Sarkozy Advocates Systemic Change After Crisis

[inanna]

Source: Washington Post

TOULON, France, Sept. 25 -- French President Nicolas Sarkozy warned Europe on Thursday that it cannot escape shock waves from the U.S. financial crisis and that to protect its future, it must take the initiative in rewriting worldwide banking rules to end the "folly" of an under-regulated system he said is now "finished."

Sarkozy, who also holds the European Union's rotating presidency, said he would propose swift action by the 27-nation bloc at its next meeting to tighten controls over European banks. But beyond Europe, he said, the leaders of all the world's major industrial powers should gather at a special summit before the end of the year and start to construct from scratch a new financial and monetary framework to replace the U.S.-dominated system set up at Bretton Woods, N.H., in 1944.

"We can no longer manage the economy of the 21st century with the instruments of the economy of the 20th century," he declared. The U.S.-inspired lack of regulation in recent years, he added, "was a folly whose price is being paid today."


Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092504285.html?hpid=sec-world

[Bonobo]

1. Sounds like America is officially being placed on the trash bin of history. Sigh. nt

[krkaufman]

6. Well, not the US. That's where Sarkozy was imprecise.

He rails against the US-led deregulation and cites Bretton Woods, but the two are distinct. The fatal deregulation came about as part of Reaganomics, and that's what needs to be reviewed and scrapped; though Sarkozy may be prudent in starting from scratch, rather than trying to reconstruct a workable system from the mess that Reagan bequeathed us.

[scisyhp1]

13. It is true that the two are distinct. But both need to be addressed.

Bretton Woods system is based on US dollar as the world reserve currency.
That makes the international financial system extremely sensitive to US
internal policy decisions. Reagan-Clinton-Bush deregulation was automatically
made into a worldwide threat by the Bretton Woods system. It now became
clear to everyone that US Government cannot be relied upon as a responsible
guardian of the international trade and commerce. Even if US re-regulates now
and stabilizes the system, there is no guarantee against the return to those
disastrous policies in the future. In fact, knowing the greed-worshiping ideology
of the American elites, incestuous unity of US Government and the capital and
American public's total lack of long-time memory, the repeat of the old mistakes
is practically a given. The rest of the World will do itself great service by
insulating against such an eventuality. It will also save a huge amount of the
guardianship rent indirectly paid to the US by the rest of the World all that time.
They thought they were buying economic stability and future prosperity with that
money. Now they can see the US lead system for what it was - a protection racket.

[krkaufman]

14. With (all of) that I can wholly agree.

It's taken "the world" surprisingly long to recognize the danger of relying on the US system, especially since this sort of crash is inevitable for a deregulated free market, as championed by Reaganomics.

[tblue]

2. Wouldn't that be the ultimate irony, after "Freedom Fries" and all our maligning of the French.

It stinks being the most hated nation in the world.

[Bozita]

3. Wonderin' if Harvard is proud of all those MBAs they passed out in the '70s.

Shame on them.

[kristopher]

4. Sarkozy has standing here.

His estimation of the state and nature of the problem is good support for Obama.

[DCKit]

5. OUCH!! Can "Least Favored Nation" status be far behind?

Sarkozy's still pissed off about the weiner roast Dumbya threw for him on his last state visit.

[Waiting For Everyman]

7. That's good and all, but they've done no differently.

We don't corner the market on greedy SOBs. They are only ahead in having a better safety-net for their citizens in place - which is a significant thing of course - that's what is really going to hurt us now.

Dems are right to focus on shoring up Main Street. That's where the real (ignored) collapse is coming from. The collapse on Wall Street is fictional funny-money.

[Eurobabe]

8. Before you paint a broad brush of "Old Europe"

suggest you read up on how some countries manage their finances differently. It's not that they have a better safety net, if they do, where did THAT come from? Perhaps grew out of well managed taxpayer $$? :shrug:

You can start with Germany: No 100% house financing, EVER. http://www.dw-world.de/dw/article/0,2144,3668963,00.html

Basically the attitude of the general population towards debt is clearly different. And people are more likely to save money.

[Waiting For Everyman]

9. I take it you disapprove of VA loans then? They go back a long time.

[Eurobabe]

10. My comment has absolutely nothing to do with VA loans.

I don't think you even bothered to read the article. What I was referring to are the kind of loans that go alot of people into trouble. NINJA loans.

VA loans are an entirely different animal altogether. You are comparing apple and oranges.

[Waiting For Everyman]

11. VA loans are 100% financing. So...

You don't approve of VA loans then?

[Lydia Leftcoast]

15. They have to have a sound economy in order to use the euro

The U.S. would never qualify.

[moggie]

12. Seems the French market, in particular, is more conservative

Here's a piece from the BBC today:

Unlike Britain, the US and many other countries, France appears to be weathering the credit crunch storm in reasonable shape.

...

French banks are immensely careful about whom they lend money to and, to limit risks, they spread their investments much more widely than those in the US or UK.

Only about a quarter of banking activity is related to investment banking and dealer-broker activity - the rest is all to do with retail banking.

This meant when the credit crunch bit, the French banks were hit a lot less hard than those in many other countries.

http://news.bbc.co.uk/1/hi/world/europe/7635327.stm

The article quotes a level of household debt which is less than half that in the UK: it's a different culture, credit-wise.