Emerging market ministers, particularly those from the BRIC economies — Brazil, Russia, India and China — are painting this weekend’s G20 meeting as a victory in dragging them out of the shadows of global policy-making.

The finance ministers’ statement included the promise of more money for the International Monetary Fund and regional development banks, on whom struggling emerging economies rely for support.

It accelerated a review of IMF quotas by two years to 2011, which should give emerging economies more say in the running of the multilateral lender. It also suggested that the headship of IFIs — international financial institutions — would no longer be guaranteed to Americans or Europeans. 

BRIC countries even issued their own communique, ahead of the final statement. “There is a conclusion that has been reached in recent years, which is that the resolution to today’s global problems is only possible with the participation of emerging countries,” Brazil’s central bank governor Henrique Meirelles told MacroScope.

 ”There is a natural evolution of the decision-making process, which many important countries agree on, that decisions move from the G7 to the G20.”

But were there actually any major concessions?  Tim Ash,  head of emerging Europe, Middle East and Africa research at RBS thinks not.

“Clearly they would like things to change, but I’m not sure that much has actually changed,” he says.

Finance ministers and central bankers from the G20 meet this weekend in the English countryside to discuss the world’s financial and economic crisis. With this in mind, MacroScope asked a number of economists what they want to see from the meeting and the G20 summit to follow later and what they expect to see.

The answer, in short, appears to be that much is needed but not much expected.

Paul Mortimer-Lee, head of market economics, BNP Paribas:

“There will be progress on agreeing that regulation needs to be more effective and more effectively co-ordinated on a global scale but I am unconvinced we are going to go a long way further.  Some populist posturing on bank bonuses etc should be expected. The less is achieved in other areas the more this will get played up. On bank recapitalisation, they will all agree strong capital is a good thing, but in no way do I expect a concerted plan — it’s driven by events and the exigencies of the local banking system.

“I would like to see progress on the international financial architecture/the IMF and its resources. Maybe we’ll get some new facility and some agreement on more new cash … but a radical overhaul requires the power structure to be rejigged — more power to the (emerging economies) and less to Europe. This is not something European politicians will want to be high profile when it comes out.”

Sarah Hewin, senior economist, Standard Chartered:

“The economic data continue to worsen and markets remain in a state of fear. So the best outcome from the meeting would be a co-ordinated response to frozen credit markets and collapsing global economic activity.

“A wish-list would include announcements on: fixing banking systems, including cleaning up banks’ balance sheets by dealing with toxic assets; more and co-ordinated fiscal stimulus and wider adoption of quantitative easing; expanding the size of the IMF to enable it to support vulnerable countries; and commitments against protectionism.

“But the experience of previous summits is not encouraging - apart from increasing IMF resources and making the right noises on protectionism, we are likely to see few real progressive steps taken.”

Gabriel Stein, director, Lombard Street Research:

“The G20 meeting, like almost all summits, is a waste of time. Most of the work will have been done beforehand and the actual meeting could just as well be delegated to functionaries. Its main purpose is political.

“It will issue a bland communiqué telling us that they agree on the need for further reforms and oversight of the world financial system, but that while co-ordination is useful, the actual details are better left to each country/region with its specific issues and problems. It will also warn against protectionism.”

Alessandro Bee, economist, Bank Sarasin:

“I would like them to come up with a plan to solve the credit crisis, a coordinated plan. Also apowerful plan with some clear-cut strategies. What we see now is more like a series of individual plans that sometmes materialse and sometimes not.

“I would expect some annoucements rather than real decisions.*

So that’s them. What about you? What do you want to see and what do you expect to see?

(Reuters photo: Peter MacDiarmid)

Ladies and gentlemen, we have a name. We are living through “The Great Recession”. Dominique Strauss-Kahn, managing director of the International Monetary Fund, used the term to describe our current angst on a trip to Africa this week. He may not have been the first to use it — we have found other citations, including JPMorgan — but the guessing here is that it may  stick with him because of his role.

It’s a pretty neat moniker, actually. It resonates, of course, with “Great Depression” but without the soup lines and Hoovervilles. At the same time, it differentiates between the severe contraction now under way and run-of-the-mill economic misery. It also has the snappiness that media folks like — hence this post.

The Bretton Woods duo of IMF and World Bank have been underlining how bad things are. Strauss-Kahn, for example, tells Reuters that delays in bank restructuring could mean economic recovery is not on the cards even in 2010 (which sounds a long way off, but is only next year). Then comes Robert Zoellick, president of the World Bank, who opines to Britain’s Daily Mail that global growth will probably fall about 1 to 2 percent this year.

Not that any of this is particularly surprising to economists. Reuters polled around 250 of them in the past week or so and found expectations of a 1.4 percent contraction in the U.S. economy this year, a 2.6 percent one in the euro zone and a 4.0 percent one in Japan over its next fiscal year.

So “Great Recession” it appears to be. Unless you think otherwise, in which case, suggestions below, please.

(Reuters photo: Dylan Martinez)

If there's one thing you don't want to be, it's the next Iceland.

Since its currency, colossally indebted banking sector and economy collapsed in spectacular fashion in October, the country has become a byword for an economy that has truly hit the rocks.

