G-20 in self-congratulatory mood

Consumer demand, Economic growth, Financial Events, Leverage

G-20.jpgWhen the G-20 met last April, it issued a Communiqué containing just 688 words. Its Pittsburgh meeting over the weekend produced a Leader’s Statement containing 9292 words.

“More” does generally not mean “better” when it comes to writing action plans. Instead, the document simply seems to be a catch-all of comments from the 20 leaders. It still ducks most of the key issues, although finance ministers will press on with their work to strengthen financial regulation.

The blog is also concerned by the G-20’s assumption that the current stimulus/inventory “bounce” will now lead straight to a full recovery for the global economy. Using the phrase “It worked” in the Statement, to describe the impact of recent measures, seems far too optimistic.

Coincidentally, another view is provided by Mohamed El-Erian, CEO of Pimco, the world’s largest bond fund. He suggests that its “the absolute levels of income, debt, wealth and unemployment, not just the rates of change, are what matters today“. Or, in the blunt view of the Governor of the Bank of England, “It’s the level, stupid – its not the growth rates“.

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