Protesters in Pittsburgh ahead of the G20 meeting this week harnessed the legendary power of McFadden & Whitehead as they called on global leaders to do more to create jobs for the unemployed.

Bankers worried about losing their bonuses might be well advised to consider a cost-benefit analysis of the contribution of their public sector colleagues.

Central bankers not only earn much less than their high-flying private sector counterparts, but over the last year have spent almost every second weekend in high-level, save-the-world meetings aimed at clearing up the mess created by Wall St and City banks.     

European Central Bank head Jean-Claude Trichet (who earns a mere 350,000 euros a year ) confessed to a group of student journalists that he spends almost every weekend working.

“My week often consists of seven working days, because we always have international meetings during the weekends,” he was quoted as saying by Germany’s Frankfurter Neue Presse. 

Trichet spent last weekend, for example, at the G20 meeting in London followed by a meeting of central bankers and regulators in Basel to thrash out a new framework for bank regulation.

One of the proposals: supervisors should make sure banks ”limit excessive dividend payments, share buybacks and compensation.”

Having wrapped up the two-day get-together in London, G20 central bankers moved down to the Swiss city of Basel (I counted central bank governors and officials from at least 9 countries onboard the same flight) to discuss more about the global economy for a two-day meeting.

The focus here again is the global economic recovery, which seems to be gathering momentum, and the timing of exit policy — which is essential in the future to avoid inflationary pressure.

The mood is decidedly more positive this time than the last time they met in Basel, where they warned that unprecedented attempts to stimulate economic may fail to bring a sustainable recovery.

G10 chairman and ECB President Jean-Claude Trichet will give a briefing on Monday.

Trichet has recently been sounding as if he expects a double-dip recession, as our European affairs columnist Paul Taylor suggests here.

Finance ministers from the G20 are meeting in London on Friday and Saturday to discuss the next steps in battling the world’s worst economic and financial crisis since the Great Depression.

Reuters correspondents from around the world will be at the event, taking you behind the scenes and and providing unprecedented coverage through this live blog.

Finance chiefs from the G20 meeting in London on Friday and Saturday are likely to be in a slightly better — or at least more relieved — mood than they were last time they got together.

The world economy is still in a mess and the financial system is far from running normally. But — and it is a big but at that — fears of global economic collapse have dissipated. This is in no small part as a result of the actions of groups such as the G20 which endorsed coordinated intervention into the marketplace.

So much so, in fact, that much of this weekend’s discussions will touch on the so-called exit strategies that countries will need to get themselves back out of the stumulus and bailout business. With markets in mind, they are likely to be coy about it.

The G20 itself, meanwhile, is taking on a higher and higher profile as a result of both the global crisis and the rise of China, India and others to economic prominence. In a special report, Brown Brothers Harriman says that the G20 will soon eclipse the G7 as the most important economic policy making gathering.

It argues that it is in the G7’s interest to do so because it stops the solidifying of an emerging market bloc and waters down Russia’s role, following the latter’s now permanent presence as part of an extended G8. 

Here’s an unscientific poll about whether the G20 or the G7 now carries more clout. As ever though, your comments welcome on what this weekend’s meeting should achieve.

As the German election approaches and with it a chance he may not hold onto his job, Finance Minister Peer Steinbrueck took a long shot this week to try and boost his legacy as the man who took on the tax dodgers and won. While some of the new rules he proposed in a now trademark campaign against tax fraud failed to pass, the 62-year-old Social Democrat can only have boosted his popularity with voters and upped his chances of holding onto the Finance portfolio after the September 27 vote.

The idea was to give the Finance Ministry a “free hand” in drawing up its own list of countries and jurisdictions it deems uncooperative in efforts to crack down on tax evasion. Finance would thus have a bigger stick to wield as it signs new bi-lateral tax agreements next year, since the threat of sanctions on operations in Germany would have been immediate and easier to execute without the hurdle of consensus in Berlin. Or so the thinking went.

The proposal managed to stand its ground for a day. After supporting the plan on Monday, the Finance Ministry was forced to retreat under a hail of criticism from business lobbies, and when cabinet outlined its new procedures on Wednesday, it was clear that any future sanctions decisions will also have to be agreed by the Foreign and Economy ministries.

Steinbrueck has led Germany’s drive to stamp out international tax evasion with a swagger that’s made many a headline. So whatever happens come election day, the public will likely remember him for the provocative image he cultivated. Who can forget last year’s call for a “carrot and stick” approach to Switzerland over the tax issue, and to his comparison of Germany’s southern neighbour to “Indians” running scared from the cavalry – presumably Steinbrueck himself. Or captain-of-industry Klaus Zumwinkel, once chief executive of Deutsche Post, who had his house raided as part of a tax-dodging probe. Liechtenstein, the tiny Alpine nation where he had hidden money in a trust, signed a tax information deal with Germany in July.

Had Steinbrueck’s plan been approved, it would have effectively given the Finance Ministry a fast track to impose sanctions that would have extended to future occupiers of the office. In that sense it was a bold gamble, although one probably doomed to failure from the start. While the threat of sanctions is essential to push rampant offenders in line with OECD tax transparency standards, it’s hard to imagine a central government granting one of its cabinet positions – potentially occupied by an anti-tax evasion crusader – carte blanche to fight independent battles.

