Friday, October 17, 2008

New World Order Economics

Politics may make strange bedfellows, but economic crises make even stranger ones. Gordon Brown, free trader, now finds that Nicolas Sarkozy, arch-protectionist, has virtues he had not previously noticed.
Second, Brown and Sarkozy, along with their EU partners, believe that now is the time to put the former hegemon in its place. America, they believe, is paralyzed by the lame-duck status of its president. It will, they reason, be forced to go along with any European proposals for what is variously called a "new financial architecture" and a "new world order". The joy on the faces of EU leaders as they gather for their several conferences can be seen in news photos. Never mind that the banking systems of their countries are on the verge of collapse, or that they are headed for a recession deeper and longer than the one the United States will suffer. Now is their chance to do things that the Americans might not like, but can't stop.
But that's no business of the United States, at least not directly. Now, however, the EU 27 plan to make it America's business. The enthusiastic response to Gordon Brown's memorandum suggests that his partners have signed on to a regulatory scheme that they plan to put to the United States on a take-it-or-leave it basis. There will be more regulations, more regulators, more international gathering of those regulators, perhaps a new Bretton Woods agreement--more on that in a moment--with a timetable "for agreeing these proposals over the next few weeks and months," says the Prime Minister. condensed from the Weekly Standard

French President Nicolas Sarkozy, who holds the European Union's rotating presidency, said here that he will meet President Bush on Saturday in Washington to lay the groundwork for the conference, which the Group of Eight industrialized countries is convening. It should "re-found the capitalist system" that has governed international financial exchanges since World War II, Sarkozy said.
E.U. leaders, who on Thursday completed a two-day meeting in Brussels, have called for globally coordinated regulation of the financial industry, elimination of tax havens and a compensation system in which traders are not rewarded for dangerous risk-taking. condensed from

WASHINGTON (Reuters) - The financial crisis is a defining moment for the world economy and there must be global solutions to end it, Prime Minister Gordon Brown wrote in The Washington Post on Friday.
Brown cited the creation of a new economic order and formation of the International Monetary Fund, World Bank and a world trade body at the end of World War Two as models for action to end the current crisis, in a column in the U.S. newspaper.
"Today, the same sort of visionary internationalism is needed to resolve the crises and challenges of a different age," he wrote.
"This is a defining moment for the world economy."

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