Gordon Brown is truly having a rough time. Rebuffed by the United States, International Monetary Fund and others for floating the idea of a tax on financial transactions at this weekend’s G20 meeting, he has now got short shrift from the Cayman Islands.

McKeeva Bush, the veteran Caymanian politican who is now premier of the British Overseas Territory, popped in to the Reuters London headquarters for a chat this week. His main concern was to explain plans for making the islands an easier place for financial services personnel to live in. He would like some of those 8,000 hedge nearly 10,000 funds that are registered there to be more than just brass plaques. But, when asked, he also had time to dismiss the idea of a transaction tax out of hand.

“That’s an old hat. I have been hearing about it for 25 years. It’s just not practicable. It will not work.”

And just in case the point was missed:

“We have looked at it and we do not think this is something that would work.”

Bush would not be drawn on the idea that a tax on transactions could, metaphorically speaking, sink his Caribbean island homeland under the waves. But Paul Byles, a government financial services consultant who accompanied the premier, did touch on the liquid nature of the issue:

“Tax flows, and they will move somewhere else.”

Reuters is blogging live from the G20 meeting in St Andrews, Scotland.  Finance ministers and central bankers will seek to firm up a plan to rebalance the world economy, aiming to beat out how to set national policy goals and make sure everyone keeps to them. In addition countries are expected to push individual concerns, from Brazil’s about FX reserves to France’s about bankers’ bonuses.

Interesting dilemmas facing G20 countries as their finance ministers and central bankers get together on the golf ball strewn Scottish coast ( a meeting in St Andrews we will be Live Blogging on MacroScope, by the way).

First, you have the Brazilians who are worried about hot money and have already slapped a tax on foreign investments in domestic bonds and stocks in order to cool down capital inflows.  They want the G20 to take action against what their central bank chief calls “imbalance- and bubble-building”.

Next you have the Americans and other big economies who know that the huge amounts of stimulus they have put into the world economy have to be removed eventually. They are not ready to do it yet, but expect the G20 countries to discuss how they are going to “sequence” the great unwinding.

And then there is Argentina, which is not alone in noticing that talk of unwinding tends to put investors on edge.  Its central bank governor wants the big countries to be careful, fearing a rapid reversal of stimulus policies could mean big outflows in emerging market countries such as, er, Argentina.

So a tricky balance, a super-sensitive investor audience, and plenty of domestic politics. Fore!

Quite a contrast to the previous day. The permitted march in Pittsburgh was peaceful on Friday.

Reuters correspondent Sumeet Desai talks about the G20 draft communique and what it means for rebalancing the world’s economy.

I got my second dose of G20 pepper gas right outside my hotel.

After a long day following protesters and reporting on their clashes with police, I was exhausted. But just as I switched off the light in my hotel room I could hear the tell-tale sound of a Long Range Acoustic Device.

The police had been using the LRAD’s high-pitched, piercing noise (along with “beanbag” projectiles and the good old-fashioned baton) all day. Sure enough, when I looked out the window I saw a few protesters had come to me for once, and were moving from Pitt University toward our hotel on Forbes Ave.

It was after midnight but I still went downstairs to check it out. I passed very few people on the street and a saw a couple of hundred students looking down from their dorm balcony, taking pictures. I wouldn’t describe them as protesters — it was just where they lived.

I moved into the side street and waited for a line of riot police to move on so I could check out reports that business windows has been smashed.

The police moved forward and the two on the end of the line turned towards me. One nudged the other who then sprayed pepper spray directly at me. When I started to run he threw a larger canister of pepper gas in my direction.

The Secret Service, which is coordinating security in Pittsburgh during the summit has taken exception to descriptions of the gas as “tear gas.” Instead they said “CS vapor,” which is similar to pepper spray, was used by police. I had my first unpleasant experience earlier in the day.

It gets in your eyes, nose and throat, stinging and making you cough so much you are nearly sick.

As the police passed the students on their dorm balcony they sprayed pepper gas up towards them, causing them all to run back into their dorm. Several other students told me they the police had indiscriminately sprayed them.

“We were just looking, then there were loud sirens and then it was hard to breath and I was coughing up a lung,” said Pitt student Dustin DeMeglio, 19.

YouTube user pincus27 shot this video from the balcony.

Pincus27 wrote on the video caption: “As we were stupidly leaning over the balcony of our dorm, a riot was taking place and the police shot teargas up to get us off the ledge. This is not a bad reflection of the police, but rather evidence of our poor judgment.”

UPDATE:

More video from Pitt dorms:

Reuters correspondent Emily Kaiser analyzes the G-20 draft communique.

Reuters reporter Michelle Nichols was on the scene for Thursday’s G20 protests. A note to the organizers of next year’s summit: You might want to lock up the dumpsters on wheels.

Reuters will be live-blogging the G20 summit in Pittsburgh on Thursday and Friday. Our army of correspondents, equipped with Twitterberries and Flip cams, will be bringing you the latest on the economy, climate change and bank regulation.

Click on “Make a comment” below to leave us your thoughts on what the world leaders in Pittsburgh should accomplish. And visit our G20 page for full coverage of the event.

The G20 is made up of the finance ministers and central bank governors of 19 countries and the European Union.