One Big Happy Family (the G 20)

Some quotes regarding the upcoming G 20 meeting in London.

Americans are suffering from a serious case of bailout fatigue, and even with his high popularity, President Barack Obama does not seem to be in a position to ask for more financial rescue funds now.

With a global downturn deepening and banks still in disarray, this suggests the rest of the world will have to come up with a stronger response as rich nations battle recession and developing countries scramble for aid.

So where is the money going to come from ?

Britain has not asked Saudi Arabia to contribute more money to the International Monetary Fund to help stabilise struggling economies, but Saudi Arabia agrees that China should do more, a British minister said on Sunday.

And China's response ?

China has so far appeared reluctant to offer major cash injections to the International Monetary Fund and other global financial bodies, and (Chinese) Foreign Minister Yang Jiechi offered no specifics on what proposals Beijing would bring to London.

Instead, he reiterated Beijing's contention that the biggest help China can offer the global economy was to keep its own financial house in running order.

"To maintain the steady and relatively fast development in China is in itself the biggest contribution China can make to international cooperation in meeting the financial crisis," Yang said

They don't seem to eager ? What about Germany ?

Europe's bureaucrats have tried to encourage fiscal stimulus by softening strictures that would keep member state budget deficits to 3 percent of their GDP or less, said Milton Ezrati, a senior economist at Lord Abbett. "Yet Germany, citing concern over its own pretty much balanced budget, has done comparatively little," he said

The IMF is currently weighted in favor of European countries. The United States actually only has 17 % of the total votes, but 15 % is enough to reject a measure. This leaves the United States as the only country with veto power in the IMF. China's vote is 3.88 %, while Germany's - with roughly the same size economy , is % 5.88. The U.K and France both have % 4.86.

There will be vicious arguments within the G20 meeting about who will pay for further bailouts (through the IMF), as well as pressure for countries like Germany to further stimulate their economy. But it's unlikely China will contribute more when the U.S. holds veto power, and with Europe holding such a large bloc of votes. And neither are in a hurry to give up their voting percentages. It's unlikely the G20 will produce a breakthrough in the financing of the IMF, or raise the money necessary to bail out the international economy . Which, the World Bank has estimated, is up to 700 billion dollars in the developing world alone. One can expect recriminations from all sides if this fails to happen, but the domestic concerns within each country are pressuring them to look inward.

Update: Right about stimulus, possibly wrong on IMF funding. It remains to be seen how much of the funding materializes once the actual details of voting rights begin to be negotiate - Update II: Not so positive as of 4/28.link