Britannia Radio

This is a passionate plea four governments and ours in particular to 
face up to the real problems instead of fiddling the figures and 
fusging the issues.  The crisis is the banks remains and nobody is 
tackling it,

G20?  Phoooey! A phoney charade.

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SUNDAY TELEGRAPH 5.4.09
This brave new world we live in needs leaders based in reality
Liam Halligan

'Today's decisions, of course, won't immediately solve the crisis," 
said Gordon Brown, presiding over last week's G20 summit in London. 
"But we've begun the process by which it will be solved."

Triumphalism on the part of our Prime Minister isn't new. Last 
December, he told the Commons he'd "saved the world". As Chancellor, 
Brown took spin way beyond simple language and into the data itself, 
presenting official numbers in a way that often snapped the line 
between mere distortion and untruth.

But despite everything I know about Brown, his G20 statement - and 
much of the media's summit coverage - made me queasy. "Smile, ogle at 
the First Ladies' dresses and pretend everything's fine," we're being 
told. "Fear not - we have a communiqué. The world is saved! Hurrah!"

This G20 hyperbole, complete with a one-day "relief rally" on global 
markets, is pure escapism. It's the real-life equivalent of "soma" - 
the mind-bending drug used for mass thought control in Aldous 
Huxley's Brave New World.

"The warm, the richly-coloured, the infinitely-friendly world of soma-
holiday," thought Henry and Lenina as they danced around Westminster 
Abbey. "How kind, how good looking, how amusing everyone was!"

Our leaders need to snap out of this trance and face reality. During 
the final quarter of last year, UK GDP fell 1.6pc. We're now looking 
at a 4pc decline in 2009, in my view, and a further contraction next 
year. In fact, unless the Western world grabs its banks by the scruff 
of the neck - forcing them to come clean about their losses, so 
thawing our frozen credit markets - we could see an 8pc peak-to-
trough GDP fall, far worse than the early 1980s.

House prices dropped only 2.7pc during the first three months of 2009 
- less than the previous three quarters. But they're almost 18pc down 
on last year. And while lending remains feeble and unemployment 
rises, there'll be little respite.

Reading the G20 communiqué, it's filled entirely with the vague 
language and platitudes of every other summit agreement I've ever 
seen. There is nothing in this limp document - nothing - that even 
begins to address the scale of the problem. As Rome burns, our so-
called leaders fiddle with flowery language.

"The era of banking secrecy is over," the G20 proclaims. Yet, under 
the cover of the summit, the US authorities slipped out new rules 
allowing banks to set their own prices for assets regardless of 
market values - dramatically cutting "paper losses" on "sub-prime" 
toxic waste. This is a sop to banks everywhere - allowing them to 
bury their mistakes even deeper, while screwing ever-rising sums out 
of tomorrow's taxpayers.

We'll get "a stronger regulatory framework for the future financial 
sector", the communiqué promises. But there isn't even the prospect 
of a debate on resurrecting "Glass-Steagall" - the Depression-era 
firewall that prevented investment banks from recklessly gambling 
with taxpayer-backed deposits.

Since those measures were swept away in the 1980s and 90s, the world 
has lurched from crisis to crisis. Yet politicians are petrified of 
re-building that crucial barrier, lest they annoy the money-men and 
jeopardise future campaign finance.

The G20 has "an unshakeable commitment to work together to restore 
jobs and growth", we're told. So how about finally agreeing a new 
over-arching trade liberalisation agreement? The "Doha round" has 
been stalled for almost eight years. If the big G20 players were 
serious about global recovery they'd have simply done a deal. But so 
fixated are they by parochial domestic interests, they pledged only 
to "prepare for a conclusion to the Doha round". How woolly can you 
get? And the much-vaunted "$250bn [£169bn] in new trade finance" is a 
mere $4bn of extra money if you look in the communiqué annex. [I said 
the devil wou;ld be in the small print -cs]

Doing the maths, even the "$1,100bn stimulus package" - the figure 
that drove a thousand headlines - turns out to be nonsense. There is 
less than $100bn of new money, most of that agreed before the G20 
convened.

What really worries me isn't so much the grandstanding - that's what 
politicians do. My fear is our leaders think if they carry on as they 
are, having "begun the process" in Brown's words, we'll find a way 
out of this crisis. I'm not sure we will.

What we need to do is to tackle the entrenched vested interests that 
caused this ghastly episode, and which are doing everything they can 
to milk it for all it is worth.

Simon Johnson, the former chief economist of the IMF, has written a 
stunning article in the upcoming May edition of Atlantic magazine. 
"The finance industry has effectively captured our government," he 
says. "Recovery will fail unless we break the financial oligarchy 
that is blocking essential reform."

Rarely has a truer word been offered, by someone in a position to 
know. Economists everywhere should follow Johnson's example and bang 
the drum for genuine change.