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What moved the markets? Certainly not the way G20 leaders fawned over Barack Obama while announcing a welter of measures largely irrelevant to the immediate problem of the global recession, including a clampdown on tax havens, bonuses and big hedge funds. It was well before the summiteers released their communiqué that Hong Kong’s Hang Seng index jumped nearly 7.5 per cent, with several European bourses notching up gains of about half that amount. In fact, stocks surged globally on hopes the worst of the crisis is past, hedged with relief that a relaxation of US mark-to-market accounting rules would provide a reprieve for banks harbouring toxic assets in case it was not.

Indeed, end-of-the-beginning theorists and green shoot-watchers are in clover: in the benighted UK, house prices registered a small upwards blip and the Bank of England’s survey of loan officers suggested lenders intended to start loosening credit conditions. Industrial output in South Korea fell by a mere 10 per cent year on year in February, down from January’s cataclysmic 26 per cent drop, amid claims by Lee Myung-bak, president, that export markets were “quickly stabilising”. Other foliage has appeared in the US, where durable goods orders and home sales rose in February.

The reality, of course, is that the world remains hostage to the health of the financial system. All the evidence from financial crises past makes clear that sustainable recovery is contingent on a purge of contaminated balance sheets. That process is far from complete. Whether the G20 claims a consensus on regulation is not going to create jobs in El Centro, California, where unemployment is running at close to 25 per cent, or anywhere else. That the G20 has said nothing worth hearing on fiscal stimulus is welcome. Given that many states, notably the UK, are close to their fiscal ceilings, any remaining borrowing capacity must be devoted to fixing banks.

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