Friday, 3 April 2009

The depressing reality

Given he held a bummer of a hand, Brown would be right to feel pleased about the outcome of his summit. He managed to turn the cards round into a not unsatisfactory show.

The 3000 words of the closing communique amount to one gigantic spin. But that's poker. And we all appreciate a positive shine when the alternative could be immeasurably gloomier.

The participating countries remain with the not insignificant domestic problem of managing the consequences of the financial and economic crisis in their own inimitable way.

But at least we now know that 19 of the world's largest economies – plus the remainder of the EU and several global finance institutions – are jointly agreed that global trade should be supported and no nation, within or without their number, should be abandoned if they threaten to sink.

Since, apart from the direct contribution of a very few wealthy countries, this global financial support is to be achieved by more fiscal sleight of hand, nobody will be unduly inconvenienced and several developed countries will be fortunately saved.

On the broader front, all this G20 really does is send a long term message to global markets that the world's richest nations do not intend to let international trade permanently decline. And where pockets of severe financial instability arise they are prepared to support individual countries through the crisis.

This will make no imminent difference to the negative economic situation faced by Britain, the US, Germany, France, Japan or most of the other highly developed nations. In particular, Britain and the US, where the finance industry has been most exposed, still have to find solutions to their own banking crises.

When, and whenever, the toxic asset overhang they're holding can be resolved, it will provide an immense boost to the objectives set by the G20. But that's an issue the G20 didn't even touch.

So as an upbeat symbol in a time of crisis this G20 looked like a good one. But like an exotic holiday, it will soon be just a memory. We and our great leaders must return to the depressing reality of a long recession.

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