat bonuses rather than using whatever available cash there is to build up the important buffer against losses (although, of course, we did see just such negligent supervision of banks for years).
Also, it is likely that - in spite of opposition from the French and the Germans - a leverage multiple will be introduced into international banking rules, which means that gross lending by banks could not be more than a specific multiple of their capital resources.
That said, the leverage multiple won't initially be included in Pillar One of the Basel rules on capital adequacy, the global framework for ensuring that banks' finances are robust enough to weather storms.
It will be a supplementary measure, which will gradually be migrated into Pillar One, subject to negotiation on its level: is a safe bank one that lends 20 times it capital, or 25 times?
That phasing-in would allow French and German banks - some of which have lent well over 30 times their capital resources - the time to increase their capital resources.
So the thrust of the G20 agreement will be to patch up the Basel rules. And some would say that endeavour is fundamentally misguided, because it was the Basel rules which created the perverse incentives for banks to take the crazy risks which hobbled the global economy.
What's not on the agenda of the G20, as you've heard me say many times, is either wholesale replacement of the Basel rules with much simpler, harder-to-dodge stipulations on how much banks can lend relative to their capital - general, broad rules less amenable to gaming by banks - or structural reform of the banking industry to separate the taxpayer-insured bits that are vital to our economies from the casinos.
For all the revolution in global economic governance, for all the importance of the arrival at the top table of the new economic powers, the G20 is endeavouring to patch up the failed framework of banking regulation rather than going for more fundamental and radical change.