By Jacob Saulwick
Bringing together a bunch of bright, ambitious people need not always result in a hash of failure and compromise.
Last week's G20 meeting will probably engender significant tinkering to the way the world economy works. But the meeting also did little to improve the immediate prospects for the economy, and it came nowhere near satisfying the rhetoric lavished on it by Kevin Rudd and Wayne Swan.
But credit where it is due: on tax havens, the future regulation of the banking system, and in additional funding for the International Monetary Fund the G20 ground out more progress than many expected. The IMF funding - announced as part of a $US1.1 trillion package - will make the biggest economic impact, strengthening lines of credit for developing countries to tap. Even so, that figure seems as much spin as substance, being an amalgam of new money, money already announced, and money that would have been stumped up anyway.
However, before the conference there were hopes for much more. In Australia, in particular, discussion about the G20 seemed infused with a large element of unreality.
Much of this came from Rudd and Swan, who framed the G20 in terms of how it might tackle the really big issues facing the world: the rotten state of US and European banking; and the need to increase government spending.
"I think it's very important that the world deals with this problem of toxic assets in the banking system, particularly in the developed world," Swan said before the meeting. "So, that's what occurs in the United States and that's why what occurs at the G20 meeting is so important."
Rudd, for his part, talked a lot about the grim state of Eastern Europe. Sounding like a man who had just started reading The Economist and urgently needed the world to know about it, he repeatedly discussed the prospect that Eastern European countries would default on their loans, in turn crippling the big European banks that had lent to them. The G20 would be a place to get a handle on this.
But the G20 did not go anywhere near the issues gripping European banks, nor did it say anything about how the Americans might salvage their system.
This is not because the problems have gone away - the IMF will issue a report this month that could put the estimated losses in the world banking system above $US2 trillion. But it is because the G20 is largely irrelevant to how the big countries fight their banking fires.
Barry Eichengreen, an expert on the Great Depression and Professor of Economics and Political Science at the University of California, warned before the conference not to hope for any immediate patch-ups.
"We should recognise that the G20 is ill-suited for crisis management," Eichengreen wrote in the London Telegraph.
"It is a large and heterogeneous grouping. Its members have very different priorities. Consensus building means bringing together not just the US and Europe but also Indonesia, whose concerns revolve around commodity prices, and Argentina, which is preoccupied by debt. Members vary in the severity of their recessions. They have different capacities for fiscal stimulus."
The G20 is a sideline to the problems in US and European banking, because while their banking crises may have international effects, their solution is entirely domestic. In the US, recapitalising the country's banks will require vast sums of public money.
This money can either be directly injected into those taken over by the Government - nationalised - or funnelled through the back door by overpaying for dodgy assets, which is what the latest plan seems to amount to.
But the willingness of US political leaders to stump up the cash depends on the degree of outrage in the American public - rightly incredulous that overpaid banking villains are being bailed out.
In this respect - through fostering public disgust that will handicap the US Administration's effort to deal with banks - the AIG bonus scandal is much more significant than any international forum.
It has been the same with attempts to prompt a co-ordinated round of fiscal stimulus, with the Germans in particular resisting a worldwide batch of spending. Here, the resistance stems from German historical worries about inflation - a legacy of the 1920s - and also their concern to retain their place at the apex of European manufacturing and industry.
On fiscal stimulus, therefore, the G20 did little. On freeing up the world's banking system, less.
Not that it did any harm. Sharemarkets bounced on Friday, in part because there are an increasing number of positive blips emerging in world economic figures. But the conference also surprised "on the upside", as some say, accomplishing more on a range of other issues than many expected.
But what are we to make of Rudd's enthusiasm for the conference, and the repeated comments about the importance of the G20 in helping strip toxic assets out of the banking system?
On one level, they no doubt reflect the fairly base political consideration that by drawing attention to problems overseas you help hammer home the point that the Government bears little responsibility for the economic crisis. Fair enough.
On another, they probably reflect Rudd's scattergun approach, sometimes seen
as diligent and earnest, sometimes as the reflection of a chaotic, unstructured mind, flitting this way and that
on quixotic attempts to save the world.
Ultimately, I suppose - and perhaps this is hardly a surprise - they are a lesson in not relying on politicians to tell you what is really going on.