The G20 met last week, as you may have noticed in the news. I’ve been reading to see what they’ve put in place to ensure we don’t get a sequel to the credit crunch.
It begins by reaffirming commitment to preventing excessive risk, and maintaining ‘sustainable growth’, which they don’t appear to have noticed is an oxymoron. They ensure us that much has already been done to implement their strategy, and more must now follow. To keep up the momentum, point one is to call for “clear and identifiable progress in 2009 on delivering the following framework on corporate governance and compensation practices.”
Read it carefully, and it unravels on the wind. This is not a call for regulation, or even a call for a framework for regulation. It’s a call for progress towards the development of a framework. It’s three steps removed from anything remotely decisive.
It’s like saying “we’ve taken a bold and robust decision to make a move towards considering thinking about regulating the banks.” It’s a to-do list that begins with ‘take suggestions for things to add to a to-do list’.
All through the statement there are ‘frameworks’, ‘proposals’, ‘important principles’ – supervision and guidance rather than regulation. France and Germany came to the table demanding a cap on bankers’ bonuses. The US and Britain disagreed. The watered-down compromise simply requests that the Financial Stability Board “explore possible approaches” to the problem. The French have said they will push ahead and apply limits unilaterally. Depending on your politics, that’s either highly commendable, or the .
The G20 has essentially met and agreed to look busy while the financial world carries on as if the 2008 crash never happened. The money continues to be made, the regulation continues to stall, and beneath is all the underlying instabilities of our economics remain unanswered.
A bigger meeting of the G20 will take place in Pittsburgh later this month. Perhaps there’ll be something more concrete then.