The $1 Trillion Deal!

April 3, 2009

Gordon Brown would want us to believe that there has been a cash injection of $1 trillion into the IMF to help the world’s struggling economies. The headlines this morning are full of quotes from the leaders hailing this as a great step forward in the new world economic order. Brown is this morning basking in the glory of putting together a ‘global’ deal and he also has his support from Obama who hailed the outcome as ‘historic.’

But will this ‘deal’ do what it says on the tin and reverse the recession? I doubt it. As I mentioned yesterday, the G20 meeting has come 6 months too late. Most leaders of G20 nations have put measures in place to deal with their economies and will wait to see whether they work before doing anything else regardless of what they have signed up to.

And once the economists and other analysts have had time to look at the astronomical figures talked about at the G20, we will have a presented to us a completely new picture, for example, at least $250bn of the trade finance will come from existing programs of export guarantees in rich countries and isn’t new money. No doubt there’s much of this in this $1 trillion package. Fraser Nelson has written a typically excellent piece over at coffee house which is a must read.


Pakistan’s Economic Woes

November 17, 2008

Confirmation here that the IMF has agreed to loan Pakistan a sum worth £5.1 billion. Its economy is in a perilous condition and as I have previously mentioned the collapse of Pakistan’s economy would lead to disastrous consequences – and not only for Asia. Pakistan is a nuclear power and with the growing number of militants and Islamists actively undermining the rule of law and democracy, a further weakening of the economy could lead to more violence and further destabilisation of the country. Do read this weeks article in the spectator by Elliot Wilson who concludes that:

‘Fading hopes of a fiscal rescue rest on a financial injection from the IMF and World Bank in Washington — assuming, that is, that the US-centric institution feels like bailing out a country now cozying up with Beijing. The bleak situation is summed up by Farrukh Sabzwari, the head of Pakistan’s largest stock trading house, KASB Securities. ‘Everything that could have gone wrong has gone wrong, from currency reserves to skyrocketing energy prices to terrorism and the rising threat from the Taleban,’ he says. ‘There is a crisis of confidence in every part of the country.’