Take a good look around you. What do you see? I see corpses. Economic corpses. From America to England, Europe to Asia, the world is strewn by collapsed or collapsing economies under the weight of the worst financial crisis since the 1930s Great Depression. The G20 so-called summit in London ended two weeks ago. Stock markets roared again. Everything looks like becoming hunky-dory again.

Nothing doing. The only things that looks like being back, or continuing, is more hype, and more hubris. That’s all politicians are good for: putting out the spin and the spiel. Newly minted US president Barack ‘Barmy’ Obama included. The G20 communiqué, like all communiqués, are top heavy with rhetoric, barren for details or specifics. It’s the old story. For all his oratorical skills, this time Obama’s tongue failed to wag.

Obama was flummoxed by a question at the final G20 press conference, when he appeared at the podium with Britain’s odious prime minister Gordon ‘Girdy’ Brown. They were asked who’s to blame for the global crisis. Brown, true to form, deferred the question to Obama. And Obama hadn’t a clue, at least not without help from his economic dream team or a teleprompter.

You’d be forgiven for thinking that the twenty of the world’s most advanced nations, plus a slew of global economic juggernaut pretenders — viz China, India, Russia, Argentina and Brazil — finally put their heads together, instead of colliding them, and came up with the ultimate panacea to save the world from the potential of a 1930s-style catastrophe. Meanwhile the world’s media went insane with coverage of how the Obamas swooned old London town. Who cares?

So, what of the panacea? In the end the G20 countries and ‘friends’ pledged to splurge $US1.1 trillion to save the world — and their own political necks. We’ll see if this will work. The world’s stock markets liked the G20 resolve. They would. But we know the idiocy of pop psychology in a herd-like desperate-for-hope state. It’s an infectious but still irrational exuberance.

Unclear, uncertain pledges

The markets liked the G20’s fiscal policy stance primarily because nothing else was available. At least nothing that’s remotely credible that would save the world economy, let alone national economies. Yet the Europeans are moaning. Let’s be clear: The euro zone economies are in far worse condition than the US economy. They’re hurting badly. Here’s an added irony: the European Central Bank has no answers to Europe’s problems. The ECB’s monetary policy stance looks as dire as Britain’s and America’s.

barack obama 031106 speaking Now, quickly recall Girdy’s famous faux paux in the British parliament when he said he had the policies to “save the world” (when he meant to say the British economy). You’d have to laugh at poor Girdy: he must have thought — once — that he was the messiah to all the world’s economic woes. Now he’s looking distinctly like an economic fraud, bankrupt of ideas to save his own thick political hide.

Because if you look closely at Brown’s speech at the end of the G20 summit - the so-called “clear and certain … six pledges” doctrine, and whilst announcing the end of the Washington Consensus world order, it amounted to only unclear and uncertain pledges. Which is why France’s president Nicholas Sarkozy and Germany’s chancellor Angela Merkel were cozying up to one another to head off global economic policy domination by the Anglophone states, albeit in another guise. And it would’ve been music to Chinese president Hu ‘Who?’ Jintao’s ears, for his mission is to bury US dollar domination of world trade.

So, those pledges: (1) Reform the regulations governing the global financial system (with greater notoriety of the usual suspects: hedge funds). But remember that this same tune was played ever so loudly and exuberantly amidst the Asian financial crisis. Nothing happened. It was all baloney. Because here are now at another financial crisis that is hammering real economies. Also, to name and shame shoddy and shady tax havens (there’s one near you), whilst cracking down on greedy bankers and CEOs. Big deal. They’ll come back once we return to ‘prosperity’ and take our eyes off the ball.

(2) Give the International Monetary Fund an extra $750 billion to lend to distressed national economies. Fine. But it mustn’t happen without reforming the IMF first, especially its draconian and dumb structural adjustment policies that have historically only worsened developing economies. Recall the treatment dished out to Indonesia and South Korea during the Asian crisis. Structural adjustment almost buried these economies, but I defy the IMF to claim that its structural adjustment brought them back to health. They came back, and relatively quickly, because of competitive currency devaluations and resurgent aggregate demand in their biggest export market, the United States.

(3) To clean up “toxic assets” in the world’s banking system by buying up these assets themselves. But what did the wünder-boy, U.S. treasury secretary Tim Geithner, do: Get U.S. taxpayers to underwrite the toxic assets that’ll be bought by private investors, and if the toxic assets’ toxicity worsens, it’s the taxpayers who’ll face tax hikes sooner rather than later to pay for Obama and Geithener’s policy blunders.

It’s entirely reasonable for loud calls to the G20 states to temporarily nationalize these banks to detox their assets (whilst toxicating incompetent bankers and CEOs). Banks need to be hauled from their liquidity trap. They must begin lending again. Only government can do this now by re-regulating markets. It’s not going to happen because nobody is racing to buy the toxic assets. Here’s an indicator: Look at the U.S.’s and Britain’s long bonds sale: the market is full of bears.

Optimism look misplaced

(4) Girdy says the G20 leaders and partners in crime will “do what it takes” to boost world growth. We’ve ventured from Ronald Reagan’s “voodoo economics” to Gordon Brown’s and Barack Obama’s “cuckoo economics”. When the World Bank, the IMF, the OECD and the Asian Development Bank are slashing international growth forecast, Girdy and Barmy’s are optimism look misplaced, at the very least, and misleading, at the very most, because they haven’t defined clearly and certainly how this will be achieved.

gordon brown If their idea is that the aggregation of national stimulus packages will produce national growth that will, in turn, aggregate into international growth, they could be waiting for quite a while. There are no guarantees fiscal policies of this magnitude will work, given that even they have not fully understood but in fact have miscalculated the depth of the global recession. What’s more, private spending is (almost) dead. So don’t be surprised if the recession deepens and continues into 2010.

But if their idea is that, in addition to the second pledge, that an additional $US500 billion will be given to the IMF to oversee the printing of new money — and special drawing rights swaps of up to $US250 billion, plus an additional $US100 billion for multilateral development banks (viz. the World Bank, which works hand-in-glove with the IMF) to lend to developing economies — will spur international growth, two issues emerge.

One: who, and how much, will citizens pay for printing money down the track, by way of high inflation rates, rising interest rates and mounting debt? Two, when will the G20 charge the World Trade Organization to oversee real changes to the old global trading order that continues to disadvantage the developing and underdeveloped economies even now?

And so to Girdy and Barmy’s pledges (5) and (6): A new $US250 billion trade credit and $US50 billion in aid through the Millennium Development Goals, respectively. Taking (6) first: Just how many times in the last nine years have we heard pronouncements of the MDGs as the western world and Asia, riding of waves of new prosperity born of speculative asset bubbles and consumerist mania, went berserk with their debt binging? They spent like there was no tomorrow. This is hypocrisy of the worst kind. And we’ve come to expect this from politicians.

As for pledge (5): Exactly what are the developing nations going to trade, where and for how much when the WTO can’t get past the torpid Doha Round, without any concrete commitments, let alone political will from the industrialized and industrializing world to genuine free trade, and moreover, that the developing and underdeveloped economies’ biggest export markets in the west are now on their knees?