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  1. Wealth
April 2, 2009

G20 liveblog

By Spear's

Read Josh Spero’s liveblog from the G20 Summit here. Updated all day. Also check out his Twitter at

Press conference over, back at my desk with the American press corps (so much more interesting and open than the Brits), this is Josh Spero from the G20 Summit over and out.

America as a cause of the economic crisis

“I tihnk my colleagues in the G20 were extraordinarily gracious about my participation. There were occasional comments, usually wedged into some other topic, that indicated they thought this started in America or Wall Street.

“Perhaps what helped was my willingness to acknowledge that some of this contagion started on Wall Street. We had a number of firms that took wild and unjustified risks. We had regulators that were asleep at the swtich and it has taken an enormous toll on the US economy and spread to the world economy.”

[This is what justifies greater international regulation.]

Obama just pronounced ‘nuclear’ properly. Truly the Bush era is over.

Diminished authority?

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“The loss of authority was traced to very specific decisions that the previous administration had made. That wasn’t my opinion but the opinion of many around the world.

“You’re seeing people more hopeful about American leadership. We remain the largest economy in the world, the most powerful military in the world, our production of culture, our politics, our media – I didn’t mean to say that with such scorn, guys – still has great influence. I don’t buy into the notion that America can’t lead in the world.

[People keep asking about diminished American authority with the decline of the Washington consensus and the rise of China. Obama is taking pains to stress that America has the potential to rise or decline.]

Salaries and bonuses:

“The best practice is that there is some accountability. Too many corporations have operated for too long like this: a CEO selects his board, the board in a cosy relationship hires an executive compensation firm which surprsiingly tends to think that it’s necessary to retain the best talent to pay people 20 or 30 million dollars a year and we get into the kinds of habits and practices that have not served shareholders well, distory the decision-making of many CEOs.”

“We don’t want the state dictating salaries. In America people don’t resent the rich, they want to be rich.”

I came here with the intention of listening and learning but also providing American leadership.”

“Each country has its own quirks and issues that a leader might decide are non-negotiable for them. We tried to accommodate those issues in a way that did not hamper the effectiveness of the overall document.”

America is a critical actor on the world stage and we don’t need to be embarrassed about that.”

“We exercise our leadership best when we are listening, when we recognise that the world is a complicated place and we are going to have a partnership with other countries, when we lead by example, when we show some element of humility and recognise that we may not always have the best answer but we can always encourage the best answer.”

President Obama:

“By any measure the London summit was historic. The international finance systen is nearly frozen.

Behind these facts is the pain and uncertainty that so many people are facing. So many have lost so muich. We owe it to our citizens to act and to act quickly.

“The whole world has been touched by this devastating downturn and today the world’s leaders have responded with an unprecedented set of co-ordinated actions.
Today we’ve learned the lessons of history.”

Most important actions:
> Committed to growth and job creation
> US cleaning up legacy (i.e. toxic) assets

“We must put an end to the bubble and bust economy that has stood in the way of sustained growth.”

“We’re extending supervision to all systemically important institutions, markets and products, including hedge funds.

We’re protecting those who don’t have a voice at the G20. I intend to work with Congress to give $448m to nations in Africa and Latin America. This is not charity – these are future markets.

“I’m pleased that the G20 has agreed to meet again this fall. We’re going to have to be pro-active in shaping progress.”

Other meetings with Russia, China, India, Saudi Arabia, South Korea.

“We also discussed co-ordinated issues on a range of issues” including North Korean missiles, Afghanistan.

The challenges of the twenty-first century can’t be met without collective action. I’m committed to forging a consensus rather than dictating our terms.

“We all have responsibilities to work together and face common challenges.”

Waiting for Obama’s press briefing. Once he’s started, I’ll get some words up.

Nicholas Sarkozy is still talking. He’s going to be the last head of state standing.

Just out of the airless box in which Gordon Brown was enthusing us to death. But he came with big words and big numbers:

> The IMF will receive $750bn in new resources
> Strategic drawing rights will be issued to $250bn
> $100bn new lending for additional lending by Multilateral Development Banks
> $250bn support of trade finance
> The poorest countries will be supported by a sell-off of IMF gold (Gordon trying to get the gold sale right this time)

That’s a $1.1 trillion support programme. Download the communique here.

What Gordon said: “This is the day that the world came together to fight back against the global recession not with words but with a plan for global recovery and reform and a clear timetable for its delivery.

“We believe that our prosperity is indivisible.”

There is almost all-out war against non-transparent tax havens, although the Chinese appear to have made a blacklist in the communique disappear, to protect Hong Kong and Macao. However, Gordon said that the OECD was today releasing a list of non-compliant tax havens, with attendant sanctions.

The era of banking secrecy is over,” he said. This is thanks to the pressure applied on Switzerland, Liechtenstein, Andorra et al to sign tax information exchange agreements. Money will become more transparent and governments will collect their due.

Hedge funds will be regulated – some, at least: they decided to “extend regulation and oversight to allsystemically important financial institutions, instruments and markets.  This will include, for the first time, systemically important hedge funds.” Quite how many hedge funds are systemically important is not clear – together, they clearly all are, but singly?

Here are the pledges (wonderfully nebulous):

> to restore confidence, growth, and jobs;
> to repair the financial system to restore lending;
> to strengthen financial regulation to rebuild trust;
> to fund and reform our international financial institutions to overcome this crisis and prevent future ones;
> to promote global trade and investment and reject protectionism, to underpin prosperity; and
> to build an inclusive, green, and sustainable recovery.

