Will Calls for a “New Global Financial Order” Result in a Se

[co-shoot]

This seems to fit what has to happen...soon I hope...if we are to ever get our packys LOL

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Friday, October 24th, 2008

Will Calls for a “New Global Financial Order” Result in a Second Bretton Woods and the End of U.S. Dominance?
By Jason Simpkins
Associate Editor
Money Morning

The leaders of 20 of the world’s most developed nations, the G20, will convene in Washington D.C. on Nov. 15 for an emergency financial summit considered by many to be the 21st century version of the Bretton Woods initiative of 1944. This will be the first chance for European leaders – many of whom blame the current financial contagion on U.S. free market capitalism run – to press for an overhaul of a global financial system the United States has dominated for more than 60 years.

The summit will “seek agreement on principles of reform needed to avoid a repetition of the problems and assure global prosperity in the future,” U.S. President George W. Bush, European Commission President Jose Manuel Barroso and French President Nicolas Sarkozy said in a joint statement.

However, Barroso was more explicit – and less diplomatic – earlier this week when he said that “we need a new global financial order."

President Sarkozy has also expressed his desire for a more dramatic remaking of the current financial system, which he says “has distanced itself from the most fundamental values of capitalism.” It was the French president who earlier this week pressed President Bush to call a summit of the G8 and include the developing nations of India and China.

Sarkozy, over the past week, outlined some of the broad principles of reform he hopes to achieve. Specifically he argued that “no bank that works with government money should be allowed to work with tax havens” such as the Cayman Islands. He also raised the issue of curbing executive pay.

“No financial institution should escape regulation,” the French president said, referring to hedge funds and private equity firms. And the world’s most prominent credit agencies –
dominated by such U.S. institutions as Moody’s Corp. (MCO), Fitch Ratings Inc., and Standard & Poor’s – should have their role in the global credit market reduced after their “scandalous” ....da dah.

Sarkozy isn’t alone either. The European Union (EU) is also on board with tougher regulations on hedge funds, limits on executive pay, and new rules for credit rating agencies. And British Prime Minister Gordon Brown, who has been instrumental in pushing for reform, has called for 30 cross-border "colleges of supervisors" to be established by the end of the year to monitor the activities of the world’s 30 biggest banks.

Indeed, the recent rash of criticism from leading politicians is indicative of the prevailing sentiment in Europe that the failure of U.S.-style free market capitalism is most to blame for the credit crisis that has put the world economy at risk of a recession. For Sarkozy, Brown and others, reform will not end with increased oversight of financial institutions but extend to the fabric of the global financial system, as well as the U.S. dominance that lies at its heart.

“Europe wants it. Europe demands it. Europe will get it,” Sarkozy said in reference to global financial reform last Saturday. ((heh heh))

And while President Bush has insisted that the United States will seek to preserve the foundations of democratic capitalism – a commitment to free markets, free enterprise, and free trade,” Sarkozy has branded the lax regulation that has become the hallmark of the U.S. economic philosophy as a “betrayal of the spirit of capitalism.”

To Europe, the capital excess that is behind the global financial meltdown epitomizes the behavior of an America that has essentially squandered its role as the standard bearer of global finance.

“We cannot continue accepting the increasing deficit of the world power,” Sarkozy said. “Americans for three decades have been living over their limits.”

Bretton Woods – Then and Now
In 1944, the United Nations Monetary and Financial Conference – a collection of 740 delegates from 44 Allied nations – convened in Bretton Woods, N.H. The goals were to prevent a repeat of the Great Depression and facilitate the reconstruction of Europe following World War II.

After three weeks of deliberation, delegates agreed to a number of principles that established the rules for commercial relations among the world’s major industrial states and served as the foundation for today’s financial system. To this day, that complex plan is known as the “Bretton Woods system of monetary management.”

The nations participating agreed to fix their exchange rates to the dollar. The dollar was, in turn, fixed to gold at a value of $35 per ounce of gold bullion. The conference also led to the formation of the Bank for Reconstruction and Development, the General Agreement on Tariffs and Trade, and the International Monetary Fund (IMF).

The Bretton Woods system met its demise in 1971 when U.S. President Richard M. Nixon severed the link between the dollar and gold. Most major world economies now float their currencies. However, such Bretton Woods institutions as the Bank for Reconstruction and Development and the General Agreement on Tariffs and Trade (GATT) live on in the form of the World Bank and the World Trade Organization (WTO), respectively. The IMF, meanwhile, is currently negotiating broad-based bailouts for Iceland, Ukraine, Hungary, and Pakistan.

And analysts aren’t confident that the upcoming round of dialogue will produce the “very large and very radical changes,” that British Prime Minister Gordon Brown has called for and Sarkozy has seconded.

The original Bretton Woods conference took years of coordination and planning. It was also a three-week gathering of the world’s foremost economists, including John Maynard Keynes – not an impromptu political salon for world leaders to pontificate on the obvious shortcomings of the current financial system. And as the IMF’s continued intervention in many struggling world economies illustrates, many of the old Bretton Woods Institutions still have value.

