The Financial Times building is a good vantage point for watching the goings-on at the G-20 summit. The Excel centre, where the summit will take place, is just a few tube stops away. As I write the “anti-capitalist” demonstrators are gathering near London Bridge – I can hear the sirens and the hovering helicopters through the windows. A procession of world leaders and summit participants have been trooping through the building, giving on-the-record interviews or off-the-record briefings.

Listening to three of the people who will be sitting around the table at the summit tomorrow, I was struck that maybe the leaders are arguing about the wrong issues. At the moment, the big controversies are about regulation and fiscal stimuli. But the three leaders I am referring to made the same point: this crisis is not going to end, until the banks have been cleaned up. As one of them argued, until the banks balance-sheets are cleaned up, more government money is just “pouring money into a bucket with a hole in it.”

Unfortunately, there is little confidence that we yet have a handle on the problem. The British claim to be confident that we have stabilised our own banking system. But there are still big worries about America. And the problem area that is shooting up everybody’s list is Central and Eastern Europe. Fiscal or banking crises there would then have a knock-on effect on western Europe, given the exposure of Austrian, German, French and sundry other banks.

But whilst it is the banks that are on everybody’s mind, the headlines are still dominated by the arguments over regulation and fiscal stimuli. The politics of this seem to have got worse over the last 24 hours – with strong statements coming out of Japan and France. The line-up of countries even reminds me faintly of the run-up to the Iraq war – with France and Germany allying against the Anglo-Saxons on both the spending and regulation issues. Merkel and Sarkozy are due to hold a joint press conference later today. All it will need is for President Medvedev to turn up, and it will be just like 2003 all over again.

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