We’ve all heard and seen the G20 protests and the police response on media and social networks, but very little has been paid attention to the actual summit itself. Below is the 19-page declaration for world leaders to follow up on in the months and years following the summit.
For the most part it’s very dry stuff, but if I could summarize it all, I would say that it calls for targeted stimulus spending, deficit reduction, and greater lending. I find this particularly confusing because overextending credit is seen as partially responsible for the financial meltdown.
Perhaps ironically, the G20 leaders concluded that the IMF and World Bank recommendations and reforms would lead to a medium term global output of almost $4 trillion more, with an increase in tens of millions of jobs, lifting people out of poverty, and reducing fiscal imbalances across the globe. Why is that ironic? Because it emphasizes jobs, growth, and poverty reduction, a primary criticism of G20 protesters.
Of course, I don’t necessarily blame people for being skeptical that increased lending and spending will accomplish these stated goals.
The declaration praised international financial institutions for their global response to the financial and economic crisis, by mobilizing financing, including $750 billion by the IMF and $235 billion by the Multilateral Development Banks. Here is their chart, on page 16, outlining the pre and post-crisis annual lending rates:
Just slap more credit on that credit card! You’ll never have to pay it off. Just continue to make the minimum payment from cradle to grave.
So much for encouraging savings, restraint, and cutting taxes. The G20 called for more wealthy countries to help poorer countries by getting consumers to buy products made overseas, and thereby supporting those economies.
Which, I guess, means it’s time to go out and buy a television.
The greatest criticism of Canadian Banks pre foreign meltdown was that our banks were not entrepreneurial friendly when it came to start up loans for business. It was claimed that they inhibited Canadian ownership and growth of those potentially successful businesses.
Oddly the few start ups and IPO’s by Canadians that I personally know, who had to turn to the U.S. for funding, all failed their business plan. The entrepreneurs themselves made a bundle on the gullibility of their American or overseas financiers if they sold their start up stake soon enough. It cost the foreign gamblers a lot of money for a pig in a poke.
Perhaps it is a good thing that our banks cannot run amok with their depositor’s money.