A columnist has pronounced that the Empire is striking back. Despite media gloom about the failure-in-the-making of the upcoming G20 meeting, Anatole Kaletsky has reported on a leaked G20 communique as follows in the (London) Times Online:
All for one: summiteers are united in a time of crisis
Anatole Kaletsky: Economic View
Far from being doomed to failure, as widely reported in Britain, this week's G20 summit appears to be assured of success. Many of the substantive decisions have already been agreed and Thursday's three-hour summit will be less of a negotiating session than a ceremonial endorsement of action already under way. According to people closely involved in the preparations, agreement has been reached on all the main issues on the agenda. These can be divided into four: saving the world economy from collapse with fiscal and monetary stimulus; saving banks from collapse with government financial support; saving vulnerable countries from collapse with help from the International Monetary Fund; and saving the global financial system from another crisis after the present one is past. . .
In addition, the G20 countries have been unexpectedly successful in co-ordinating their interest rate reductions and monetary stimulus measures. Rates have been slashed in almost all developed countries - and after the further half-point cut that the European Central Bank is expected to announce on the day of the London summit, all of the G7 advanced economies in the world will have adopted a near-zero interest rate regime. Such a policy would have been inconceivable in the eurozone and even in Britain a few months ago. Even harder to imagine was that the monetary authorities would co-ordinate their actions as closely as they have, with the British, US, Swiss and Japanese central banks all announcing within a space of three weeks that they would start “printing money” to allow their governments to finance higher borrowing at zero cost.
DoctoRx here. Some of us will be a mite suspicious of a columnist who breathlessly applauds governments printing money so that they can borrow at a zero interest rate.
Certainly the global stock markets, which have been selling off hard since Asia opened today, do not share Mr. Kaletsky's view that all this "stimulus" will stimulate much. But we can at least hope that his optimism is well-placed.