What Will the G20 Summit Really Accomplish?

Hopefully more than political grandstanding will be accomplished at next week's upcoming G20 Summit. The issues could not be more serious when the world’s most powerful leaders meet in London next week. Millions of jobs have already vanished and millions more could go as the global economy faces its biggest downturn since the Great Depression. Fear has gripped virtually everyone country and every citizen of the planet. If the summit is not successful then obviously there will be a greater sense of drift and crisis.

Yet there those, whose great hope that the summit will bring of the beginning of the end of the crisis as well hope that the world leaders were able to galvanize a new direction and a new authority.

Over the last months we have witnessed demonstrations throughout the world regarding the economy ( France,Latvia, Russia & too many more to count) , more so there will be massive protests against the G20 summit. Tens of thousands of people marched across central London just Saturday to demand jobs, economic justice and environmental accountability, kicking off six days of protest and action planned in the run-up to the G20 summit next week.

It is not just Anarchists and others which have promised violence, there are common people who are simply fed up. With the deepening global recession there is growing public anger over bankers’ pay and the painful fallout from the crisis. Even the peaceful protesters are pushing for a more transparent and democratic economic recovery plan. There have been statements such as ” Storm the banks” and “Hang a Banker”.

The goal is revive the world economy. There are discussion to be had regarding extra resources for the International Monetary Fund and for credit to get trade flowing more easily. The hopes of the world leaders are to approve multi-billion ( trillion) dollar trade finance package, make more pledges to avoid protectionism and promise tighter control of tax havens.

The question is will anything really get accomplished? The rhetorical commitments might not be worth the paper they will be written on. According to preparatory meetings for the summit, there have revealed sharp divisions over the essentials needed to stop the financial implosions and fix the financial system that has all but broken down since August 2007. The toxic assets of banks, insurance companies and even hedge funds must be addressed or more so... disposed of. This issue needs to be hard pressed.

Personally I find it very hard to believe the G20 Summit can come to any joint agreement. Not being negative I believe in the statement ” Less Government is best Government”.

What do you think?

Comments

[kelm:]

It is unlikely the summit will come up with any great new initiative that gives the markets hope or delivers a better turn-around or bailout. However, if the divisions break into the open then there may be some market turns that we see. For example, China and the BRICs are looking for the US to get their act together, straighten out their markets and not devalue their investments in the US. If China sees no traction on those issues and no traction on the BRIC proposal for a supra-national reserve currency (even though establishing it will take some years) they may well start publicly backing away from our bonds. If the divisions between Europe and the US on stimulus and especially the inflation implications are not smoothed over then the markets could react badly.

In the last few days we have seen the US dollar sell-off hard and then pause and start back up again. This looks odd. Frankly it looks like the market is flailing and unsure of direction. The G20 could be the event that provides direction and that direction most likely could be down.

So, it is not what they will solve that is important but what they will cause that investors need to be concerned about.

Mar 30 09:41 AM

[Andy Abraham:]

Very well put... I especially like the line... it is not what they will solve... but what they will cause investors to be concerned about.

Mar 30 04:51 PM