Britannia Radio

There are acres of self-congratulatory statements all over the press  
today and you don’t need me to add to them.  The politicians and  
journalists all seem so suprised to find that nobody walked out and  
no physical violence occurred that it is being headlined as a great  
success.

The truth is somewhat less.  There was progress in refunding the IMF  
to a substantial degree which will particularly help the poorer  
countries.  Even here however, much of the vastamount mentioned was  
already promised.   There was enormous emphasis given to stopping the  
crisis happening in the first place and putting in place regulators  
to stop this.

However the regulators were there in the first place and they didn’t  
stop it anywhere in  the world because nobodsy enforced the  
regulations.  Germany and France were determined on a bureaucratic  
solution to a past event and to a great extent got thir way.

What seems to be missing altogether were any measures to get  
international trade moving now and to solve the crisis we are  
actually in.

There is so much comment today that I’ll only give quotations from  
articles rather than the whole !

However. I start with the Telegraph’s leading article, replete with  
faint praise. .

XXXXXXXXXXX CS
===============================
TELEGRAPH                     3.4.09
No grand plan, but the G20 was a good start
Arguably, the biggest problem of all was not addressed at the G20.

Telegraph View


They came, they saw, they communiquéd. Simply by turning up, leaders  
had already achieved more than a similar crisis summit in London in  
1933. Franklin Roosevelt, then American president, stayed away and  
not long after the world was at war.

Holding a summit is in itself a worthwhile exercise, even if the  
results rarely match expectations. It has been demonstrated this week  
that the Group of 8 leading nations is now eclipsed by the broader  
G20. Globalisation, an unstoppable process that has lifted hundreds  
of millions out of poverty, but speeded and broadened the economic  
crisis of recent months, has made it impossible and undesirable to  
ignore the needs and capabilities of developing economies.

Putting leaders together has produced some progress on  
extracurricular matters: the Russians and Americans are talking about  
cutting their nuclear weapon stockpiles; the G20 is committed to  
reaching an agreement at the United Nations climate change conference  
in Copenhagen in December. [Oh dear! That’ll set things back again. -cs]

On the pressing need to rescue the world from depression, there are  
some sensible measures. The International Monetary Fund has had its  
war chest fattened; additional lending is being made available to  
some of the world's poorest nations; there will be far greater co- 
operation and international oversight of financial institutions;  
greater availability of trade credits will contribute to efforts to  
combat the first fall in trade flows for 25 years. We already knew  
most of that was coming.

But yesterday was comprehensively not an agreement on a "global plan  
for economic recovery and reform", as Gordon Brown had promised on  
the eve of the gathering. In recent months the stated aim of the  
Prime Minister, who deserves credit for bringing the summit here, was  
that the G20 should announce a massive further fiscal stimulus. The  
co-ordinated extra increased spending he wanted was ruled out of  
order by the Germans and the French several weeks ago. They do not  
want to imperil their nations' finances further, and won that debate  
in London because it was not truly on the agenda.

What of the other hopes for the summit? "For the first time we have a  
0common approach round the world for cleaning up bank balance  
sheets," said the Prime Minister. Banks need to be fixed so that a  
broad economic recovery can take hold, but the common approach is  
hard to divine.

If what Mr Brown means is the latest American bank rescue plan,  
involving an uncertain state insurance scheme, there is considerable  
doubt that it will work. Even worse, the G20 call for a single set of  
global accounting standards, a crucial step in the restoration of  
investor confidence, was being undermined yesterday by standard- 
setters in America. They caved in to bank demands by proposing to  
allow banks to use their in-house, and presumably different,  
valuations for certain assets on their books. That sort of crazy  
asymmetry will hinder any recovery. And again, yesterday, there were  
solemn condemnations of barriers to free trade – which are revealed  
to be hollow by the rising number of protectionist measures enacted  
worldwide.

