It was classic Brown and vintage Mandelson. The TV pictures were great, the endorsements of other leaders fulsome, but there is little chance the UK government will do what it says.
It was the biggest cover story for ailing public finances in our history. The one certainty is we are a bit more in debt , all of us, as a result, thanks to the large bill for the summit. Every penny cost of what they ate and of the police overtime is borrowed. And now we have to stump up more borrowed money for the IMF.
Let’s just look at the promises and the likely results:
1. “We will put in place credible exit stategies for long term fiscal sustainability and price stability”. When? I presume that does not apply to the UK, which is going in for a borrowing binge and more inflation. They can’t even tell me if there is any prudential limit to their borrowing!
2. “We will build a stronger more globally consistent supervisory and regulatory structure”. When? How will that work? Is a global regulator about to tell the UK government it is borrowing too much and must stop? I doubt it. Is a global regulator about to force RBS to get into sensible financial shape? Don’t hold your breath, of course not.
3. They plan a “Financial Stability Board to warn of macroeconomic and financial risks”. They need one today to tell the UK government it is is risking too much by buying so many bad banks and putting them onto the taxpayer. I don’t expect it to happen soon.
4. They will take account of “macro prudential risks”. The biggest currently is the artificial government bond bubble being created by both the US and UK authorities. Why is no one in authority warning of this? Why is a government bond asset bubble a good thing, whereas a private sector property asset bubble has to be punctured by monetary action? (Rhetorical question!)
5. They will extend regulation to “systematically important hedge funds”. The only one which matters now is the enormous hedge fund the US authorities are setting up to buy toxic debt with massive gearing. They are unlikely to stop that.
6. “Tough new principles on pay and compensation”. How does that work? I don’t suppose it will get British taxpayers our money back from Fred’s pension. They will still go on paying six figure salaries and mega bonuses to employees of loss making nationalised banks. It’s all just words, playing to the gallery.
7. They will “prevent excessive leverage”. Has anyone told Mr Darling? I bet they don’t stop him leveraging the British taxpayer to new heights of indebtedness.
8. They have demanded much more transparency. Don’t expect an honest UK government balance sheet before an election, and don’t expect them to confess the full extent of their off balance sheet liabilities or of their pensions black holes.