It’s interesting that Messers Gordon Brown & Co., have managed to secure trillions of dollars in global financial aid at the G20 meeting in London’s Docklands. The last time I was there I ended up giving a beggar a tenner… Wait a minute, I think that was Mr Brown, (Well, it was a sorry looking down and out!). I can’t help wondering what will happen after the banks spend the cash fortuitously on Ferraris and non-existent stocks and hedge funds – I expect Mr Obama & Co., will splash out zillions next time – aha! That may well be the reason we have soldiers on foreign soil – a simple case of you scratch my back and I’ll pay your debts; or something like that… And as for the starving prisoners of Zimbabwe, they can go whistle – at least whilst they still have the breath to do so!
OK, less of the sarcasm, but you see my point – no matter how much money the world leaders put into the global economy there will always be losers – just ask Bernard Madoff!
As far as the G20 debate went, markets rallied at the news of $1.1 trillion dollars being pumped into a collapsing worldwide economy. And a somewhat smug Mr Brown beamed, “This is the day that the world came together to fight back against the global recession.”
The IMF were informed that there would be a tripling of resources available to them, amounting to $750bn; and in order to boost foreign exchange reserves around the world, the IMF are to create their own currency made up of Sterling, Yen, Euros and Dollars in the form of Special Drawing Rights. I should point out that much of what was said regarding IMF funding has only been agreed in principle.
Anyway, the FTSE closed 4.3% higher; New York’s Dow finished trading 2.8% higher; Frankfurt’s Dax leapt 6% at close of play and the Paris Cac 40 looked good after closing 5.4% higher.
Now this all looks fine and dandy but take a closer look and maybe you’ll see a different picture emerge.
In Rome, during the G7 meeting (13-14 February), IMF big wig Dominique Strauss Khan stated that he hoped to double the fund’s lendable resources to $500bn – this is money which supposedly was discussed yesterday and forms part of the G20 bailout.
In January, Japan made it known that they would be contributing $100bn to the fund.
So it came to pass that the people suddenly realised that much of what was determined to be ground breaking agreements had in fact been played out some months before. That is except for some good news from China who pledged some $40bn to the fund – didn’t they used to be a developing nation?
It does appear that the politicians are just going over old ground.
A moment of caution bekons for the wise man can act the fool, but the fool cannot act the wise man… And the rest of us will be well advised to treat the debate with just a little pinch of salt.