Monday, 16 March 2009

A WeeLate, Right? G-20 Finance Chiefs Vow to Spend More of Our Tax Money Cleaning Up Banks' Balance Sheets

Click here for Bloomberg News' story on the G-20 statement over toxic assets. Superb reporter Simon Kennedy writes.

Well, here is the nut graph of Simon's story and a very good comment from Mohamed El-Erian, the CEO of bond powerhouse Pimco. The thing is, all the efforts to write off and wipe out toxic assets have cost us between $1 trillion and $3 trillion. What else is deemed as necessary to clean up balance sheets once and for all? No one seems to know -- the truth is, there must be more rubbish to throw away.

The commitment, made three weeks before G-20 leaders gather in London, comes as investors demand faster action in the face of turmoil that’s showing few signs of abating. The Standard & Poor’s 500 Financials Index has dropped 35 percent this year and a lack of lending is pushing the global economy deeper into its worst recession in six decades.
''Markets are looking to policy makers around the world to move from the recognition and design stages to implementation, and to do so in a coordinated, or at least correlated, fashion,´´ Mohamed El-Erian, the co-chief executive officer of Pacific Investment Management Co. in Newport, California, said in an interview. ''Tackling toxic assets is a necessary condition for sustainable progress.´´

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