No funny shirts in Washington on display at weekend for the Group of 20 meeting, but there will be next Sunday after the talkfest known as APEC ends in Lima, Peru.

It’s pity no one really thought of handing out funny shirts for Washington: a hair shirt might have been more appropriate than the five page summary of the meeting.

It started:

We, the Leaders of the Group of Twenty, held an initial meeting in Washington on November 15, 2008, amid serious challenges to the world economy and financial markets. We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world’s financial systems.

And the Financial Times reported:

World leaders agreed to take “whatever further actions are necessary” to tackle the financial crisis and restore global growth at an emergency summit of the Group of 20 in Washington on Saturday.

They set out an ambitious agenda for reform of the financial regulatory system and institutions such as the World Bank and International Monetary Fund and agreed to meet again in April to consider more concrete steps.

And so they did to, talking nicely about all the nice things: greater and better regulation, co-ordination of policy, and they did so within two days of the Eurozone going into official recession and the US reporting its largest ever monthly drop in retail sales of 2.8% (2.2% fall without cars and energy).

In fact, while they won’t meet until early April, 101 days after Barack Obama become the 44th President of the US, the global economy could very well be in recession and going lower. Certainly Europe, the UK, Japan, Denmark, New Zealand and possibly Australia (except for the export sector), will be in the red, one way or another.

April will be six months after what’s turning out to have been the pivotal month in the slump; October, when the credit freeze developed after the failure of Lehman Brothers and then the flood of rescues and bailouts in the US and Europe, and then the near panic as the $US700 billion Paulson bailout fund idea looked like failing.

That turned the crunch and the slowing pace of economic activity into a global hiatus that in turn became an almost instant slump.

Whatever the G-20 do in addition to the action they have already taken will be like trying to right the ship after it has taken an awful lot of water and everyone is bailing for their lives.

Australia has moved to cut rates and boost spending, as have China, New Zealand, Japan and South Korea. America’s $US120 billion tax rebate earlier this year evaporated like rain in the desert. All it did was delay the inevitable slide in the economy that would have started in the second quarter and made the November 4 election that much tougher for the Republicans. The Americans are now fighting over whether the US car industry should be bailed out, one way or another.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey