Saturday, April 04, 2009
Oborne: The Giant G20 Con Trick Is Unravelling
Iain Dale 6:00 PM
The biggest falsehood concerns the belief that the G20 nations have pioneered a $5trillion spending boost to global economies. Although Gordon Brown and President Obama had originally hoped to get world leaders to agree to such a 'fiscal stimulus', they actually failed to secure a single penny of extra government spending anywhere in the world.
Rather than admit defeat, however, they pretended they had won. So they invented the $5trillion figure. They arrived at the number by adding up the extra government borrowing expected to take place in G20 economies between 2008 (when the recession began) and 2010 (when world leaders hope it will end). It is a completely arbitrary figure.
The next fabrication concerns the claim that G20 leaders agreed a 'programme of support to restore credit, growth and jobs in the world economy' - worth some $1.1trillion. It was this headline-grabbing figure which caught everyone's imagination - yet sadly, it too is mainly a bogus number because much of the money had already been pledged in recent months.
Almost half of that $1.1trillion - some $500billion - takes the form of extra money for the International Monetary Fund to bail out countries that run into trouble during the economic downturn.
Although Gordon Brown brazenly asserted that this was new money, this is simply not true. Japan, for example, gave $100billion to the IMF last November, while the EU offered the same sum earlier this year. Admittedly, China did agree an extra $40billion last week. However, this contribution is very much less than Gordon Brown had hoped - and, most worryingly, indications emerged after the summit closed late on Thursday that the Chinese were having second thoughts.
Next, Gordon Brown claimed that some $250billion has been raised to regenerate world trade with the help of extra finance. Once again, his claim is an invention. Indeed, the small print of the G20 communique suggests only $3-4billion of new money has been committed, and the $250billion figure is only a vague pledge.
I fear that the more we look beneath the headlines of the London summit, the more its achievements look threadbare. I would estimate that no more than $250billion of the much vaunted $1.1trillion is genuinely new money. The true story is that Gordon Brown seems to have corralled fellow leaders into perpetrating a gigantic collective fraud on world public opinion.
Amid all the hoopla of Thursday's triumphant communique, it must be remembered that Gordon Brown has a long and disgraceful track record of this kind of bogus financial announcement. When he was Chancellor, many of his Budgets turned out to be contain fabrications.
This week's hubristic G20 communique reminds me vividly of Brown's notorious Comprehensive Spending Review of July 1998. Back then, Gordon Brown declared: 'On the 50th anniversary of the NHS, the Government will now make the biggest ever investment in its future.'
This announcement was given a euphoric reception by the media - only for it to emerge some time later that there was no extra spending and that the Chancellor had merely made the figures look huge by double and treble counting.
The problem with this kind of duplicity is that you always get caught out in the end. So will be the case with the G20 summit. Gordon Brown has achieved brilliant headlines in the short term, and it is likely that Labour's rating in the polls will soon start to rise as a result.
This week Gordon Brown and his fellow world leaders played cynically with the hopes and fears of these desperate people. They made promises they can't keep, made claims that they can never substantiate and triggered hopes that undoubtedly will soon be dashed.
The Prime Minister has won short-term plaudits, but over long haul his cheap and dishonest tactics will gravely damage the esteem in which politicians are held, and do great damage to his reputation.
Oborne's right. The con trick is unravelling. And unravelling fast. Once the markets cotton on, who knows what the consequences may be. Read his entire article HERE.
Hubris, hoopla and claims that were false, cynical and very, very dangerous
Last updated at 9:02 PM on 03rd April 2009
Judging by yesterday's headlines, the Prime Minister pulled off an audacious triumph at this week's London G20 summit. Super Gordon single-handedly set in motion a lavishly funded global reconstruction plan which will lead the world out of the slump and away from economic disaster.
Gordon Brown himself asserted there are two key components to his brilliant scheme. First, he has paved the way for recovery by remodelling the world's economic institutions. But even more importantly he claims that he has arranged for a massive injection of liquidity into global financial markets.
Nor is it just the media that is hailing the Prime Minister. Barack Obama described the G20 deal as 'historic by any measure' and issued a statesmanlike diagnosis on the condition of the world economy, saying 'the patient has stabilised'.
A good deal? Gordon Brown and Barack Obama failed to secure any extra government spending
As summit host, Gordon Brown was no less fervent, declaring that 'a new world order' had been established - comparing the deal struck between the summiteers with the Marshall Plan which famously rebuilt Western Europe after the horror of World War II.