Steinbrueck took on the finance job with plans to balance Germany’s budget by 2011. At one point, before the financial crisis sent that idea to the shredder, it had even looked possible for 2008. What’s left for legacy is the battle against tax fraud. With the OECD guidelines he championed now seen internationally as close to sacrosanct, Steinbrueck’s reputation looks secure. But the cavalry will not have free reign.

Five things to think about this week:

Q3 - CLUES AND CUES
- Global equity markets started the quarter positioned for economic stabilisation after a strong Q2 performance but, even so, EPFR data shows less than a third of the cash that flooded into money market funds in 2008 has exited in the year to date. The Q2 reporting season, which is about to kick off (Alcoa out this week), will show whether there are reasons for investors to draw down their cash holdings further. The U.S. data that came out before the long July 4 weekend held more negative surprises than positive ones, and macroeconomic confirmation of recovery will be needed to tempt more wary investors into equities.

BOND YIELDS
- Benchmark U.S. and euro zone bond yields broke lower after the U.S. non-farm payroll data but the VIX hit some of its lowest levels post-Lehman and a recent compression of intra-euro zone spreads has yet to go markedly into reverse. Which of these trends turns out to be sustainable will become more evident in the next few weeks, particularly as U.S. supply resumes this week with TIPS, 3, 10, and 30 year auctions.

L'AQUILA SUMMIT
- The slow-burning international reserve currency debate could pop up at the G8/G8+5 big emerging powers summit in Italy this week. China's public stance is that it is not pushing the issue but Beijing also reckons a debate on this would be normal at such a forum. It is unclear if any final statement will mention it in a way that would rattle FX markets. But sideline comments on the debate will be closely watched and particular focus will be on which countries, if any, would be willing to join China, Brazil and Russia in their commitment to buying the IMF SDR notes -- for which crucial groundwork was laid down this week.

FOLLOW THE MONEY
-  Questions remain over what use is being made of the 442 billion euros ($619.6 billion) of ECB one-year money that was pumped into the market. A spike up in overnight deposits clearly suggests banks are continuing to park a significant proportion of that cash at the ECB. Any swings in that data will be closely watched for signs that the money could be put to work in other parts of the rate/fixed income market -- or maybe even filter through to the economy in the form of lending. The BOE will also be in focus, with clues sought on the outlook for its QE strategy.

COMMODITY RISKS
- Commodity price volatility looks to be on the cards. A rally in industrial raw materials risks tapering off unless a stronger economic rebound materialises soon, both in big emerging economies and their developed counterparts. For soft commodities, the focus is increasingly turning to the potential impact on harvests from El Nino weather patterns that are developing. Investors will have to decide whether they would be better off exposed to stocks linked to the metals/minings, which will at least earn dividends, or to the commodity itself -- or neither. As for any spike up in food prices, the fallout would be even wider at the current economic juncture, and complicate both policy and investment decisions.

(Reuters photo: Santiago Pandolfi)

It’s starting to look like the Summer of Love. Two reasons: The recovery is taking on a L-U-V shape globally, and it’s going to require huge amounts of love and nurturing to keep growth alive.

• L stands for Europe, where slowness to confront deep damage and write down the remaining $500 billion odd in bad bank debt, mean rebuilding will be protracted and painful.
• The United States sports a U, bouncing along bottom right. But its financial giants swallowed harsh medicine early and the U.S. has the flexibility to stage an impressive rebound, if not undone by a fast-rising jobless rate at 9.5 percent and heavily indebted consumers.
• V stands for Asia (ex Japan), the surprise region showing resiliency, thanks to its rapid Q4/Q1 inventory workdown and huge infrastructure spend by China.

Like the Summer of Love 41 years ago, it is a drug-fueled affair. G20 governments are peddling $820 billion in stimulus this year, equivalent to 2 percent of GDP. Central bankers are spending even more. The Fed has doubled its balance sheet to $2.04 trillion the past 12 months.

These actions might have cushioned a severe cyclical downturn but the structural adjustment to a world of costlier credit is only just beginning.

Will politicians and central bankers have the wisdom or the stomach to keep the drug supply going long enough to prevent L-U-V from turning into an ugly W?

Keith Hennessey, a former top economic adviser to President George W. Bush, saw this one coming. He rightly predicted that the Group of 20 would drop a key word from its communique at the conclusion of the London Summit: Free.

Take a look at how the wording changed between the November G20 Summit in Washington and April’s gathering in London.

November: “We recognize that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems.”

April: “We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.”

Hennessey’s take, as expressed on his new blog: “Losing ‘free’ would be an enormous step backward. All G20 nations agreed to the above statement last November, so there is no good reason to change it if the U.S. objects. In the short run, it is easy to see how a negotiator might give this up for a more concrete immediate objective. In the long run, few things are as important.”

What’s your view? Should the G20 have kept the word “free”?

(Reuters photo by Jason Reed. Hennessey is standing behind Bush, on the far right)

Here are two word clouds of G20 summit statements - the first is of today’s London meeting. The second is from the G20’s Washington summit in November 2008. The cloud gives greater prominence to words that appear more frequently in the text.

Above: G20 statement after London summit in April 2009

Above: G20 statement after Washington summit in November 2008

(word cloudes are screenshots taken from wordle.net)