“Things like this that produce real results for the world are planned years in advance,” Edwin M. Truman, who was an assistant secretary of the Treasury under U.S. President Bill Clinton, told The New York Times. “The notion that you’re going to have something come out of this in three months is probably naïve.”

The timing of the conference is also precarious, as it will come just 11 days after a new U.S. president is elected and just a few days before President Bush takes his last official trip abroad. The U.S. president will be joining an annual summit of Asian-Pacific leaders in Peru.

The meeting is being planned in such haste that the White House was not yet certain where it will actually be held. And with so many nations participating – not to mention a lame duck U.S. president – it unlikely the November summit will achieve anything substantive.

Still, there remains the hope that at least a framework of discussion – and perhaps even an outline for reform – can be established.

Instead the leaders who attend will be challenged to “agree on a common set of principles for reform,” White House Press Secretary Dana Perino told The Times. It will then be up to financial experts “to put meat on the bones when it comes to fleshing out the principles.”

http://www.moneymorning.com/2008/10/24/bretton-woods/

http://www.euractiv.com/en/financial-se ... cle-176571

[co-shoot]

Xxxx, another step to what is happening...I think

Asia, Europe reach consensus on financial crisis
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Digg Facebook Newsvine del.icio.us Reddit StumbleUpon Technorati Yahoo! Bookmarks Print By CHRISTOPHER BODEEN, Associated Press Writer Christopher Bodeen, Associated Press Writer – Sat Oct 25, 7:07 am ET AP – European Commission President Jose Manuel Barroso speaks at the opening ceremony of the 7th Asia-Europe … BEIJING – Asian and European leaders said Saturday they have reached a broad consensus on ways to deal with the global financial meltdown and will present their views at a crisis summit next month in Washington.

Speaking at the close of a two-day Asia-Europe Meeting in China's capital, the leaders called for new rules for guiding the global economy and a leading role for the International Monetary Fund in aiding crisis-stricken countries.

The biennial forum, known as ASEM, generally does not make decisions, and a statement issued by the leaders indicated how much the crisis in global markets has driven world opinion and institutions.

"I'm pleased to confirm a shared determination and commitment of Europe and Asia to work together," EU Commission President Jose Barroso said at a closing news conference.

He said participants would use the statement as the basis of their approach at the Nov. 15 Washington summit of the 20 largest economies.

Although short on details, the statement, adopted Friday, calls on the IMF and similar institutions to help stabilize struggling banks and shore up flagging share prices.

"Leaders agreed that the IMF should play a critical role in assisting countries seriously affected by the crisis, upon their request," it said.

Participants also agreed to "undertake effective and comprehensive reform of the international monetary and financial systems," the statement said.

The document is one of the strongest endorsements yet for a leading role in the crisis for the Washington-based IMF, long known as the international lender of last resort.

Responses to the crisis among participants have been varied thus far. The 15 euro countries and Britain reacted in dramatic fashion, agreeing to put up a total of US$2.3 trillion in guarantees and emergency aid to help banks. In contrast, South Korea, China, Japan and the 10-country Association of Southeast Asian Nations have merely recommitted themselves to an US$80 billion emergency fund to help those facing liquidity problems — to be established by next June — even while their stock markets tumble and export markets dry up.

Speaking for the hosts, Chinese Premier Wen Jiabao said financial innovation needed to be balanced with regulation, and called for measures to reduce the impact of the meltdown on jobs, growth and trade.

"We need to use every means to prevent the financial crisis from having an impact on the growth of the real economy," Wen said.

He said that the direct impact of the crisis on China had been relatively light, but the accompanying slowdown in the world economy and export demand would "inevitably have an impact on China's economy."

China will seek to do its part by maintaining "fairly fast and stable economic growth," Wen said. Although growth in the third quarter slowed to 9 percent — down from 11.9 percent for all of 2007 — China's economy continues to grow at the fastest rate among the largest economies.

French President Nicolas Sarkozy said the Beijing summit had raised expectations for solid results when the leaders meet in Washington.

"They have all expressed their willingness for the Washington summit to be a place where we make some decisions, and we have all understood that it would not be possible to simply meet and have a discussion, we need to turn it into a decision-making forum," Sarkozy said.

German Chancellor Angela Merkel called for the IMF to become a "guard for the stability of the international finance system," and said there was unanimous agreement that it needed to take on a supervisory role.

She also called for the step-by-step integration of the IMF into the Financial Stability Forum, founded in 1999 by the Group of Seven leading industrialized countries and aimed at bolstering the international financial system.

The IMF, whose loans normally include strict provisions, is discussing loan packages with close to a dozen countries from Iceland to Pakistan, and is examining ways to speed up the process.

___

Associated Press writers Henry Sanderson in Beijing and Kwang-tae Kim in Seoul, South Korea, and researcher Bonnie Cao in Beijing contributed to this report

[Arthur Rubin]

The IMF, whose loans normally include strict provisions

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