The G20, a group of the world’s 19 largest national economies plus the European Union, will meet in London today to discuss possible solutions to the financial crisis and global recession.
While such meetings are normally only attended by finance ministers, this meeting marks only the second time since the group’s formation in 1999 that heads of governments, including President Barack Obama, will be in attendance.
“This, unlike any other recession, is a recession right across the world,” said Brendan Barber, general secretary of the Trades Union Congress, to the BBC. “Where I hope we will see a consensus emerge is in the recognition that unless they act together, then the problems are only going to get worse.”
One of the issues that will be debated is U.N. Secretary General Ban Ki-Moon’s call for a $1 trillion stimulus package aimed at improving the economies of developing countries.
Ban said that a stimulus plan will help to prevent social unrest and allow liquidity, or quick transfer of material assets into cash.
Although no money has been officially pledged by any nation, diplomats stated that some of the money can be drawn from financial aid programs already in existence whose money has not yet been used.
Ban also said that $250 billion of the goal amount should go to the poorest of the developing countries, and another $250 billion put into critical investments.
The rest of the money would finance trade flow activity and fix gaps in liquidity.
Scott Moore, a professor of economics and finance at John Carroll University, expressed a lack of faith in the proposed U.N. plan, despite its good intentions.
“You couldn’t feasibly give small, poor countries [the same kind of] fiscal stimulus É It wouldn’t work. There wouldn’t be any impact,” said Moore.
Moore also said that a stimulus package, which will have a difficult time recovering the lagging economies of superpowers such as the U.S., will fare even worse in countries whose economies are not nearly as well-developed.
Furthermore, Moore said that one of the U.N.’s difficulties will be getting enough agreement to move forward on any economic policy action.
“Going into this meeting, there doesn’t seem to be a lot of unanimity among the major players,” said Moore. “There’s a lot of concern in financing such large stimulus payments, because it could prove inflationary.”
In the past, the risks of transferring such huge sums of money on an international basis have decreased the value of currency for some countries.
The worldwide economic state has not gone unnoticed by an impassioned public. Peaceful demonstrations have taken place in cities throughout Europe, including London, where tens of thousands of protestors called for the U.N. and G20 to take action on poverty.
A collection of charities and unions called “Put People First” marched from Embankment to Hyde Park to voice their cause of global justice.
According to police patrolling the event, the groups, which numbered about 35,000, voiced support for the alleviation of both poverty and climate change, as well as for improving the availability of jobs.
The march was festooned with banners bearing such slogans as, “justice for the world’s poor,” and the more critical, “capitalism isn’t working.”
Eamonn Butler, director of a free-market think tank called the Adam Smith Institute, criticized the idea that capitalism is responsible for the current state of affairs, arguing instead that it is the fault of government action.
“The world market economy is actually a very moral system that raised a billion people out of poverty in the last 10 years,” said Butler.
The call to U.N. and national leaders for action is being debated in its effectiveness and its ability to restore prosperity to an economy that is faltering worldwide.
“Only the G20 has the global economic reach to provide the response necessary to mend this global economic recession and support the restoration of jobs around the world,” said Kevin Rudd, Prime Minister of Australia.
Chief Secretary of the Treasury of the U.K., Yvette Cooper, voiced doubt that the suggested stimulus package would be enacted.
“What we are not going to have is a process in which finance ministers are writing their budgets in the course of next week,” said Cooper, according to the BBC.
Moore held to the notion that a stimulus, far from being a needed fix, would be detrimental in the long run.
“It’s not realistic to take a trillion dollars, which we would have to borrow, and go spend it in those countries,” said Moore. “[Developed countries,] particularly Germany, are very reluctant to let that genie out of the bottle.”