At least, though, these topics are being discussed. Arguably, the  
biggest problem of all was not addressed – the restructuring of  
economies, such as China's and Germany's, that have been too reliant  
on exports to over-consuming nations. So, the G20 in London produced  
no grand plan for recovery. But if the jamboree has a legacy, it may  
be that the optimistic tenor of the leaders' exchanges goes some way  
to restoring battered global confidence. It is good to talk.
======================
SHORTER REPORTS   3.4.09
TELEGRAPH
==Only those who thought it would save the world will be disappointed

    By Tracy Corrigan

It's difficult to bill the result as a resounding triumph, but it's a  
long way from being a failure either. It all depends where you set  
the bar. In my view, nothing too stupid has been decided and some  
reasonable measures have been agreed, though most, such as  
strengthening the International Monetary Fund, were widely expected.  
There is one very obvious missing item from the G20 communique – a  
further economic stimulus package – but that is no bad thing, given  
that plenty has already been done, and at substantial cost. Instead  
there is new money for trade loans and the like. That's good enough  
for me.
Still, we have to be honest: many of the issues addressed in the G20  
discussions have no real relevance to the world's prospects for  
economic recovery. An awful lot of effort has been expended on the  
supposedly contentious issue of regulation, and any cracks between  
the Europeans on one side and the Britons and the Americans on the  
other have been papered over successfully.
[- - - - - - - - ]
The truth is that G20 ignored issues they couldn't agree on and made  
some promises, such as free trade, which have yet to be tested. But  
did anyone really expect otherwise?
+++++++++++++++++++++++++++++
Business groups back trade plans but warn leaders on regulation
Business groups hailed the G20’s commitment to $250bn (£170bn) of  
extra trade finance and its stance against protectionism but warned  
against heavy-handed regulation.

    By Alistair Osborne, Business Editor

Roger Bootle, managing director of Capital Economics, also noted that  
“as far as measures are concerned, there’s a distinct lack of meat on  
the bone” – including who pays for the IMF’s trebling of resources to  
$750bn.
Richard Lambert, director-general of the CBI employers’ group,  
welcomed the trade finance initiative, saying it should “plug the  
funding gap left by the credit crunch and give businesses the  
confidence to trade with one another across international borders”.

He also supported undertakings that [- - - - - - - - - -] the World  
Trade Organisation (WTO) would monitor any protectionist moves by G20  
countries [- - - - -] though he dismissed some of the other trade  
measures as “a bit fluffy”.

Reacting to the proposed strengthening of financial regulation, Mr  
Lambert warned: “This should not be done in haste or it could do more  
harm than good.”

Mr Lambert accepted that “there had to be a trade-off between America  
and Britain, whose focus was entirely on stimulus, and Germany and  
France, where the focus was on financial regulation”.

However, he stressed: “The fact is that the financial markets are now  
in such a state of shock that they are regulating themselves, so  
there is no need to go too fast.”

Miles Templeman, director-general at the Institute of Directors, said  
[- - - - - - - - -]  “There is time to get any new financial rules  
right, and so we hope that world leaders don’t rush into hasty and  
ill-thought-out regulation, which would risk choking off recovery.”

Stephen Haddrill, director-general of the Association of British  
Insurers, said: “The EU and the Financial Stability Board will need  
to stick to the principles of modern markets and not try to reinvent  
older forms of regulation that belong to past eras. The UK and  
London, in particular, have the most to lose if the fine words of  
today become the shackles of the future.”

Stuart Fraser, policy chairman of the City of London Corporation,  
played down the risk to London.
“The City has nothing to fear from better regulation,” he said. “Good  
regulation can be a competitive advantage to the City. Who wants to  
buy financial products or invest in poorly regulated markets?”

[- - - - - - -]
Mr Bootle pointed out that there was nothing specific in the G20  
communiqué over “national stimulus, which is less than the original  
aim”.
He said Britain and America had been pushing for countries running  
current account surpluses – notably China, Germany and Japan – to  
loosen fiscal constraints and increase spending.

His point was echoed by shadow chancellor George Osborne. “The great  
thing missing from this communiqué is the one thing the Prime  
Minister lobbied hardest for,” he said. “That is a new commitment to  
a significant second fiscal stimulus. That commitment is very  
obviously not there.”

He said the “$1 trillion being trumpeted today is a trillion dollars  
of loans, credit lines and guarantees”, but not “a single dollar of  
additional fiscal stimulus. It is left to individual countries to  
decide for themselves what their own public finances can afford.”

Mr Bootle said that even the provenance of the extra IMF resources  
was “opaque. We don’t know who’s putting up the money.”
He said there was an absence of such detail in the entire communiqué.  
“The real test will be in the weeks and months to come when we will  
see if there’s real consensus or a whole lot of wrangling,” Mr Bootle  
said.
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
THE TIMES  [little intelligent commentary! -cs]
Lucky Gordon Brown basks in market glory

    David Wighton: Business Editor’s commentary
[little about the economy - much about share movements -cs]
Sometimes you just get the breaks, and Gordon Brown's luck was  
certainly in yesterday. He happened to be winding up the G20 summit  
on a day when there was a raft of market-pleasing news around the  
world. The result was a surge in share prices that helped the  
summiteers claim success.

