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Message: Was the g20 a big show of smoke ?
G20 leaders claim summit success
By George Parker, Chris Giles, Edward Luce and David Oakley
Published: April 2 2009 19:11 | Last updated: April 2 2009 21:12
Gordon Brown, host of the summit, said the meeting marked the emergence of a "new world order", as he unveiled what leaders claimed was a $1,100bn package of measures to tackle the global downturn, including support for lower income countries and a $250bn plan to boost the international money supply.
Close inspection showed some of the $1,100bn pledged included reannouncements and half-done deals
In London, the FTSE 100 jumped 4.3 per cent to go through the 4,000 mark for the first time in six weeks while in New York, the S&P 500 surged more than 4 per cent to close up 2.9 per cent.
The leaders papered over divisions between the US and Europe over whether the world could afford a new fiscal stimulus, with US president Barack Obama describing the summit’s measures as "bolder and more rapid than any international response that we’ve seen to a financial crisis in memory" and predicted they would mark "a turning point in our pursuit of global economic recovery".
France’s president Nicolas Sarkozy, meanwhile, said the summit’s agreement on a new regulatory regime and crackdown on tax havens showed "a page has been turned" on an era of post-war "Anglo Saxon" capitalism.
Although the summit ended with smiles, a row between China and France over the blacklisting of tax havens – including possibly Hong Kong and Macao – continued behind the scenes well into the day.
US officials say that Barack Obama helped broker a compromise over offshore tax savings between Hu Jintao of China and Nicolas Sarkozy of France, who had threatened to walk away from the summit.
Mr Sarkozy had objected to the absence of agreement to publish a list of offshore tax centres that were not in compliance with existing standards on transparency. With the exception of China, all other countries agreed that the Organisation of Economic Cooperation and Development would publish a list of offshore offenders in a "naming and shaming" exercise.
In the end they agreed a compromise in which the G20 would only "take note" of the OECD’s list, rather than endorse it.
The summit text included commitments to curb "risky" bank pay and bonuses, but offered little new on monetary policy action or efforts to clean up bank balance sheets. Of the $500bn of money pledged to the IMF to bolster struggling economies, some had already been announced and $250bn was a pledge of future funds. In a new development, the G20 agreed to let the IMF create $250bn of Special Drawing Rights, its own currency comprising dollars, euros, yen and sterling, boosting the foreign exchange reserves of every country. Additional reporting by David Oakley
Copyright The Financial Times Limited 2009
Personal Comment .: The markets seem to have reacted very positively today at the G20 summit meeting all over the planet and even more so in Asia , but let's take a moment to look at the results . - There were no real agreement on a global perspective about either of the following : 1- A coordinated cleaning up of bank assets 2- A joint statement against protectionism 3- A joint perspective on a stimulus approach depending on the evolution of the situation 4- A coordinated monetary policy in reaction to further possible eco- nomi turmoils 5- A global set of rules to in order to avoid what caused this mess Instead the world leaders agreed to : 1- boost IMF funds a little more then previously agreed 2- They came to a meek agreement to make a black list of tax haven countries ( wich will come to nothing probably ) 3- They also agreed to let the IMF create $250 bn of Special Drawing Rights, it's own currency comprising dollars, euros, yen and sterling, boosting the foreign exchange reserves of every country . So all in all the market reacted mostly to smiles and handshaking before anything of substance was even talked about . The coming weeks and months should prove it brutaly , when it becomes obvious that protectionism is on the rise, that every country will have to deal seperatly with it's banking sector problems , and when monetary policies start impairing each others rather then strenghtening each others . Numbers over the next 3 to 4 months will be blurred by the stimulus packages , so the markets might keep rising and unemployment might seem to reflect some kind of improvement while rising at a slower pace , but i believe gold will either stand still or continuously rise slowly but surely . And then comes september and maybe , just maybe more coordinated efforts will be made but i fear protectionism might become a big concern and a very complicated matter to address. Any comments and reflections on those matter would be gratly appreciated , especialy contrary opinions and comments that could help lift the veils bluring the future . Anybody out there ... ? Regards
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