02 April 2009

Highlights from the G20 Final Communique

From Reuters:

-- "To treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs (multilateral development banks), to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries."

That constitutes "an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy".

Compared to the US stimulus spending to date, this is almost a drop in the bucket. It appears to represent a minor concession to President Obama's push to spend out way "out of" (more like into, but why nitpick at a grand time like this) debt and the recession.

-- The measures taken will "by the end of next year, amount to $5 trillion, raise output by 4 percent, and accelerate the transition to a green economy".

-- "Central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability."

Correct me if I'm wrong, but haven't most of the monetary policy instruments already been used, and what the heck is an unconventional instrument - could it be printing wads of cash?

-- To put in place "credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand ... thereby reducing the scale of the fiscal consolidation necessary over the longer term."

Don't worry your pretty little heads about this one. We're just going to take over all the banks and major private firms, pretend that we know what we're doing with them, and then have an 'exit strategy' when we're done screwing around with them.

-- "To extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds."

-- "To endorse and implement the FSF's tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms."

Now all the world's governments can tell corporations everywhere what they should and should not produce, what compensation is 'appropriate,' and which chosen few will be allowed to make money. I wonder if they sang Kumbaya while the made that decision.

-- "To take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems ... We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information."

What are they going to do? Invade the 'tax havens?' Those tax havens are sovereign countries.

-- "To extend regulatory oversight and registration to Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest."

OK - I'm somewhat interested in this one. Those agencies have a lot of power, and have no consistent standards of good practice.

-- "We reaffirm the commitment made in Washington: to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO) inconsistent measures to stimulate exports.

We're going to take over the world's finances and businesses, but don't worry, trade won't suffer in the least.

Call me a cynic, but I see little that will make a difference or that is appropriate (unless you're a power-mad president or PM, then it might be), but we'll see. I've attached the link here for the full communique. The wording of the opening paragraphs ("We the leaders of the Group of Twenty ...") provides for some amusement if nothing else

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