In Britain there was a surprise increase in house prices in March, at  
least according to the Nationwide index, raising hopes that the slump  
may be coming to an end. Admittedly, there was a similar rise in the  
rival Halifax index in January, which was quickly reversed the  
following month. Nevertheless, it followed other glimpses of light in  
the housing market on both sides of the Atlantic.  [Today “Halifax  
says house prices down 1.9%” FT -cs]

There has also been more encouraging evidence in terms of business  
activity, which suggests that while conditions are still getting  
worse, both in Britain and America, they are at least getting worse  
more slowly.

The picture is grim in continental Europe, particularly in Germany.  
But in their new, sunnier mood, investors welcomed the smaller than  
expected cut in euro interest rates, from 1.5 per cent to 1.25 per  
cent, as a signal that the European Central Bank is getting more  
optimistic about the eurozone outlook.

In the US investors were cheered by a vote from its accounting  
standards board to allow banks more freedom to use their own  
valuation models, rather than market prices, for assets where there  
is little trading. Opponents of the controversial move said it would  
do nothing to restore confidence in bank balance sheets. But  
investors focused on the boost that it will give to profits and bid  
up bank shares.

To be fair, the markets were also cheered by the G20 agreement  
itself, even if the figures owed something to Mr Brown's talent for  
inflationary arithmetic.

There was no new fiscal stimulus (which was probably just as well)  
and no new measures to tackle toxic bank assets (which is where  
attention needs to focus). The moves on regulation and tax havens  
were sensible enough, if irrelevant to our current plight, and the  
new money for the IMF will make a real difference, if well spent.

The agreement should certainly help speed the recovery if only by  
underpinning confidence. The downturn happened much faster than  
expected. And the markets are starting to believe that the recovery  
may too.
++++++++++++++++++++++++++++
Leading Article - Summit of achievement
Structural weaknesses and policy divisions remain. But the G20 has  
announced measures that will help to repair the damage inflicted by  
financial crisis

Low expectations have been met. Divisions on how to deal with the  
financial crisis remain. Imbalances in the global economy lie  
uncorrected. But the G20 summit took important steps in improving the  
machinery for coping with the financial crisis. The mere fact of  
agreement will have expanded, in Gordon Brown's phrase, the oxygen of  
confidence in the global economy.

To judge a summit primarily by its contribution to psychology may  
appear to trivialise a crisis that is widely compared to the Great  
Depression. Yet confidence is the crucial missing ingredient. Its  
absence has directly caused the collapse of the Western financial  
system. In the 1930s, John Maynard Keynes stressed that investors did  
not respond only to opportunities for profit. If they expect  
businesses and consumers to stop spending, new investment will dry  
up. The economy will be locked into stagnation. An agreement that  
helps to alter that state of mind would be an achievement almost  
regardless of the effectiveness of the individual measures that it  
comprises.

The steps agreed at the G20 are restricted in scope. Some had also  
been widely trailed: Mr Brown's practised technique of presenting old  
information as if it were new has been brought to a global audience.  
But the measures are not trivial. The cost amounts to more than $1  
trillion. [Much of it already in the pipeline but nobody seems to  
admit how much! -cs] The most important commitment is to increase  
resources available to the International Monetary Fund - $500 billion  
for loans to struggling economies, and another $250 billion for a new  
overdraft facility available to sovereign borrowers.

[- - - - - - - - - -] The money committed by the G20 leaders is  
substantial. It includes commitments from important emerging  
economies, notably China. These economies aim for a shift in the  
voting weights within the IMF, and they ought to receive it. There  
was also a commitment by the G20 to trade financing, which should  
help to repel calls for protectionism.

These are huge sums, but they are not a fiscal stimulus of the type  
espoused by President Obama and Mr Brown. That is inevitable. Fiscal  
expansion is not a course available to all countries. There is a  
limit to how far weaker economies can sustainably increase public  
debt without causing investors to take fright. Fiscal stimulus cannot  
on its own resolve the more fundamental problem of a huge burden of  
household and public debt in the US, while there is a glut of savings  
in Asia. The G20 was right to focus instead on the greatest  
structural weakness of the global economy: a dysfunctional financial  
system. The leaders' statement stressed co-operation in purging the  
banking system of bad assets and regulating non-bank financial  
institutions.

