Ignoring global trade, monetary issues, the role of the Fed and Central bankers in the crisis, US dollar hegemony, and nearly everything else that makes sense to discuss, the G-20 Targets Hedge Funds as Leaders Near Consensus.

Leaders of advanced and emerging economies are closing ranks behind plans for tougher rules on financial markets to prevent another collapse like the one that wiped out much of Wall Street.

A global approach to regulation has been gaining momentum ahead of the Group of 20 summit April 2 in London. U.S. President Barack Obama, U.K. Prime Minister Gordon Brown and their G-20 counterparts aim to merge their national blueprints for strengthened regulation into a united front to rein in hedge funds, derivatives trading, executive pay and excessive risk-taking by financial firms.

Agreement on a shared regulatory agenda would provide the G-20 summit with a measure of success even as leaders remain at odds over trade policy, fiscal stimulus and the status of the dollar. A joint regulatory approach is crucial to prevent investors from seeking out markets with the most permissive rules, setting off a race to the bottom as countries vie to attract capital.

“Having the U.S. and Chinese on board makes it a whole lot more likely” that an international framework will eventually emerge, says Harvard University’s Kenneth Rogoff, former chief economist of the International Monetary Fund.

Rogoff says that “it seems virtually certain that four to five years from now, the world will have either a global financial regulator or, more likely, a treaty on global financial regulation with a secretariat, akin to the World Trade Organization.” Still, he adds, “nothing is going to happen quickly.”

G-20 Meetings a Complete Waste of Time, Money, Energy

Given that the World Trade Organization is essentially useless, it makes little difference if we get something “akin to the WTO“, now, five years from now, or never.

As I said on March 15, the G-20 Summit is a Complete Waste of Money.

Going back further to November 15, 2008 I see the G-20 Summit Blames Buyers of Poison Apples (as opposed to those who made the poison apples).

“The G-20 leaders, representing 90 percent of the world economy, blamed the crisis on investors who “sought higher yields without an adequate appreciation of the risks.”

Banks and brokerage packages sold poison apples. The G-20 is blaming those who bought poison apples not those who knowingly sold poison apples.

Blaming Hedge Funds for this crisis is an extension to the placing blame on buyers of poison apples theory.

Mike “Mish” Shedlock
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