The Prime Minister claimed to have struck a "historic" deal to end the global recession as he unveiled plans to plough more than $1 trillion into the world economy.
"This is the day that the world came together to fight back against the global recession," he said. "Not with words but with a plan for global recovery and reform."
Barack Obama, the US President, hailed the deal as a "turning point" for the global economy which would put it on the path to recovery.
Iain Martin sums up neatly all that is wrong with these grandiose claims:
... it's not the kind of stimulus which Brown has been wandering the world demanding - ie a further co-ordinated boost, involving increased spending or tax cuts by the major economies, to get demand going.
Instead there is $1 trillion for funding the IMF and other related trade business.
It involves: $500 billion funding of increased funding for the IMF, $250 billion of increased drawing rights for the IMF and a new trade finance package amounting to $200 billion. Is this all new money? Don't be silly. Is it being spent now? No. Where's it coming from? All will become clear when the deal is picked apart in the coming days, like a Gordon Brown budget.
Fraser Nelson is even more specific about the lies:
1) “Making available an extra $1 trillion”. Ahh, those Brown verbal tricks. What does “make available” mean? Is it guarantees, promises, statement of intent? Real spending? Not a penny of cold hard cash has been pledged by anyone. The sum is concocted by taking the IMF’s pre-existing $500bn target for its bailout fund (a target it still hasn’t met), adding another $250bn to the target. And, then, we add a $250bn fund which the IMF would create by printing its own special money.
2) IMF Funds “treble to $750 billion”. Very fishy. We heard from the IMF on Valentine’s Day that it wanted double its rescue fund to $500 billion – then it said it wanted even more. So where has the extra $250bn come from? Who has stumped it up? No one, it appears - it's just a target. And then the IMF will print its own money, in its own pretend “currency” (called Special Drawing Rights or SDR), and then allow its members to swap this for real money. The idea was once rejected by US Congress, but Obama thinks he won’t need congressional approval now the limit is kept to $250bn. But to be clear: no one has stumped up any new cash. It’s a little quantitative easing for the world – aimed, I suspect, at Eastern Europe. China will be happy as it wants SDRs to replaced the US dollar as a reserve currency.
If I were American, I'd be shitting myself, because one of the most important things for the US economy and US influence is precisely that the dollar is the main reserve currency. If that goes, the yanks will find it much easier to get themselves into an economic backwater and will lose an awful lot of their international prowess. Obama has really fucked the US badly here, much like Tony did to us with the EU. And so quickly, too!
3) Old pledges dressed as new. Brown gave a breakdown of who had stumped up: Japan, he said, contributed $100bn to the IMF. Yes it did: in January. The EU has agreed to contribute $100bn, he added. We know: this was announced at the last EU summit. Brown said China has chipped in just $40bn, and this appears to be new. But given the size of Beijing’s $2 trillion piggy bank, that is a rather derisory amount (and won’t buy it a seat on the IMF board). The Brazilians had thought China was good for $100bn.
4) Double counting. The Dear Leader has good news. “We are going to act decisively to kickstart international trade” But how? “We will ensure availability of at least $250 billion over the next two years." Note that “over two years” means that this is $125bn, double counted. Why not make it four years, and whack up an extra $1 trillion? It’s just a joke. Nor is this real cash – it comes from trade insurance schemes to protect importers and exporters. It’s not money being spent by governments. Pure Brown-style fiscal conjuring.
5) Tax havens. “We have agreed there will be an end to tax havens that do not transfer secrecy on request.” This is a piggybacking on the long-running OECD campaign against tax havens – this is not a G20 initiative. Brown solemnly announced the OECD would publish a list of non-compliant nations, as if this were a breakthrough. It has been doing this for the last year – here is a list of the most recent such announcements.
6) “The Washington consensus is over”. A curious aside from Brown – and a dog whistle to the Soros/Naomi Klein school of economics. The so-called “Washington Consensus” doesn’t refer to any formal economic protocol. It is used by the likes of Soros to denote what he calls ‘free market fundamentalism’. The academic who coined the term talks about its abuse here.
7) Ban on new trade barriers. Yeah, right. They agreed this in November and, since then, 17 of the 20 countries have increased trade barriers.
8) Brown’s gold advice: “I’ve been proposing this to the IMF for ten years”. He was certainly proposing in 1999 that the IMF sold gold – then priced at $278 an ounce. Luckily, the IMF ignored Brown and gold is now $890 an ounce. Shame he didn’t take the IMF’s advice when it was warning his borrowing would end in tears.
9) “For the first time, we have come together to set principles for the global finance system.” As far as I can determine, all they have agreed is that banks and hedge funds should be regulated – but don’t say how. Ergo, it’s meaningless.
10) No fiscal stimulus. It’s mentioned twice in the 3,080 word document – there wasn’t one. Both Brown and Obama wanted the world to contribute new money. They failed. There was none of the big agreement that Brown led us to believe. There was a split, as evidenced by the Franco-German minority report yesterday. But still it’s a big summit, a deal was done (albeit a fairly nebulous one) and the threatre was fine.
So, a load of flummery, misdirection and reheating old news. Just like every fucking thing this government has ever done. In itself, it doesn't worry me that Gorgon is doing it, he doesn't know how to do any other fucking thing, indeed, he doesn't know how to do anything, he can only talk shit.
But what worries me is that Obama and all the rest of them are sliding down the same slippery ZNL slope of flummery, misdirection and reheating. It really doesn't bode well for the rest of the world and even I wasn't expecting Obama to start with the Blairite "will spend billions for mere soundbites and 'message-sending'" politics quite so quickly. (Actually, that's a lie: governments either do or they talk and spend. The only way Obama will ever do anything would be much like New Labour: purely by accident and almost always with unintended negative consequences.)
Update: TDM says so much in so few words.
Update 2: Fraser Nelson is on fire today: "Baldrick has a cunning plan."