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Letter from America | 9
Thoughts on the
G20 Meeting in
Pittsburgh
by Charles Lewis Sizemore, CFA
Chief Investment Officer,
Sizemore Capital Management LLC
www.sizemorecapital.com
“
It worked,” say the leaders of the our writing. It is difficult for us to give the G20 countries with trade surpluses to export less and
twenty most influential world as an organization much credit for fixing the consume more with the complimentary pledge
economies. They are speaking, of global financial system. Firstly, by many by countries with trade deficits to consume less
course, of their collective efforts measures, it is not altogether certain that the and invest more. How exactly does this work?
to “fix” the world economy in the system is fixed. A recent report by the IMF Are Chinese citizens to be coerced into buying
wake of the 2008 meltdown. suggests that the world’s banks still have roughly goods they didn’t previously want? And are their
In the preamble to the Final Statement from $1.5 trillion in bad real-estate-related debts to American and British counterparts to be barred
the September G20 meeting in Pittsburgh, our write off in the years ahead. Even after 2008’s from their local Wal-Mart or high street?)
leaders inform us that: meltdown, the banks have written off less than In other grandiose words, our leaders
“When we last gathered in April, we half of the losses that they may eventually have designated the G20 to be “the premier forum for
confronted the greatest challenge to the world to. An undercapitalized bank is a “zombie” bank our international economic cooperation.” This is
economy in our generation. Global output was – it sucks in funds from depositors and the quite ambitious for a body that represents only
contracting at a pace not seen since the 1930s. central bank, but it does not in turn loan out 15% of the world’s countries and which does not
Trade was plummeting. Jobs were disappearing those funds. have an official charter, a full-time staff or a
rapidly. Our people worried that the world was That said, it does appear that the global headquarters. Up until last year, the G20 member
on the edge of a depression. At that time, our economy is on the mend, however slow and states had never even met at the head-of-
countries agreed to do everything necessary to torturous the process might be. And to their government level; they had previously only met
ensure recovery, to repair our financial systems credit, the G20 leaders made the recapitalization at the finance minister and central bank chief
and to maintain the global flow of capital. It of the banks a priority in their September level. Still, it appears that the organization’s
wor ked.” Statement. This shows that the G20 has at least a ambition knows no bounds.
Well, it’s certainly good that we have that few good ideas, even if it lacks the means to This month, we’re going to take another look
settled. We were starting to worry. enforce them. (Our personal favorite among the at the G20. This formerly insignificant talking
No doubt, you may detect a hint of sarcasm in unenforceable resolutions was the pledge by shop has quickly evolved into a serious
www.investmentinternational.com November 2009 Investment International
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