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GlobalPost correspondent Michael Goldfarb is on the scene at the G20 summit. Here's what he's seeing so far.
LONDON — As the world's leaders meet here I've been observing events around town and jotting notes back to my editors in Boston — in other words, covering the summit in real time from the ground up. We'll be collecting these short hits here throughout the day, as well as posting them to my Reporter's Notebook.
The summit is over.
The headline is staggering: the G20 has committed itself to $1.1 trillion of stimulus for the global economy via increased resources to the IMF, and support for trade initiatives. But after the headline comes the Kremlinology, because the details have yet to be divulged and everything depends on interpretation.
British Prime Minister Gordon Brown, host of the event, faced the press alone to announce the agreement, so let's work through his speech:
He began by noting that there are no quick fixes, the hope is that this package will shorten the recession.
Interpretation: things aren't going to turn around until 2010 but be patient.
The first detail he mentioned was a reform of banking regulations. Hedge funds will be regulated for the first time and the shadow banking system will be exposed to sunlight. He also said credit rating agencies are to be regulated in future as well.
Interpretation: By mentioning this first he acknowledges France and Germany's requirement that there be no stimulus without serious reform.
No details on regulations and your correspondent did not get to ask his question, but it will be interesting to see if international regulations are passed by individual nations. Right now in the U.S. and U.K., public opinion would like nothing better than tighter regs but a year from now ...?
Next: Global approach to toxic assets — no need to interpret this. Look for the whole world to put toxic assets into the bad bank.
Then: Trebling the funding of the IMF to $750 billion, plus creating a special drawing right fund and $100 billion for multi-later development banks (did you know these things existed?)
But this funding is not happening overnight. It will take place over the next 18 months. "By the end of next year" was Brown's exact phrase ... but how many of the leaders attending the G20 will still be in office in 18 months? Brown himself may be gone.
In addition, all the money pledges to IMF means new governance of that body as well. Appointments to its senior management will be based solely on merit.
Interpretation: China will have more say in the running of IMF ... or does it? Japan pledged $100 billion to the fund, so did the E.U. China came up with $40 billion. Asked to comment by a Chinese reporter about a seat at the table, Brown said many countries had contributed to the IMF ... the implication was that all were entitled to consideration in the organization's management. In other words, given the opportunity to single out China for praise, he ducked.
For me the most interesting initiative involves the IMF selling some of the gold it holds to create a special fund for the world's poorest countries. These nations are so poor that they cannot afford to borrow money from the IMF at any interest rate. It was a specific proposal ... it will be very interesting to see how long it takes to get specifics on the other proposals.
Anyway, those are the benchmarks. Another summit will be held later in the year. Let's see how many of regulations are in place and whether the global economy is starting to turn over again.
We're all packed in to the drafty ExCel. It holds more than 10,000 usually but it is a ghost town right now with the heads of government behind many closed doors, and the 2,500 accredited journalists in two vast exhibition halls.
No spinning going on so the press conference due imminently will have real news for us.