The G20 summit and our hour of redemption

The agreement that followed the G20 summit of Thursday April 2 is already being feted as historical but on reflection it’s hard to see what the $1.1 trillion boost to the world economy will achieve if it will achieve anything.

After all we’ve been waiting for Gordon Brown to put the UK banking systems to rights every since the fall of Northern Rock nearly two years ago and with the problems at RBS and HBOS the situation has got worse rather than better.

True, the problems facing the UK finance industry shouldn’t be under estimated but they are puny in the context of the global economy so what hope is there of the G20 measures working even with Obama on our PM’s side?

Of course all that extra cash should prevent the world economy sliding into an even deeper recession but it won’t do much to help the economic crisis closer to home.

In that context Alistair Darling’s Budget on April 22 is possibly more important, though given our present state of indebtedness he won’t have any room for manoeuvre.

Intriguingly, the communiqué following the G20 summit was almost as complicated and opaque as those mortgage market derivatives that fooled so many company boards and regulators in the US and Europe and led to the mountain of toxic assets that have brought our banking system to its knees.

Proof of that was provided by the mad media scramble after the event to make sense of all the big numbers and like so many non-executive directors before them, few journalists or economist admitted that the deal sounded too good to be true.

And to compound the problem the G20 leaders had the nerve to claim that their measures to support their banks were enhancing transparency and shrinking that toxic mountain when the very opposite is true but transparency is not a hall mark of governments and it certainly has never impacted on the PM’s budgets when he was chancellor.

All of which bring us to global regulation and the prospect of as Nicholas Sarkozy puts it: “turning the page on the Anglo Saxon financial model”. True, tighter controls on investment and hedge funds can’t be bad and there’s a real need to throw a sharp light on the nether world of global finance where the toxic funds were spawned and proliferated.

Even the creation of a financial stability board to work with the International Monetary Fund to identify risks developing in the financial system might be a good thing but if you’re fearful of what this Brave New World may bring about remember that it is human nature to turn contrite and ethical in our hour of darkness and to be a tad forgetful about our good intentions when life gets better again.