Saturday, April 04, 2009

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.


Alex said...

Oborne is almost completely correct. The only thing that he gets wrong is that he thinks $250 billion is new money when in fact none of it is.

Read my blog from Thursady for a more detailed explanation:

The markets saw through this one Thursday because they follow the money. The brief Thursday price rises were all to do with a relaxation of US rules on mark to market accouting that allows the banks to lie about the current value of their assets.

The markets know that none of these national leaders actually has the authority to spend anything like this sort of money without getting approval from their national parliaments. You really think they can all turn up at a conference with a chequebook big enough to spend a fair proportion of a million million dollars?

Dream on.

Oldrightie said...

IMF due into the UK treasury soon. They may even walk away when the real mess is inspected. Then what? I've predicted before, Labour and Brown will fall when they default on Public Services' wage bill!

jon dee said...

I hope the Sundays home in on Brown's deception.

It needs exposure.

Conand said...


'none of these national leaders actually has the authority to spend anything like this sort of money without getting approval from their national parliaments.'

To be fair, The King of Saudi Arabia and Hu Jintao don't have that problem. I basically agree with you though.

Befuddled said...

CityAM had it more or less spot on in their Friday edition, where they had a similarly detailed breakdown of these phantom numbers on their 2nd page. Not sure if this is available online anywhere.

I am continually impressed with the quality of this free sheet - if only it had a wider audience!

Oliver Drew said...

@OldRightie - That's an interesting thought - It didn't occur to me that they wouldn't step in, though I expected the main requirement to be a severe cut in public spending (ala 1976).

What are the chances of them refusing aid? I find it hard to believe that we are so bad that we are worse than places they have already helped (though I understand our public finances are in exceptionally bad shape...looking forward to the budget!!)

Simon Gardner said...

“...exposing the G20 summit as a giant con trick. ”

This all sounds (from you and your posts passim) like the most enormous and bitter sour grapes.

jon dee said...

Assuming the report of "Brown's assignment for next G20 meeting; a blueprint for IMF reform" is true (The Independent) is he possibly planning his next two moves?

Firstly, in setting up the IMF as a "rapid reaction force", a UK request for funds will turn into a masterly management ploy by the guru himself.

Secondly, by taking on this assignment, apart from the vanity factor, he makes a Blairite career move to remain on the world stage after his Premiership collapses.

canvas said...

"Once the markets cotton on, who knows what the consequences may be."

oh, please. you pipped 'the market' to the post? haha! What a joke.

Tory doom and gloom. Grim reaper where art thou?! 'Do nothing' but damn those who try to help?

The Grim Reaper said...

Peter Oborne has become a brilliant columnist and journalist recently. However, there's one thing which continues to undermine him. He has repeatedly insisted he believes that Gordon Brown is a "fundamentally decent man". Until he admit that this isn't true, I shall continue to view his writing with a certain caution.

Canvas said "Grim reaper where art thou?!"

You rang? ;-)

canvas said...

spooky!! ;)

Dick the Prick said...

When did solidarity become a labour word? soz, just asking.

This economic play thing has to come to an end. Money's never been cheaper tho - I want Dave to walk into a room with a couple of options. This prism of 'cuts' is pissing me off - slapping would do, punching etc. Insane!

(funnny tho - not often economics runs politics, let's face it - we're all a bit chipper!)

Marian said...

New Labour are getting away with murder issuing numerous lying press statements every day such as those ref the G20 that are accepted and printed word for word without dissent or criticism in the dead tree press and the taxpayers BBC.

What have Dave Cameron and the Tories to say about this? - ABSOLUTELY NOTHING!

Bond007 said...


What are you gibbering on about?

I think I have a fairly decent command of the English language, but I never seem to understand what you talk about.

Are you ill?

pol-e-tics said...

I have Fraser Nelson on Thursday evening recording the same analysis as Oborne. There was probably one mole at G20 issuing the truth.

mr bean said...

Simon Gardner said...

This all sounds (from you and your posts passim) like the most enormous and bitter sour grapes.

With a face like yours, you must eat them every day.

W12 said...

I smell the whiff of tory fear

golden_balls said...

it didn't take long for the doom mongers to pipe up.

rob's uncle said...

Who or what is 'Simon Gardner'?

CherryPie said...

It always was going to be a political statement. The agenda has been set!

Andrew Cooper said...

'...will gravely damage the esteem in which politicians are held...'


Simon Gardner said...

Isn’t increasing confidence the main point of any conjuring trick to bring the world out of recession - something Tories clearly don’t want to happen - at least not yet?

Twig said...

Daniel Hannan puts it rather well, how can you inject a trillion bucks into the world economy - where is it coming from if not the world economy?

Daniel Hannan - Lateline, 2nd April 2009

Chris Paul said...

Whether he's correct or not ... he's not essentially honest anyway ... can we get with the dirty realism when it comes to pictographs of the great man PO? That one seems 20 years out of date. Hard living has taken its toll.

And ... Daniel Hannan doesn't understand what "money" really is by the look of it. The electorate should be asked to choose between Hannan and Brown. Because - unlike Cam - Han is expressing Cam's right wing politics, economics and philosophy. And the people won't choose Han.

He's been warning the USA off a proper health service I hear ... oh dear.

The poli's can go to the G20 and agree all this stuff because it's been in the works for months and because they are agreeing within a range their people accept and often to things that others are funding.

Dick the Prick may be on to something when it comes to 'Solidarity'. That can fall well short of what's needed.

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