G-20 Summit Blames Buyers of Poison Apples

[Joanne98]

Hopes were high that the G-20 summit would issue a statement on US dollar hegemony, currency fluctuations, a new world order, a return to a gold standard, or make some other earth shattering statement. I predicted the summit would be a complete waste of time. Let's take a look.

Bloomberg is reporting G-20 Calls for Action on Growth, Regulatory Changes.


In a statement after a five-hour summit in Washington, the Group of 20 urged a "broader policy response" to spur growth, including potential interest-rate cuts and fiscal stimulus.
My Comment: Wonderful. The US is at 1% and Japan at .3% with every other country on a Mad Race To ZIRP. It did not help Japan or the US and it will not help spur growth anywhere else either.

The group set a March 31 deadline for recommendations on tightening accounting standards, strengthening derivatives markets and increasing oversight of hedge funds and debt-rating firms.
My Comment: Gee let's see. We postponed mark to market accounting, did nothing about off balance sheet accounting, and are blaming hedge funds for loose lending practices at banks.

"There was a common understanding that all of us should promote a pro-growth economic policy," U.S. President George W. Bush said. U.K. Prime Minister Gordon Brown said "there is a clear determination on the part of world leaders in every continent to take necessary action to move economies out of this difficult period."
My Comment: The understanding (or rather the misunderstanding) was that the meeting would actually accomplish something other than sing the praises of pro-growth economic policy.

With no clear promise to cut taxes and interest rates together, markets may be disappointed, said Carl Weinberg, chief economist at High Frequency Economics Ltd. in Valhalla, New York. "This isn't a strong action statement on addressing the matters at hand."

Rather than coordinate action, nations should act "as deemed appropriate to domestic conditions," the leaders said in their statement.

My translation: Everyone will continue to do whatever it was they were doing before.

The group pledged not to erect new trade barriers, guaranteed more resources for the International Monetary Fund if needed and promised to meet again before May.

Tumbling stock markets and forecasts for a worldwide recession are intensifying pressure on the G-20 leaders to act, 15 months after the credit crunch began. The IMF predicts advanced economies will together contract next year for the first time since World War II.

My Comment: Another meeting before May? How exciting. Exactly what is another meeting supposed to accomplish other than issue another lame statement praising growth?

The G-20 leaders, representing 90 percent of the world economy, blamed the crisis on investors who "sought higher yields without an adequate appreciation of the risks."

My Comment: Banks and brokerage packages sold poison apples. The G-20 is blaming those who bought poison apples not those who knowingly sold poison apples.

Reaching agreement on what to do was difficult, French President Nicolas Sarkozy said after the meeting. "I'm a friend of the U.S. but it wasn't always easy," he said. "There were misunderstandings to overcome."

My Comment: Exactly what misunderstandings were overcome?

The statement papered over differences by recognizing that regulation is "first and foremost" a national responsibility, while at the same time demanding "intensified international cooperation" to oversee financial firms whose operations and problems cross national borders.

My Comment: "Papered Over" is right and not a single misunderstanding was overcome.

The leaders called for the creation of "supervisory colleges" for bank regulators around the world to better to coordinate oversight and share information about activities and risk-taking of international banks.

My Comment: They are going to create yet another college of useless bureaucrats that will not do a damn thing but receive outrageous pay for sharing information one can easily find on Bloomberg. Any information actually worth sharing will be hidden from public view just as it is now.

Capital standards should be raised, they said, particularly for banks' structured credit and securitization activities.

My Comment: This is a case of saying one thing and doing another as Compelling Banks To Lend At Bazooka Point and the Battle Over Bazooka Point Lending proves.

The leaders directed their finance ministers to work on recommendations for enhancing disclosure by investors and institutions, including hedge funds, of their financial conditions.

My Comment: Meanwhile Paulson and Bernanke are in a battle with Bloomberg because they are failing to disclose to investors exactly what they are doing with taxpayer money.

Debt-rating companies, which blessed many of the products that have since gone into default, should be registered, and oversight of their actions strengthened to ensure they provide unbiased information and avoid conflicts of interest.

My Comment: This is more useless nonsense. Exactly what good would it do to register Moody's, Fitch, and the S&P. The big three were blessed by the SEC and that is what the problem is. It's Time To Break Up The Credit Rating Cartel.

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http://globaleconomicanalysis.blogspot.com/2008/11/g-20-summit-blames-buyers-of-poison.html