G20 Agree on Global Stimulus

The G20 meeting in London ended with a nine-page communique setting out a number of financial stimulus commitments to try and halt the global economy sliding into depression.

The headline figure most sources quote is $1.1 trillion, but this is on top of $5 trillion already agreed by individual countries. The extra $1.1tr will come from global institutions like the IMF and the World Bank. Looks like a bit of shuffling the cards with reserve-rich countries lending to those close to bankruptcy.

However, what the meeting refers to as trade financing is a pathetic $200 billion. So what is the rest of the money for? Plugging black holes in banks worldwide?

All of this, however, begs one huge question. This is yet again gambling the future on expected growth, whilst ignoring all the toxic "assets" - better known as liabilities - and how to deal with them.

Just the regulated derivatives markets (ignoring the OTC trades) are worth some $700 trillion. Even a small 10% loss would dwarf this whole global stimulus package. Where was the solution to this potential earthquake?

Stock markets rose on the news.