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WILL HUTTON Guardian Columnist - 5th April 2009

Now to the much talked about London G20 meeting three days ago. There were the wild scenes just 24 hours before Thursday's summit, the largest gathering of world leaders the city has ever seen. But as things turned out even hardline anti-capitalist protesters - let alone predictably sceptical, even cynical commentators and would-be media experts must be at least a bit surprised with what the leaders of the big economies, despite their differences, actually hammered out. But what of the trillion-dollar rescue plan? Not to put too fine a point on it - aimed at stopping the financial meltdown, and maybe the world's entire economy in the process, from crashing down around our ears, thanks to the self-styled Masters of the Universe in Wall Street. A clever spin? A lot of hot air? Or maybe, just maybe, a genuine agenda for reining in cowboy capitalism? Well Will Hutton is a highly respected UK writer and economic commentator and George Negus talked with him from London.

GEORGE NEGUS: Will - Barack Obama said that, by any measure, the summit in London was historic. Are we looking at the economic and financial equivalent of the Berlin Wall coming down - I mean, where would you rate this on the historical scale - Pretty big?

WILL HUTTON, AUTHOR AND ECONOMICS COMMENTATOR: For me it's a big deal on two levels. This shadow financial system that has grown up in the last 20 years - the world of tax havens, derivative trading, securitised assets, huge bank bonuses - you know, it has been - therein has lain the seeds of destruction for the world financial system. A lot of the losses - up to $2 trillion says the IMF - lie in this shadow financial system. Without it, it wouldn't have happened on the same scale. Now, they are going to regulate it. That is as big as 1944 - the Bretton Woods. And the second thing is, giving serious money to the IMF, naming and shaming countries which are protectionist, giving this paper money - this special thing - drawing rights to the less-developed world, the IMF has now has now got serious funds to give them. This was not the story before this. On both those levels, this marks the turning point. It is the end of the Washington consensus and the beginning of something new.

GEORGE NEGUS: Will, explain that. Gordon Brown used that same term when he talked about the New World Order as it were - a new New World Order if you like. What do you understand the end of the Washington consensus to mean that the Americans no longer can tell the rest of the world how to suck eggs where economics and finance is concerned.

WILL HUTTON: That's one way of putting it. Look, from the Reagan and Thatcherite revolutions, picked up in your own country big time, the story has been for at least 20 years, markets rule. States are ineffective, they're inefficient, they're useless, you can rely on markets to get things right. We now know that that's simply not true. In May 2007, the insurance premium to insure yourself against things going wrong when you bought a securitised asset or a corporate bond were at new lows. The market was saying there isn't a cloud in the sky. It is blue skies. Two months later, we have the biggest financial crisis effectively in 100 years. Everyone now knows that markets make calamitous mistakes which are even more costly than the mistakes that governments make. I have been commenting on these summits for, you know, since the mid-'70s, embarrassingly, it's all been, frankly, platitudinous nonsense - hot air. Nothing gets said, nothing gets done, nothing concrete happens.

GEORGE NEGUS: This one, you believe, obviously isn't. It has got some substance?

WILL HUTTON: Yeah, and it's mattered that the Chinese are involved, the Saudis are involved, that the Indians are involved. And actually, some of the people who were preparing the communique that I talked to, obviously off the record, in the weeks up to it, were telling me that the Australians and Kevin Rudd was actually marshalling a consensus around this. It's astonishing when you get the 20 top countries in the world saying we are going to do things differently.

GEORGE NEGUS: So the G8's dead, Will?

WILL HUTTON: For me, that's one of the messages of this. For me, bring on the G20. It's amazing, just on tax havens, which is only one small part of it, the countries which have been trying, the tax havens that have been trying in the last few weeks to get of the G20 blacklist - it's unbelievable. This Swiss Government got the head of UK Customs and Excise to fly from London to Switzerland on Tuesday to get Switzerland off the blacklist, in the last 48 hours. If the Swiss are opening up, for that alone, give me the G20.

GEORGE NEGUS: Is it ironic though to get to this point where we are now dealing with this disease, this economic and financial disease that has been plaguing us, it took the so-called Masters of the Universe and their excesses to be seen for what they are - the Idiots of the Universe - as I saw one American commentator call them. It took all of that, including ridiculously excessive bonuses etcetera, it took that to wake us up to what was going on in this totally unreal financial world.

WILL HUTTON: Yes, it is a catastrophe what has taken place. It is a catastrophe in London, it is a catastrophe in New York. I mean, all round the world there are banks and insurance companies which are on the edge. The collapse in world trade is unbelievable - 9% say the World Trade Organisation, 13% fall say the OECD. You in Australia are seeing your - the volume of your exports and the price of your raw material exports I mean, have really fallen off a cliff. It is hurting, it is hurting. That you have to go through THAT to get to where we have got to is an enormous shame. And the story isn't over.

