Not quite, but near enough, according to reports on Friday afternoon from the FT and Reuters.
The pink paper revealed on Thursday that Bric countries were looking at ways to support the eurozone, such as via a unicorn SPV, increased IMF funds, and lines of credit to sovereigns struggling to access liquidity. But it looks like Geithner and Osborne have put a stop to such emerging market altruism:
The US and UK rejected suggestions from emerging market countries that the International Monetary Fund needed more firepower to fight the eurozone crisis, creating a discordant start to the Group of 20 finance ministers meeting in Paris.
Tim Geithner, US Treasury secretary said the Fund had “very substantial resources that are uncommitted”, while other non-eurozone countries insisted that it was for Europeans to resolve the crisis themselves.
…
Mr Geithner was backed by other non-eurozone advanced economies in stressing the view that the single currency must resolve its own problems. George Osborne, UK chancellor, said, “the biggest boost to global and British growth would be a resolution of the eurozone crisis”.
This brought to mind a comment Martin Wolf made at Thursday’s FT Future of America conference when summarising the thoughts of a panel on China featuring Victor Chu, chairman of First Eastern Investment Group, Stephen Schwarzman, chairman, chief executive and co-founder of Blackstone, and Michael Spence, Nobel Laureate and professor of economics at NYU’s Stern School of Business.
“The Chinese really don’t want to run the world, but they are not quite sure that the US can either,” said the Wolf.
It’s no surprise, really, that the Bric’s offer has been rebutted. It’s not in the short-term political interest of the leaders of the US, UK, Australia and Canada to suggest to European leaders that an exogenous bail-out is possible. If were just the Bric’s cash, that would be one thing, but in order to maintain influence in the IMF, the English-speaking quarter would have to follow suit. And there’s no desire to do that right now.
Of course, it’s their money and throwing it at the eurozone right now when it needs to resolve its own problems would be foolish. There’s little evidence that it would prove catalytic — though it may do later. But it’s depressing that the G20 is so bereft of leadership. And it’s clear that the erstwhile Tilt markets are worried about where the global political will — somewhat present in 2008-9 — has gone. If the eurozone misses its self-imposed deadline and can’t persuade private bondholders to do a little more burdensharing (amongst other things), the Bric plan may need dusting off.
On that chipper note, have a great weekend and here’s a handy Citigroup guide to the fortnight ahead. See you Monday.
Related link:
U.S. rejects plan to strengthen IMF in euro crisis – Reuters