New regulation will not necessarily be well directed. There is a more  
pressing case for breaking conflicts of interest within the credit  
ratings agencies and limiting leverage than in regulating bankers'  
pay. The G20 summit has made little difference to the lives of  
bankers or the prospects for banks. This, of course, means that the  
summit has skirted the main problem - but it was always going to. The  
banking sector will ultimately be cleaned up by the banks themselves.

The G20 summit was hard work for everyone involved: the Prime  
Minister, politicians, bureaucrats, security, Londoners and all of us  
ordinary observers. Its achievements were predictably modest, but it  
was not in vain.
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
FINANCIAL TIMES  - Leader
The first bricks in a new world order

Some useful progress, but still a way to go. That must be the  
conclusion of the Group of 20 summit in London. Gordon Brown, UK  
prime minister and chairman of the meeting, set out a six-point plan  
to save the world. This reflected some real achievements: a generous  
increase in funding for the International Monetary Fund, a new  
issuance of special drawing rights and a boost for trade finance. He  
sounded disappointingly thin on other key areas – notably cleaning up  
banks and future fiscal stimulus. More detail would have been  
reassuring.

Mr Brown cast the G20 meeting as part of a co-ordinated “fight back  
against the global recession” and said the “global crisis requires a  
global solution”. We may doubt aspects of the solution, but the  
crisis is undeniable. World growth is expected to decline this year  
for the first time since the second world war. The World Trade  
Organisation expects that trade will fall by 9 per cent – a worrying  
prospect.

It has also become clear that this crisis will not soon burn itself  
out. An important part of John Maynard Keynes’ works was his  
explanation of how economies could be caught in low growth traps. The  
longer the recession, the greater the destruction of happiness. An  
extended downturn will also increase the risk of the crisis expanding  
and deepening far beyond its current spread. In new democracies,  
whether in Africa or central and eastern Europe, this is a moment of  
genuine peril. In some poorer countries, it could even lead to war  
and famine.

One particular risk is a potential financial crisis in emerging  
markets, which could spread rapidly through a region. The prospect of  
this is stronger the longer recovery is delayed. Countries have  
already sought help from the IMF recently. More could follow. It is  
essential that the Fund has the resources to prevent local problems  
becoming international. A financial crisis in eastern Europe, for  
example, would be miserable enough. But it would transmit losses  
through banks across Europe. The world does not need another subprime  
crisis.

The G20 pledge to increase the IMF’s resources by $500bn, therefore,  
is extremely cheering. Some of the money had been allocated already.  
Nonetheless, it is an important achievement and a welcome sign that  
national governments see the role that such international  
institutions can play.

The proposed new issuance of $250bn of special drawing rights by the  
IMF would increase the world’s pool of reserve assets, freeing the  
hands of emerging and developing economies. It, too, is an excellent  
idea which will increase global liquidity.

The plan for $250bn over the next two years for trade finance is also  
welcome. The proposal is larger than expected, but is mostly drawing  
together existing programmes. It will be delivered through export  
credit agencies, investment agencies and development banks.

There is little to report on fiscal policy. No one country’s stimulus  
can rescue the world from the mire; the US is not in a position to  
revive world demand on its own – again. While deficit countries, such  
as the US and UK, must expand demand, the surplus countries must do  
their part and expand domestic consumption by more. The world needs  
to increase demand without increasing its imbalances.

The communiqué offers little credible commitment to this end. Perhaps  
it was unrealistic to expect much more. Arguments about stimulus  
generate much more heat than light; even apparently miserly Germany  
has committed to a large stimulus programme. The IMF has been invited  
to “assess regularly the global actions required” to “accelerate the  
return to growth”. If the IMF is robust, this might prove a useful  
mechanism for asserting accountability.

The weakest part of the package is the financial element. Banks are  
still gravely wounded. The financial crisis lit the fuse for this  
recession. It may also prolong the fire; the crisis will last much  
longer if major countries refuse to clean up their banks. Given the  
range of countries at the G20, a one-size-fits-all bank rescue policy  
was never feasible. But the absence of detail about a common approach  
to cleansing the banks of their toxic assets is extremely  
disconcerting. Stating vague commitments only serves to create fears  
that little substance lies behind the words.

The world is better for having held this summit. The possibility of  
dangerous contagion is lower and useful progress has been made across  
a range of issues, from the need to keep trade free to IMF quota  
reform. But leaders must remember that the crisis, which started in  
the banking system, will not be resolved until the banking system  
itself is fixed. That is where they must turn their attention now.