Within weeks, banking problems and currency falls meant Hungary was being hyped as a "second Iceland", at least until a joint International Monetary Fund and European Union rescue package restored some stability.

Next to win the unwanted comparison was Ukraine.  Having lost at one stage half its value, the currency has somewhat stabilised -- although most foreign investors are very hesitant to hold Ukrainian assets again.  And like Iceland itself, Ukraine is now dependent on an IMF lifeline.

Now, it is Britain in the limelight.  The New York Times as well as Britain's Observer and Daily Telegraph newspapers have all made the comparison in recent days.

For people earning and saving in sterling, it is an uncomfortable place to be and nervousness is to be found in the strangest of places.  During a recent visit to a podiatrist, a Reuters correspondent found the conversation punctuated with speculation about the possibility of an IMF bailout for Britain and angst over cutbacks in the National Health Service footcare budget.

America caught a cold and now China has one too. 

IMF chief Dominique Strauss-Kahn said on Monday that the Fund could cut its forecast for China's economic growth in 2009 to around  5 percent. To think that only last year China was galloping at a double-digit clip. It's staggering, and it's worrying.

Worrying, for one thing, because  - as the Heritage Foundation's Derek Scissors puts it - "the American economic slump is running into the Chinese economic slump, creating the conditions for a face-off between Beijing and the U.S. Congress, possibly leading to destabilization of the world's most important bilateral economic relationship". 

He argues that the new U.S. administration, confronted with a record-breaking bilateral deficit and soaring unemployment, could impose prohibitive tariffs or erect other barriers to Chinese goods. The EU, Japan and others would then be permitted by WTO rules to raise barriers against a diversion of Chinese goods to protect their markets, and "some form of Chinese retaliation is certain".

"If intemperate, such retaliation will prompt further action by the U.S. and perhaps other countries, threatening the global nature of the trading system," Scissors concludes.

Michael Pettis, a professor of finance at Peking University, blogged on the same theme last month, warning that Smoot Hawley, the notorious U.S. tariff act that contributed to the Great Depression of the 1930s, could return in a different guise.

Pettis says that while everyone is watching to see if Washington re-enacts new versions of Smoot-Hawley, the real threat may come from current-account-surplus countries which seek to support their export sectors.  There are indeed signs that China is looking to export its way back to vigorous growth through subsidies, raising import tariffs and perhaps currency depreciation (see the grumbling from France's Anne-Marie Idrac only yesterday on the yuan). 

The bitter lesson from the 1930s is that not all countries can export their way back to economic health at the same time. And if they try, there will be a fight.

In the late 1990s, when the Asian Financial Crisis was in full swing, Time Magazine dubbed then Treasury Secretary Robert Rubin, his deputy Lawrence Summers and then Federal Reserve Board Chairman Alan Greenspan as “The Committee to Save the World.”

On Saturday, a new committee convened in Washington, only this time the crisis is global, and now there are 20 members. Leaders from the 20 richest countries came together and backed a 10-page plan for the global economic crisis, agreeing on the need for measures to spur growth, better financial market rules and more say for emerging countries.

Sexy stuff, right?

Here’s a sample paragraph:

“Regulators should develop enhanced guidance to strengthen banks’ risk management practices, in line with international best practices, and should encourage financial firms to reexamine their internal controls and implement strengthened policies for sound risk management. * Regulators should develop and implement procedures to ensure that financial firms implement policies to better manage liquidity risk, including by creating strong liquidity cushions. * Supervisors should ensure that financial firms develop processes that provide for timely and comprehensive measurement of risk concentrations and large counterparty risk positions across products and geographies. * Firms should reassess their risk management models to guard against stress and report to supervisors on their efforts. * The Basel Committee should study the need for and help develop firms’ new stress testing models, as appropriate. * Financial institutions should have clear internal incentives to promote stability, and action needs to be taken, through voluntary effort or regulatory action, to avoid compensation schemes which reward excessive short-term returns or risk taking. * Banks should exercise effective risk management and due diligence over structured products and securitization.”

Eyes glazed over yet?

But don’t discount it, because if it works, it could help get us all out of the worst global economic situation since the Great Depression.

As one senior administration official told reporters at the White House, “this is the stuff of financial markets reform.”

“A number of these may sound very technical, or very mundane. I can assure you they are not,” he added.

This is the stuff that could get your house price back to where it was, your ability to get a loan, and your 401(k) to the point where you might want to open the envelope.

Another official pleaded with reporters to focus on the specifics.

“This is my life, I’ve been living this stuff. I want you to get all excited about it,” he said.

It may not be exciting, but important is another matter. Tell us what you think of the plan.

There was a time when IMF/G7 meet-ups were met with hundreds of angry protesters throwing rocks and smoke bombs at police.

How things have changed…

Now the protests are scheduled, complete with press releases and carefully assembled information packets. But while the message is there, the people really aren’t.

Kenny Bruno of Oil Change International

Even without much of an audience, the colorful nature of these well-organized protests guarantees plenty of media coverage to get the message out.

So what exactly is that message?

Oil Change’s Stephen Kretzmann and Dr. Brent Blackwelder of Friends of the Earth talk greenwashing

Is it a sign of the times that violent mass protests are being replaced by media-friendly performance art? Tell us what you think.