Britannia Radio

Here's Brown stripped naked without even a fig leaf to hide behind .  
The G20 summit was a farce.  Everything in it was decided before they 
got there so the only new thing was a photograph of them all.  How 
many people-air-miles did that photo cost?

But still Brown struts the stage.
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SUNDAY TELEGRAPH   16.11.08
Gordon Brown will not be hitting the G20 spot
What should you make of this weekend's "global summit" in Washington? 
Is talk of "international policy co-ordination" just talk? And is 
Gordon Brown really "leading the world" - his own words - out of the 
economic crisis?

By Liam Halligan

These are crucial questions. Current events will shape not only our 
immediate financial prospects, but the global economy for decades to 
come. British politics, too, is in flux - as Brown tries to win on 
the world stage the popularity that's eluded him back home.

Historians in the future will try to unravel how the Western 
economies imploded in 2008, and a new world order emerged. But what 
strikes me for now, as the summit media coverage hits fever pitch, is 
that we're being sold four distinct myths.

This summit isn't a "New Bretton Woods". References to the 1944 
conference at a New Hampshire hotel are now dime-a-dozen. Back then, 
during a fortnight of intense deal-making and after years of 
preparation, global leaders hammered out a series of detailed 
currency and regulatory agreements - a template for the post-war world.

This weekend's effort has been cobbled together by a deeply unpopular 
out-going US president. After all the photo ops and media briefings, 
there'll be just a few hours of talks.

Bretton Woods "worked" because of US leadership. This time, the real 
US president isn't there. It's almost as if this summit - wedged 
between Barack Obama's election and his taking of office - has been 
scheduled to make it as ineffective as possible, to avoid any real 
decisions.

The second myth is that the International Monetary Fund can re-emerge 
as an institution responsible for "global economic surveillance". 
This idea - repeated ad nauseam by Brown - lacks all credibility.

The IMF is broke - controlling barely 3pc of total world reserves. It 
is also politically reviled. For years, it imposed policies on 
developing countries that were not only seriously damaging, but had 
more to do with promoting Western business interests than economic 
stability.

Many of those developing countries have now matured into leading 
economic powers. They complain - rightly - the Fund remains US-
controlled. The idea that such countries would listen to the IMF, let 
alone refill its coffers with cash that will be used to bail out 
Western countries, is laughable.

Such notions still fuel the third myth - that the West is still in 
charge. We're not. Getting out of the current crisis requires 
governments to stand behind massively over-exposed Western banks - 
providing credible financial backing as some collapse, others prevail 
and the global banking system reconfigures.

That takes deep, deep reserves, and after years of profligacy, the 
Western coffers are bare. Excluding Japan, the G7 controls only 7pc 
of total global reserves. The Bric countries - the large emerging 
markets of Brazil, Russia, India and China - have 45pc.

Six months ago, China's total reserves were worth less than the 
market value of the US banking system. Now they're worth more than 
twice as much - a stark illustration, if any were needed, of how much 
the world has changed.

Yet Western powers have only convened the G20 group - including the 
Brics, Saudi Arabia and other large emerging markets - under huge 
duress. And nothing about the structure or tone of this summit 
suggest the G7 - with its large budget deficits, barely functioning 
banking system and paltry reserves - is willing to acknowledge 
today's realities.

The fourth myth we're being sold is built on the other three. As a 
Western leader and former IMF officer-holder, our Prime Minister has 
appointed himself the champion of this summit. His conduct is 
diminishing the UK's status as a leading nation.

Brown's claim that he convinced China to launch its recent fiscal 
stimulus package is preposterous. Having constantly opposed calls 
from Germany and many Asian countries for tighter bank controls, he's 
now causing irritation by arguing he mooted such reforms first.

But the main reason the Prime Minister's posturing looks so odd, and 
is counter-productive, is that the economy he has run for the last 
decade is among the weakest of any represented at the summit.

The Government could end up borrowing £100bn this year - compared 
with the official £43bn estimate. Next year, borrowing could hit 
£150bn - a whopping 10pc of GDP.

Brown says it's "a fact" that our national debt has fallen from 44pc 
of GDP to 37pc at the latest count. The really scary thing is he 
believes his own hype. Add Northern Rock and the Private Finance 
Initiative, and we're looking at 46pc of GDP. Public sector pension 
liabilities account for another 50pc on top of that.

Brown is running around Washington claiming the UK's is a low-debt 
economy that can lead the world in launching a global "Keynesian" 
boost. Unaffected by such hubris, the world's currency markets are 
now casting their judgment.

Since our Prime Minister starting talking about "fiscal rescues" and 
"lower interest rates", the pound has taken a battering. Sterling 
yesterday slipped to a six-year low against the dollar, its weakest 
ever rate against the euro, and a 13-year low against a trade-
weighted basket of currencies.

George Osborne is right. We are at risk of a run on sterling. The 
markets will eventually stop buying the UK government's debt. A gilts 
strike is a real possibility. Some of us have been stressing these 
dangers for months. Had the shadow chancellor done the same, rather 
than waiting until the eve of this summit, he'd now be less 
vulnerable to the charge that he's just playing politics.