What will be the shape of the world’s new financial order?

October 22, 2008

A man protests outside the New York Stock Exchange October 13, 2008. Governments around the world bet hundreds of billions of dollars to rescue failing banks on Monday, sending world stocks soaring and giving Wall Street its biggest one-day gain ever. REUTERS/Shannon Stapleton (UNITED STATES)The global financial crisis has produced broad agreement that the world needs a new financial architecture, but world leaders are a long way from reaching agreement on what shape it should take.

Many countries have rescue plans to support banks and unfreeze credit markets. The United States has set in motion reforms to change the relationship between Washington and Wall Street.

But calls are being made for much deeper, coordinated reforms, and a series of global summits is planned to discuss how to reform the financial system. The first of these meetings will be held on Nov. 15 in the United States.

Capitalism as we used to know it may be on its deathbed. Some world leaders have called for a revamp of the 1944 Bretton Woods conference that resulted in the post-World War Two financial order and created the IMF and the World Bank. 

Economists and commentators have been filling newspapers with suggestions about what should be included in the new financial architecture, from more regulation to concerns about climate change and trade.

Some experts say world leaders risk making terrible mistakes of they get it wrong and must stand back and properly assess what went wrong before enacting wholesale reforms. Others say it would be wrong to force one country or region’s vision on another.(L-R) Austria’s Chancellor Alfred Gusenbauer, Luxembourg’s Prime Minister Jean-Claude Juncker and France’s President Nicolas Sarkozy, whose country currently holds the rotating Presidency of EU, chat at the start of a European Union leaders summit in Brussels October 15, 2008. EU nations are set on Wednesday to back calls for a root-and-branch overhaul of the world’s financial structures in a bid to ensure no repeat of the worst credit crisis since the 1930s Great Depression. REUTERS/Gerard Cerles/Pool (BELGIUM)

There is little doubt we are now, as British Prime Minister Gordon Brown put it, at a “defining moment” for the world economy. But there are more questions than answers.

Can world leaders overcome their differences and live up to the task? Will they have any concrete proposals to discuss on Nov. 15? Will it be more than a big talking shop?

As financial and philanthropist George Soros says, what kind of system will evolve from this is a very open question. 

13 comments

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Its time we rally against the inept Government . Its time we Rally against the Chief Executive Officers and CFO’s who have walked away with our cash. Its time the people of this country stand up and say no to the B.S. that has been splashed in our face. A March on Washington and a March on the Offices and homes of the Chief executives of AIG , Lehman, Fannie and Freddie is in the works. The 700 Bilion Dollar Bailout of the Banks and Financial institutions will be like adding fuel to a roaring Fire.With its 100 Bilion PLus in Pork, It will temporarily bring some smiles as the indexes close up but an eventual collapse of this unstable system is inevitable. The Government plans to print new money to pay for the bailout. The U.S. Dollar will be worth less than toilet paper( which we thought it already was.) Make your voice heard, Join the Rally to Protest the Theft of our country. So much for the mortgage mess, subprime lending and Fraudulent rating and selling of Mortgage backed securities. Next shoe to drop is the Consumer Credit Card mess that Bankers have gotten into. The Credit Card and Car Loan Bubble is the next to burst. The Middle class will pay again for the mistakes and misdeeds of the very corrupt, irresponsible chief executive and chief financial officers. Dont stnd by idly while this Lame Duck smiles as we go up in flames..Join the March…

Posted by Heywood Jablomé | Report as abusive

Excellent. The world economy is completely changing and we all must adjust accordingly. Since all countries are engaged in commerce in some way, all countries need to revamp their economic responsibilities to their “own people” and to other countries as well. Let’s hope the “richer” countries do not forget the hundreds of millions around the planet who are living in starvation and whose crops are gone because of drought…brought on by global warming…brought on by “richer” countries industrialization, consummerism, and exploitation (cheap labor) of those now suffering. We are all connected. What’s that expression about water raising all ships; so conversely, the opposite is true, too. We must unite in a objective, dramatic, and long-term economy recovery together! Cheers!

Posted by good day | Report as abusive

Although it is a controversial publication, looking at the Wikipedia summary of the various points of the Protocols of the Elders of Zion, there is a forecast of such an event, the collapse of the credit market and recovery though nationalization of the banking system as expressed in number 22.

Written 100 years ago before the world embarked on massive credit programs, it portrays an interesting scenario of what might happen.

Posted by Slydog | Report as abusive

Its ironical that the very country that started the big deception and let the economy to its knees is inviting to a conference.. Sounds as if Germany would lead the post WWII decisions on world order and hae a permanent place in the security council.

Might it be that we will see a meeting in USA, one meeting in France and the last one in UK? The old world powers desperate to keep the system intact and not removing the World bank, IMF and G7 group in favor for a true global organisation that can be controller by others then a American or European and where votes are based on current worldview and not then one existing in 1944.

