There is a desperate wish, a deep seated willingness, to believe now all will be well. With G20 meetings over, President Obama heading back to the US this week, surely we can expect good economic times to start-a-rolling.
I am afraid that is very far from the truth.
The whole process is like building a house. It takes months, if not a year or two from the initial idea to the day you move in. Let me show you.
The G20 gave us a grand scheme of thinking – a drawing of how you want your house to look. Now individual governments have to continue the work of actually deciding how many bedrooms, which room goes where, how much will be spent – i.e. the banks, auto bailouts, increased spending, tax cuts and the like. They must railroad the plans through parliaments and central banks – that’s the planning part of the process and changes will be made.
If we are lucky, the building starts as the money flows into the economy. It’s a dirty, messy business – job losses, home foreclosures and a drop in living standards. We are putting in new plumbing and electricity – that’s the reform of the banking system. It is hard to see what the final house will look like in the midst of dust and rubble. The plan seems a long time ago.
Finally, maybe a year down the road, a house has been built that now needs to be finished and we need to decide the color of the curtains and carpets – assuming we still have any money left. More likely, we do what most new homeowners do – move in and wait until we can afford the rest.
And that is what will happen here. Later this year, or early the next, the creaking global economy will turn around under the weight of G20 action.
However don’t be in any doubt, by mid-year, five trillion dollars WILL turn it around, but all those nice projects – the new schools, updated hospitals, long-awaited roads that haven’t already been started will be shelved because we find, just like the house builder, we have now overspent and it’s time to cut back.
This week we are probably entering the long-hard slog of the crises. There will be days when the markets rise by a couple of hundred points, and we promptly give half back the next. There will be times when it seems all jobs are in danger, and days when we wonder what on earth will happen next. Thankfully, this week does not look like it is going to be that bad. The builders can take a bit of a rest because with many countries observing Easter and Passover there will be a wish for a quiet time to enjoy with family and friends. Economics can take a backseat despite our economic woes. Whatever you’re up to in the week ahead, I hope it’s profitable!
Richard Quest is a CNN anchor and correspondent who reports on business travel issues. Tune in to CNN International each evening at 1900 GMT to catch Richard’s new show, “Quest Means Business.
