Finally the g20 meets today. There have been high hopes that this real summit can reach agreement on major issues that will help to slow the slide into Global Depression and perhaps even mark the bottom of the market so to speak.
However, what has been disturbing the past week or so is the divergent politics which are driving the agenda rather than facing up to real problems.
However, what has been disturbing the past week or so is the divergent politics which are driving the agenda rather than facing up to real problems.
1. Tax Havens - Tax havens did not cause this recession and persecuting them is not going to cure it either. This is a political grab at trying to secure more tax base. it will fail and is the wrong move in any event. What logically you need to do is grow your own tax base, not try to steal someone else's. Why has this even made it onto the agenda? it is the politics of socialist envy.
2. Hedge Funds - Ooh, the bad guys. You know, the ones who said all the banks were broke and full of toxic assets and were proved right. hedge funds account for a small fraction of international financial flows, why all the attention? Again, they did not make the banks invest in sub-prime toxic assets and derivatives.
3. World Trade - Hooray at last, yes increasing trade will help the world recover. Finishing off Doha trade talks should be a huge priority. I hope they can do it.
4. Financial Regulation - Well this is a two edged sword, the right regulation is needed. The regulation of derivatives which has been lacking and support for the ratings agencies to make the markets work again. The idea should be to make the markets far more transparent, not to limit them.
5. Global Stimulus - Well the US and UK have come dangerously close to doing more than enough. The Euro area and China really do need to do more to stimulate demand. You can't save car factories is no one wants to buy their cars.
6. Global Currency - A crazy theoretical idea, but really, are the Chinese going to really undermine their dollar assets when they follow this logic through. How can a real 'world bank' work in conjunction with the world's democracies - already the European Bank is struggling to reconcile the different parts of the Euro area alone