'This is the day the world came together to fight back against the global recession,' he intoned, 'not with words but with a plan for economic recovery and reform.'
If these highly ambitious claims were even half-correct it would be wonderful news indeed. However, the truth is that they are false, cynical and very, very dangerous.
The reality is a much more modest achievement. The week's meeting has certainly done a small amount of good and Gordon Brown deserves a great deal of credit for making the event a success and shaping the final agreement from world leaders (after fears of a mutiny from France and Germany).
But the official communique is unlikely to register as more than a blip on the radar of the map which is leading us, hopefully, out of economic recession. The claims by Gordon Brown that we have now reached some kind of turning point, while accepted by some commentators who really ought to know better, is simply laughable.
The biggest falsehood concerns the belief that the G20 nations have pioneered a $5trillion spending boost to global economies.
Although Gordon Brown and President Obama had originally hoped to get world leaders to agree to such a 'fiscal stimulus', they actually failed to secure a single penny of extra government spending anywhere in the world.
Rather than admit defeat, however, they pretended they had won. So they invented the $5trillion figure. They arrived at the number by adding up the extra government borrowing expected to take place in
G20 economies between 2008 (when the recession began) and 2010 (when world leaders hope it will end). It is a completely arbitrary figure.
The next fabrication concerns the claim that G20 leaders agreed a 'programme of support to restore credit, growth and jobs in the world economy' - worth some $1.1trillion. It was this headline-grabbing figure which caught everyone's imagination - yet sadly, it too is mainly a bogus number because much of the money had already been pledged in recent months.
Almost half of that $1.1trillion - some $500billion - takes the form of extra money for the International Monetary Fund to bail out countries that run into trouble during the economic downturn.
More from Peter Oborne...
- Masterly diary of a minister low in rank, high in wit:A VIEW FROM THE FOOTHILLS by Chris Mullin31/03/09
- PETER OBORNE: The week that Brown's grand vision was shattered27/03/09
- PETER OBORNE: How a bitter war between the Bank of England and No10 could decide if Britain has to be bailed out by the IMF again13/03/09
- PETER OBORNE: Toughened by tragedy, has David Cameron now the courage to tell voters the truth?07/03/09
- PETER OBORNE: Torture, and why the Blair years will be judged some of the most morally squalid in our history27/02/09
- PETER OBORNE: Treachery, sleaze and a Prime Minister in denial. This is a Government in collapse20/02/09
- PETER OBORNE: Borrowing to save the economy is like trying to sober up a drunk by giving him a large whisky20/02/09
- PETER OBORNE: Vile torture. British agents. And the questions that David Miliband must answer now19/02/09
- VIEW FULL ARCHIVE
Although Gordon Brown brazenly asserted that this was new money, this is simply not true. Japan, for example, gave $100billion to the IMF last November, while the EU offered the same sum earlier this year.
Admittedly, China did agree an extra $40billion last week. However, this contribution is very much less than Gordon Brown had hoped - and, most worryingly, indications emerged after the summit closed late on Thursday that the Chinese were having second thoughts.
Next, Gordon Brown claimed that some $250billion has been raised to regenerate world trade with the help of extra finance. Once again, his claim is an invention.
Indeed, the small print of the G20 communique suggests only $3-4billion of new money has been committed, and the $250billion figure is only a vague pledge.
I fear that the more we look beneath the headlines of the London summit, the more its achievements look threadbare. I would estimate that no more than $250billion of the much vaunted $1.1trillion is genuinely new money.
The true story is that Gordon Brown seems to have corralled fellow leaders into perpetrating a gigantic collective fraud on world public opinion.
It is a sign of the degradation of the civil service over the past ten years that senior British government officials were happy to throw their weight behind what was little more than a lavishly funded PR stunt.
Perhaps it should come as no surprise that Jeremy Heywood - the senior Downing Street official who was deeply implicated in Tony Blair's sofa Government ahead of the Iraq War, when Britain was run by a close-knit cabal, when Cabinet government collapsed and normal procedures such as note-taking were ignored - should have been heavily complicit.
But it is disappointing that respectable Treasury officials like Jon Cunliffe, who has a reputation for integrity, should have allowed themselves to be compromised by association with the dodgy and dishonest summit communique.
