What a fool believes

Five months and one day ago, I dared to cast aspersions on the settlement reached at the London G20 meeting. The $1.1 trillion package supposedly agreed by G20 ministers was either a list of measure that had been in place for years (export credit agency backed finance), increases in limits for borrowing from the markets by multilateral development banks, increases in capacity for SDRs at the World Bank but no increases in World Bank funding from governments, and an increase in funding limits for the IMF, but only vague promises to actually provide funds.

That was spun by Gordon Brown into a "$5 trillion stimulus package", although it was never clear where the other $3.9 trillion had come from, which was why I asked two months ago what had happened to this magical $5 trillion, because apart from blowing a few million on cash for clunkers there seemed to be precious little spending, at least not in the 13 figure, GDP busting numbers talked about by Mr Brown.

Now we read in today's Times that the IMF funding leg of the $1.1 trillion package, the only part that actually required any government cash, is not going to happen after all. This includes a $75 billion funding package from the EU. Labour ministers have told the EU that they should increase the commitment to $500 billion, but as predicted here on Tuesday, the Germans are having none of it because they are out of recession and they don't need to provide any camouflage for the UK's debt binge.

So let's all learn a lesson and wise up on some financial vocabulary:

Millions

• low end: a CEO's base pay, bankers' bonuses and the value of some suburban housing;
• mid-range: the GDP of small island states or the cost of acquiring the services of some soccer players;
• high end: the annual overspend by middle ranking government departments and annual national benefit fraud.

Billions

• low end: the wealth of minor plutocrats, the annual profits of big banks in good years, the size of most hedge funds and the cost of major infrastructure projects;
• mid-range: the size of annual budget deficits in large developed nations and the assets of the largest pension funds;
• high end: the GDP of all but the very largest and wealthiest of nations and the off balance sheet liabilities in major banks.

Trillions

• low end: the GDP, national debt and total resources of the largest and most developed nations;
• mid-range, high end: does not exist in real currencies.

The simple fact is that nobody writes cheques for trillions and even commitments for tens of billions don't happen round a table at a G20 meeting. Only a delusional fool would ever believe, let alone announce, that there was ever an agreement over a $5 trillion stimulus.