GEORGE NEGUS: That's right, because Kevin Rudd has echoed Gordon Brown's words that this is the end of the beginning, as it were.

WILL HUTTON: It is the end of the beginning. This crisis could get much more serious before it is over. We could see further declines in world GDP that require war-footing type mobilisation by the G20. Kevin Rudd wanted this economic stimulus, so did Obama, so did Brown. They had to take it off the table because the French, the Germans and others weren't prepared to be bullied, as they would say it, by the Anglo-Saxons.

GEORGE NEGUS: Tell us more about that, Will. I saw Barack Obama saying that this wasn't a punch in the face for the Americans, it was a recognition that the rest of the world wanted something done and America was part of that. The Europeans have come out of this smelling like roses.

WILL HUTTON: Well, the Europeans got a good deal on regulation. I mean, Sarkozy knew, actually, what was going to be the final communique. If I knew what was in it on Saturday when I wrote that article on Sunday, I can bet your bottom dollar that Sarkozy knew what was in it on Tuesday when he was threatening walking out. He knew he was going to get what he was going to get.

GEORGE NEGUS: Good theatre, very good theatre.

WILL HUTTON: Great theatre!

GEORGE NEGUS: Can I ask you about that? There was such a happy smiling bunch of - 20 happy smiling faces when the communique was released, this obviously was worked out behind closed doors by the boffins, days ago. I mean you can't solve a problem like this, or even come up with a communique in a day. So this must have been going on for a long time.

WILL HUTTON: No, the whole process began after Christmas and really it needed a leader. And Gordon Brown was the man. I mean, he just consecrated three months to it. I mean, he just lived and breathed it for three months. Jet around the world trying to get a concession. Even so, there was still bits to be sorted out. The Chinese were really saying we don't want Hong Kong and we don't want Macau on that G20 blacklist. And do you know what? They weren't on the blacklist. And do you know what? They should have been on the blacklist. What goes on there is really, really not clever. But the Chinese protected their own and in order to get the agreement - even at one in the morning, on Thursday morning, they were still talking about that. So, it does go up to the wire.

GEORGE NEGUS: Well, I hate to bring politics into all this, but it is obviously there lurking in the background, is it too naive and adolescent - too stupid to suggest that this is the world shifting back to the centre left, if there is a spot on the spectrum we can find for it ideologically? Isn't Sarkozy talking about "capitalism with a conscience"?

WILL HUTTON: The Europeans, they call themselves on the right, I mean frankly, Sarkozy's party and Angela Merkel's Christian Democrats, are in some respect to the left of even the Australian Labor Party. And that is a point they make. They say, look, we've got really expensive Rolls-Royce welfare states here. When you get a recession, we have to spend a lot more money on the welfare benefits and unemployment benefits than actually the Americans, and even the British. So, actually, our budget deficits go up automatically. We give that fiscal stimulus through our very generous welfare states. I mean, we in the Anglo-Saxon world could learn a bit from them, in my view. But yes, they are towards the left. You have got Rudd, Brown and Obama broadly singing off the same hymn sheet. Although, frankly, Gordon Brown was a cheerleader for all of this before he became prime minister. He has moved a long way. The Chinese are going to always be, as communists, they could hardly be anti this kind of thing. Although, amazingly, the spectacle of Communist Chinese defending two tax havens - you know, the world has moved to the centre-left in response to a crisis created frankly, by the right.

GEORGE NEGUS: We live in curious times, to say the least, Will, but I guess if we can't pronounce capitalism dead, we can say that we are going to have to be living in a situation where capitalism ain't what she used to be.

WILL HUTTON: The kind of turbo capitalism of the last 20 years has brought the world to this point. We were privileging finance too much, we were privileging the get-rich-quick dimension of capitalism - a dimension of capitalism that did not accept the obligations to pay taxes. What a game it was! We pick up these enormous bonuses, we live in Palm Beach, and you guys, when things go wrong, you can foot the bill. What a bargain was that! And I think the world has responded to that with this summit.

GEORGE NEGUS: As you say, if we can take this summit seriously, and it sounds like most people are, that it isn't just a spin, then welcome to the real world for those people.

WILL HUTTON: Yes, yes, and you can still see the need for the global fiscal stimulus. This isn't over by any manner or means. But I have to tell you, the spectacle of 20 leaders plus the Dutch and the Spanish, talking in these terms, I found - and Sarkozy kind of said it, he said I found it kind of uplifting, and I found it kind of uplifting. I thought it was - you know, you want to be a cynical journalist, don't you? You don't want to say political leaders have got something right, but this time, for 24 hours, I am going to give them the benefit of the doubt.

GEORGE NEGUS: Let's hope it lasts longer than 24 hours. Thanks very much, good to talk you always. It's good to know that we are not all cynics, maybe just a bit sceptical.