Brown managed to have a sideways dig at Blair by suggesting that he had proposed some of these measures ten years ago, yet they had now only taken ten days (and tens of billions of lost dollars – my note) to achieve.

I’ll bring you the OECD list as soon as I get it.

More quotes from Richard Murphy, this time hammering Switzerland’s defence of banking secrecy:

The argument that banking secrecy protects Latin American and Russian familes from kidnap is “the biggest load of rubbish.

“The person who has enough money to put it in Switzerland or Liechtenstein advertises it in a lot of other ways: they live in a big house, they drive a Mercedes. This is the red rag for kidnappers.

“Swiss banking secrecy was created in 1934 for the reason of tax evasion” after the French raided a Swiss bank in Paris and took away notable names. “The next time the French came to call, there was only a list of numbered accounts.

On l’affaire UBS: “The case is still hanging over them. You have a bank which has admited admitted to running a criminal organisation. The confidence that people who want to place their money with them must have been massively reduced.

“It’s due to their utter incompetence. They chose not to comply with US law. UBS has exposed what really goes on in Swiss banks.”

Good to see the Telegraph is capable of producing grade-A rubbish like everyone else.

That story is about how Prince Philip has again offended people with his racist remarks. Except he didn’t say anything racist.

Obama said: ‘I had breakfast with the Prime Minister, I had meetings with the Chinese, the Russians, David Cameron… And I’m proud to say I did not nod off in one of the meetings.’

To which the Duke laughingly replied: “Can you tell the difference between them?”

While there is no suggestion that the 87-year-old intended to offend, his offhand comments about the physical similarities of foreign politicians at an event intended to strengthen global unity will raise eyebrows.

It takes an agile mind to construe a remark about how all politicians spout identical rubbish as one about how they all look the same. This story reads like it was written by a desperate work experience schoolboy.

1.00 The family photo is being retaken because the Canadian prime minister was in the bathroom. Good.

Just spoke to John Kirton, director of the G20 Research Group, about tax havens (shockingly) and why the G20 might be making a mistake:

“They’re aiming to create a level playing field among jurisdictions. All of the non-conforming jurisdictions are being forced to conform by signing tax information exchange agreements.

“There will be sanctions of some sort. In a world market, naming and shaming is enough: the dominant thought here is that if you name and shame them, the market reaction will be ‘We’re not going there’.

But there’s a sound argument from economists that if you identify them, the market will say, ‘That’s where we should go‘.”

Another unintended consequence: mass migration. “Another problem that hasn’t been considered by the G8 governors is that these middle-income countries (Caribbean tax havens) have had their exports killed and their hotel industry killed. The only bit of their economy they’ve got left are financial services.

“They’re going to hop on boats and illegally emigrate, say from Guadeloupe to France.

“There’s a real danger that it can go too far. What’s tax avoidance to some people is tax evasion to others.”

Pictures from the press centre:

Business Secretary Lord Mandelson

Anti-Poverty Campaigner Sir Bob Geldof

I just asked Stephen Timms, Financial Secretary to the Treasury, about tax havens: is the G20’s focus on tax havens a distraction from the low-tax status of London and various American states?

“No, I don’t think it is. The OECD has had long-standing internationally-agreed standards and our view is that jurisdictions need to sign up to those standards. Progress in the last few months indicates that they want to do so.

“There’s an important issue about transparency. So much activity was hidden away in jurisdictions where this doens’t apply.

The reason why the value of some assets hasn’t been understood is because they’ve been hidden away in tax havens. This opacity has contributed to the severity of the recession.

“So it’s not a red herring. It’s very important that we grasp this opportunity to deal with it.”

In response to another question, he said “the era of banking secrecy is over. Now countries recognise that tax information does need to be exchanged with other countries.”

He welcomed announcements from Singapore, Hong Kong, Liechtenstein and other counties that they were going to sign up to OECD standards, and said that progress has been remarkable on getting tax havens to sign up to tax information exchange agreements (IEAs).

He also said, on the subject of tax havens, that they were expecting sanctions to be announced today, but a list of tax havens would appear in the future, possibly by a G20 finance ministers’ meeting in November.

Brown’s opening statement is just that – nothing of note except that language in communique against protectionism is agreed.

Quotes from Richard Murphy, a tax expert, on tax havens:

At the moment the entire tax haven section is in square brackets – it might not even get a mention [in the final communique]. The one absolute delivery is the one thing we’ve got no guarantee on.”

“The main opposition [to tax haven reform] is China – they’re opposed to seeing Hong Kong and Macao being named on a blacklist.”

“It wouldn’t necessarily be better to put out a list now than to take another three months to prepare a more accurate one.”

“Will there be sanctions [on tax havens] announced? They’re still being discussed, even if there isn’t a list produced. The incentive is to make it clear to those who want to get off that this is what will happen.”

More after Gordon Brown speaks (and his remarks of course).

Just spoke to Hetty Kovach, policy adviser on development finance for Oxfam. Quotes soon.

I was just interviewing Richard Murphy from Tax Research LLP about tax havens (check back for highlights) when the sign under the Washington-timed clock fell off. A sign of things to come?

Travelling through Mad Max-style East London. Everything is grey. Even the first security marquee doesn’t have a floor – just grey gravel.

To read more from Spear’s on the G20 Summit, see William Cash’s analysis of what it will really mean for tax havens and Vanessa Neumann’s report from the protests.

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