Sunday, February 23, 2014

G20 Wrap Up - Lots of talk about Growth

The G20 leaders are excited because they were able to get everyone to agree to talk about a growth rate target instead of austerity. There were just a few items on the agenda and none of them indicate that any kind of major change to the monetary system is imminent (which is what we watch for here).

There was one item though that might actually impact the real world someday. They agreed to "
 a new system in place by the end of 2015 to automatically exchange tax data between countries."  

It seems there is a lot of concern amongst the G20 nations that too many big companies (and maybe individuals?) are using their various international locations to avoid paying taxes. The headline in this article mentions Apple and Google.  However, as with anything pronounced by these global entities, the devil will be in the details. A question that comes to mind is whether or not this tax exchange plan will really only involve large global corporations or might actually include anyone who may have a bank account in more than one country. Again as usual, there are no details on implementation.

Other than the tax issue, nothing of major signifigance to this blog's theme came out of the meeting. Certainly nothing that would indicate any kind of major systemic change is coming soon. Even the tax exchange plan is just a tweaking around the current system two years from now.

It seems like the goal of this meeting was to be able to have headlines saying "G20 Targets 2% Additional Growth Rate". This attempts to send a message to markets that we are past the crisis and moving forward to better days. There are no specifics on how this will be done, however. In fact, they won't even explain any plans on how they will try to get it done until November. Who knows how the global economy will be doing by November?  

To be honest, this strikes me as just PR to try and calm markets. Until actual detailed plans are implemented by passing real legislation in actual countries, it is all just talk for now. And we see how well their 2010 plan to reform the IMF voting quotas has done. It's 2014 and not yet implemented. It's off the table until January 2015. Keep that in mind when you hear about grand generic comments about boosting growth by 2%. The tax exchange plan may be more real.

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