Oborne: The Giant G20 Con Trick Is Unravelling

Peter Oborne has a brilliant column in the Mail today, exposing the G20 summit as a giant con trick. Here are a few extracts...

The biggest falsehood concerns the belief that the G20 nations have pioneered a $5trillion spending boost to global economies. Although Gordon Brown and President Obama had originally hoped to get world leaders to agree to such a 'fiscal stimulus', they actually failed to secure a single penny of extra government spending anywhere in the world.

Rather than admit defeat, however, they pretended they had won. So they invented the $5trillion figure. They arrived at the number by adding up the extra government borrowing expected to take place in G20 economies between 2008 (when the recession began) and 2010 (when world leaders hope it will end). It is a completely arbitrary figure.

The next fabrication concerns the claim that G20 leaders agreed a 'programme of support to restore credit, growth and jobs in the world economy' - worth some $1.1trillion. It was this headline-grabbing figure which caught everyone's imagination - yet sadly, it too is mainly a bogus number because much of the money had already been pledged in recent months.

Almost half of that $1.1trillion - some $500billion - takes the form of extra money for the International Monetary Fund to bail out countries that run into trouble during the economic downturn.

Although Gordon Brown brazenly asserted that this was new money, this is simply not true. Japan, for example, gave $100billion to the IMF last November, while the EU offered the same sum earlier this year. Admittedly, China did agree an extra $40billion last week. However, this contribution is very much less than Gordon Brown had hoped - and, most worryingly, indications emerged after the summit closed late on Thursday that the Chinese were having second thoughts.

Next, Gordon Brown claimed that some $250billion has been raised to regenerate world trade with the help of extra finance. Once again, his claim is an invention. Indeed, the small print of the G20 communique suggests only $3-4billion of new money has been committed, and the $250billion figure is only a vague pledge.

I fear that the more we look beneath the headlines of the London summit, the more its achievements look threadbare. I would estimate that no more than $250billion of the much vaunted $1.1trillion is genuinely new money. The true story is that Gordon Brown seems to have corralled fellow leaders into perpetrating a gigantic collective fraud on world public opinion.

Amid all the hoopla of Thursday's triumphant communique, it must be remembered that Gordon Brown has a long and disgraceful track record of this kind of bogus financial announcement. When he was Chancellor, many of his Budgets turned out to be contain fabrications.

This week's hubristic G20 communique reminds me vividly of Brown's notorious Comprehensive Spending Review of July 1998. Back then, Gordon Brown declared: 'On the 50th anniversary of the NHS, the Government will now make the biggest ever investment in its future.'

This announcement was given a euphoric reception by the media - only for it to emerge some time later that there was no extra spending and that the Chancellor had merely made the figures look huge by double and treble counting.

The problem with this kind of duplicity is that you always get caught out in the end. So will be the case with the G20 summit. Gordon Brown has achieved brilliant headlines in the short term, and it is likely that Labour's rating in the polls will soon start to rise as a result.

This week Gordon Brown and his fellow world leaders played cynically with the hopes and fears of these desperate people. They made promises they can't keep, made claims that they can never substantiate and triggered hopes that undoubtedly will soon be dashed.

The Prime Minister has won short-term plaudits, but over long haul his cheap and dishonest tactics will gravely damage the esteem in which politicians are held, and do great damage to his reputation.

Oborne's right. The con trick is unravelling. And unravelling fast. Once the markets cotton on, who knows what the consequences may be. Read his entire article HERE.