Like Asia, European equities have gotten a lot cheaper compared to historical averages. Another simi...
A Fool's Errand in Crowded London
04/02/2009 11:48 am EST
The leaders of the G20 nations convening in London this week can at least agree on this: 24 hours in each other's company is plenty.
The heavily hyped summit was to kick off with a "working dinner" on April Fool's Day, with First Spouses supping separately and out of harm's way.
The crockery may be at risk: The Chinese and the Russians blustered into London with demands for a new world currency and ill-concealed glee over America's leading role in the financial disaster. French enfant terrible Nicolas Sarkozy insisted on a global nanny to teach some manners to les Anglo-Saxons, and threatened to storm out if the native English speakers didn't agree.
The Germans had soured on Americans long ago over the US’s meddlesome calls for Europe to lift spending. And Brazil’s president Luiz Inacio Lula da Silva spoke for many around the globe when he blamed everything on the "irrational behavior of white and blue-eyed people who before the crisis looked like they knew everything about economics, but now have demonstrated they know nothing." The Czech prime minister who called US economic policies a "road to hell" was on the guest list as well, and unrepentant.
Fates willing, the right seating arrangement will have been found. The deeply unpopular host, British Prime Minister Gordon Brown, undoubtedly fresh from watching a marathon session of the American classic movies President Obama gave him on his recent US visit, has been preparing as if his career is at stake. It probably is.
Luckily for the embattled Anglo-Saxons, the summit didn't allot much time to debate the French demands, much less the jibes from Moscow and Beijing. Instead, the heads of state will rattle their steak knives in the direction of tax havens and hedge funds and profess a unity plainly contradicted by all the press leaks. With any luck, they'll also spare the china, placate China, and strengthen the International Monetary Fund. And maybe end global warming before jetting out of town.
Whatever points politicians might try to score, the symptoms of economic distress look depressingly familiar and multinational. The day the White House gave General Motors’ chief executive officer Rick Wagoner his walking papers, the French government replaced the boss of ailing, subsidized auto maker PSA Peugeot Citroen, which shares many warts with the Detroit Little Three. While President Obama was telling big bank CEOs to cool it on conspicuous compensation, Britain and Spain had to bail out troubled lenders closer to home.
Nowhere is the gloom deeper than in Japan, which has been cranking out horrible statistics week after week with robotic efficiency. Exports have been halved, corporate profits are decimated, and the stock market is down 80% from its 1989 peak (where it is quite reasonably priced, suggests Andrew McHattie in this week's Global Perspectives.)
At least, like most markets outside of Europe, the Nikkei has managed to outperform the Standard & Poor’s 500 index both for the month and the year so far. It's not up 30% for 2009 like Shanghai, or 9% like Brazil. But neither is it down in March like the FTSE, after the Bank of England chief said another stimulus would be unaffordable. (In contrast, Paul Goodwin of the Cabot China & Emerging Markets Report is excited about China's wherewithal to stimulate growth amid the global slump.)
The G20 was certainly stimulative, in its own way. Protesters thronged London streets for what was billed as the Financial Fools’ Day. But while they chanted for the abolition of money, investors were making some once again. The markets resumed their recent roll, kicking off a new quarter with sizable gains in Asia and the Americas, and even a nice comeback in Europe. Stocks are behaving better than the politicians.
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