The G20 meeting this week is another chance for leaders around the world to publicly lash out at eachother for the others’ mistakes. While Gordon Brown is confident that the meeting can result in a revitalized economy I am going to have to be the party pooper here. What happens when you get 20 egomaniacal, opinionated and divisive leaders in a room? Mostly finger pointing and political grandstanding. Any sort of relevant international economic agreements would certainly take longer than a few hours. Remember, the Bretton Woods agreement took 22 days….
This meeting could actually have some currency implications, however. Don’t be surprised if we see more out of the meeting on the dollar as the reserve currency. I think China and Russia will take this stage to voice their opinion.
Ambrose Evans-Pritchard has a nice piece in the Telegraph over the weekend on the same topic.
The risk is that this G20 becomes the defining moment when a disgusted American political class – sorely provoked – turns its back on the open trading system. The US alone has the strategic depth to clear its own path, and might find eager partners in a “pro-growth bloc” – much as Britain led a reflation bloc behind Imperial Preference in the early 1930s. As the world’s top exporters, Germany and China should take great care to restrain their body language this week.
Well done, Mr Brown, for trying to hold the world together. But if the summit degenerates into a shouting match between mercantilist creditors and prostrate debtors, it may serve only to frighten markets and tip us into the next – more violent – downward leg of this slump.
Personally, I don’t expect much to come from this meeting other than a lot of posturing and maybe some head butting. But who knows – maybe the world leaders will surprise us all. But don’t bet on it.