UK and US struggle over control of global markets and recession

President Bush will host an emergency summit of leaders from the major economies to chart a new course for world finance amid signs that Europe and America appear intent on heading in different directions.

A weekend meeting at Camp David with President Sarkozy of France and José Manuel Barroso, the European Commission President, produced a joint statement promising to hold “a series of summits on addressing the challenges facing the global economy”. The first will be held soon after the US elections on November 4, when Mr Bush will still be President. He hopes to put his stamp on policies that will largely be implemented by either Barack Obama or John McCain after one of them is inaugurated on January 20.

Mr Bush said: “As we make the regulatory institutional changes necessary to avoid a repeat of this crisis, it is essential that we preserve the foundations of democratic capitalism — commitment to free markets, free enterprise and free trade.

“We must resist the dangerous temptation of economic isolationism and continue the policies of open markets that have lifted standards of living and helped millions of people escape poverty around the world.” But Mr Sarkozy, who holds the rotating presidency of the European Union, which has a tradition of deeper and stronger intervention in markets, advocated a new form of “regulated capitalism” because there is “no liberty without some regulation and stability”.

He urged stiffer regulation of hedge funds and credit-rating companies while also saying that leaders should reconsider the rules governing tax havens such as the Cayman Islands and the relationship between world currencies such as the dollar and euro.

“We must reform capitalism so that the most efficient system ever created doesn’t destroy its own foundations,” he said. Although agreeing with Mr Bush that it would be “wrong — catastrophic — to challenge the foundations of market economics”, he added: “We cannot continue along the same lines, because the same problems will trigger the same disasters.”

Gordon Brown has said that the world’s top 30 banks should be under the supervision of a panel of regulators and wants a revamp of the International Monetary Fund, which was set up at Bretton Woods in 1944 to help struggling economies.

Mr Bush, however, has sought to wrest back control over the reform initiative, with the White House insisting that “the United States has committed to hosting the summit”.

The meetings would involve emerging economic powers previously excluded from similar talks, as well as those that have dominated the global financial system since the Bretton Woods deal. In addition to the G8, leading developing nations such as China, India and Brazil are likely to be invited, along with the likes of Saudi Arabia, South Korea and Australia.

The President-elect — Mr Obama or Mr McCain — will also be asked to attend.

— The French Government has begun an investigation into withdrawals by thieves from President Sarkozy’s personal bank account. The thieves probably “did not know that it was the president’s account”, a source close to the inquiry said. The President’s office confirmed that Mr Sarkozy had filed complaints last month concerning the theft, which reportedly involved only small amounts of money.


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The US has proven they are not competent when it comes to financial regulation. Enron was bad enough, now this mess. Why on earth would the europeans kowtow to their arrogance (and, to put it bluntly, ignorance)? They can’t be relied on.

Rufus, Vancouver, Canada

A commodity backed money is poison for politicians!
They ‘ve got rid of it in 1973.
Sending the bills for wonderful programs and irresistable wars straight home to the voter – no hiding it in “normal market-operations” – would make life difficult.

Peter, Berlin, Germany

Capitalism is the investment of savings as equity capital into new business as free money paid for by the long term creation of dividends from the success of the business and the new earnings of their employees. Loans, CDO’s, retail banking, variable rate mortgages have nothing to do with capitalism

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October 20, 2008. Tags: , , , , , , , , , , , , , , , , , , . news.

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