I also suspect that President Obama will also come to bitterly regret his involvement in this cynical event whose main function has been to pull the wool over the eyes of the public. Indeed, it is interesting to speculate how much Obama, who displayed his inexperience this week, was duped by Gordon Brown.
Amid all the hoopla of Thursday's triumphant communique, it must be remembered that Gordon Brown has a long and disgraceful track record of this kind of bogus financial announcement. When he was Chancellor, many of his Budgets turned out to be contain fabrications.
This week's hubristic G20 communique reminds me vividly of Brown's notorious Comprehensive Spending Review of July 1998. Back then, Gordon Brown declared: 'On the 50th anniversary of the NHS, the Government will now make the biggest ever investment in its future.'
This announcement was given a euphoric reception by the media - only for it to emerge some time later that there was no extra spending and that the Chancellor had merely made the figures look huge by double and treble counting.
The problem with this kind of duplicity is that you always get caught out in the end. So will be the case with the G20 summit. Gordon Brown has achieved brilliant headlines in the short term, and it is likely that Labour's rating in the polls will soon start to rise as a result.
However, in the long term, very little has changed. For all Gordon Brown and President Obama's extravagant claims, the world is still in the grip of recession and millions of people still face the loss of their jobs.
Most significantly, the world's stock markets, which on Thursday greeted the summit communique with elation, were going into sharp reverse last night.
This week Gordon Brown and his fellow world leaders played cynically with the hopes and fears of these desperate people. They made promises they can't keep, made claims that they can never substantiate and triggered hopes that undoubtedly will soon be dashed.
The Prime Minister has won short-term plaudits, but over long haul his cheap and dishonest tactics will gravely damage the esteem in which politicians are held, and do great damage to his reputation.
A hero who's not wasting your money
I believe that one genuine hero has emerged from the collapse of the British banking system. He is John Varley, the Barclays chief executive who this week proudly announced that his bank would not be taking government money to stay afloat.
I admire Varley because he has fought hard to keep one of the greatest names in British banking for more than 300 years independent and out of the hands of the State.
It is a hard fight and, who knows, he may yet fail. But at least Varley is doing his best.
The contrast between doughty John Varley and the despicable Victor Blank, the New Labour crony who sold Lloyds Bank down the river after meeting Gordon Brown at a cocktail party, is almost too much to bear.
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Here's what readers have had to say so far. Why not add your thoughts below?
Is is true they all (G20) got British Goodie bags courtesy of M and S ?
Fat cats feed Fatter Cats ..Excellent !
That's true Britishness under Gordon Brown !!!
I await the day when Gordo announces an injection of a zillion pounds into the UK economy (conjured out of thin air). The excitement will be too much for him & hopefully he will explode.
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IMF: Let the Softening Up Process Commence!
Iain Dale 9:54 AM
Economists have warned that the UK's public finances are in such a bad state there is a real possibility that Britain will seek help from the fund.
The G20 agreed this week to establish a new scheme, controlled by the IMF, which countries of all backgrounds can go to if they are experiencing financial problems.
That coincided with a concerted push by British ministers to argue that there would no longer be any stigma attached to asking for cash.The previous Labour Government's bail-out by the IMF in 1976 was seen as a national humiliation and helped sweep the party from power for 18 years.
A senior Cabinet minister said, however, that the new fund would not be like the 1970s version and should not be seen as such. He said there would be nothing wrong if America or Britain used the facility.He said: "Previously a country would only go if they were in a very bad state. It was a bit like going to accident and emergency to get urgent help. "This new facility will not be like that. It is a bit more like getting wellbeing care or even like going to a spa to recuperate."
Isn't it strange how this Cabinet Minister remains anonymous and refuses to be named. You might almost think he had something to be ashamed of. A key part of the Tory attack on Labour now should be to drive the point home that Labour has plundered our public finances to such a state that we could be driven to seek emergency assistance from the IMF. Recuperation, my arse. More like resuscitation.
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It is plainly obvious that the G20 'summit' was nothing more than a publicity stunt to try to 'save Gordon'. The way he acted like a schoolgirl with a crush on a teacher to Obama was embarassing to watch. The other leaders probably only agreed to turn up to be seen with Obama. I agree with you and other commentators who have realised that the whole thing was an expensive sham. Apart from the BBC of course who probably think Gordon has saved the world from disaster!
- Kelvin, Cheltenham, 04/4/2009 08:17