Friday, 3 April 2009

The day after G20

The dust settles, the Obama-fest moves on, a few panes of glass in the City are repaired and soon it will be like the G20 were never here.

They'll be back in twenty years - too soon, I think.

And what did they do while here? Well, they met formally from 10am to 3pm with a break for a decent lunch. Each leader spoke for eight minutes and then they decided to solve all the world's problems by throwing money at them. One trillion dollars has been pledged, with the IMF the big winner with a $250bn boost in the form of "Special Drawing Rights".

And one of the G20 has already been into the cookie jar. Mexico has secured a $47bn line of credit, and here's where it gets interesting. In the past the IMF handed out money with one hand and pain with the other. Their loans were strictly conditional on the recipient adopting deflationary policies, cutting spending and generally giving up the profligacy that got them into the mess in the first place. But not this time - Mexico has been treated very leniently.

And last night on Channel 4 News we see Lord Mandleson, UK Business Secretary, and Tsar for the re-election of our useless Labour government, say the stigma has gone from taking loans from the IMF. Why did he say that, I wonder. Is he softening us up for when the UK government has to go cap-in-hand to the IMF? Looks like it.

Of the "big idea" - the world currency, little mention. China, especially, is desperate to have something other than US dollars in which to hold its trillion dollar cash pile. It has managed to offload $100bn by injecting it into the IMF. As for the rest, can they afford to buy the entire United States yet?

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