Posted by Mazepa | Report as abusive

This global economic crisis happened because it needed to at a time when humanity is stretching and exhausting the resources of the planet in blind pursuit of profit and unending economic growth . This crisis has happened because we desperately need to adddress the way we live and manage resources and so our leaders must not be allowed to lumber us with a Capitalism 2.0 simply built upon the worst excesses of version 1.0.

Ordinary people have a stake here too, this isnt just about bankers , the world of high finance and redefining financial instruments , its about the way we live on this fragile overcrowded planet and how long we want to go on living on it. We have an opportunity here to embark upon real economic reform , to strike a New Deal for the Planet which addresses poverty , the environment and sustainability. We need a future plan for life not a quick fix and return to a system that never sees beyond short term gains

The tide is rising and change is inevitable… THIS IS A GREAT OPPORTUNITY FOR THE MEDIA TO MAKE A DIFFERENCE TO THE WORLD. The present system has become so top heavy, that it is about to collapse, and out of destruction comes re birth. Lets make sure it is not as violent as the beginning of the 20th C and that finally all of humanity will be fed, and the planet will be cared for. A new system needs to uphold the rights of the individual, and also the rights of diverse cultures. Sometimes you need to go down to go up, and the present world condition is finally waking people up to the injustices the present system embraces. We need great minds to work out a new system which unlike the present system does not reward the pathological, and instead supports a higher ideal of unity of mankind as brothers and sisters under One Sun. All cultures and races rights must be championed, along with the freedom to achieve, without this the natural spirit of progress will be damaged with negative consequences. As a whole, HUMANITY HAS A CHOICE, either embrace positive change or continue down the same path of diminishing returns. We need leaders to harness this positive moment and take the world up to a new level.

Where there is hope or a dream there is possibility of attainment, lets leave history behind and move forward to something better for everyone!

Posted by Time for a change. | Report as abusive

Creating local currency is what we will do if we have any sense. There are thousands around the world. They were used in the United States during the great depression. They are based on REAL wealth, created by REAL PEOPLE. They have been attacked by governments on occasion because of the threat they pose to authority, leaving local economies to suffer under sadly oppressive financial policies.

Copy and paste these into your browser…

The Schumacher Society is dedicated to linking people, land, and community by building local economies:
http://www.smallisbeautiful.org/

An article about an extremely successful local currency in Austria, until government shut it down:
http://www.newciv.org/nl/newslog.php/_v1 05/__show_article/_a000105-000002.htm

How a truly sustainable economy would look:
http://www.jeffvail.net/2008/07/re-post- hamlet-economy.html

Our hope for long-term survival:
http://www.permacultureprinciples.com/fl ower.php

Slydog, it is one thing to simply read. It is another to question what we read. Perhaps you should read the “Wealth of Nations” and “The Communist Manifesto”. I think that these books, when carefully considered, will help us all to understand where modern capitalism went wrong and where we are headed. Adam Smith warned of the cost when military power is used for enforcing or maintaining economic stability and relations. Karl Marx predicted the nationalization of banking as a response to recurring financial collapses in unregulated capitalist societies. Do their comments sound even vaguely relevant?

properties, demographic conditions, habits, cultures, productivity etc.. You might have many more theories to evaluate its financial, ecological social and other values that can be provide minimum human requirements without any compromise with tough carbon emission standards. we must have to find out efficient barter system which can be controlled by various regulatory bodies/countries. I mean to say that life supporting commodities should be negotiated only against transfer of natural products,and other products against valuable exchanges.

Posted by Ashish Vora | Report as abusive

Their are many ways to get what a person wants; 1. Steal it from someone weaker. 2. Borrow money even though you know you can’t pay it back. 3. Go to school-increase your earning ability-work harder, two jobs if necessary.
Honor, a Christian work ethic says to do item #3. The BUMS in Washington are in items #1 and #2 As the ?nutcase with the sign says,”Repent the hour is at hand” Come on folks, work for what you want. Don’t buy junk or stuff you don’t need. Support the American Worker!! John

This is a real laugh.

The people who engineered the crash are supposedly talking about how to stop it happening again!

Ha Ha Ha. Isn’t this what they used to call “Putting the lunatics in charge of the asylum”?

Posted by Peter | Report as abusive

It’s a great time for politicians. They can whip up hysteria about bankers’ bonuses and hope that no-one thinks too hard about who really did the damage. While dreaming of power. Power in the name of the people.

It’s a great time for the pundits who can tell us precisely how it all went wrong. Strange that they never told us when it was going to happen.

It’s a great time for the survivalists and other assorted fruitcakes who thrive on disaster scenarios. The purveyors of baked beans, bottled water and shotguns must be making a fortune.

It’s just a shame about all the people who have lost their money. It’s not a great time for them.

And there won’t be any “new world order”. The market is simply correcting itself and all will be well again shortly. Bad news for the media.

Posted by Jason | Report as abusive

When my car engine needs fixing I take it to mechanic. When plumbing gives problems I call a plumber. When the world fincial system breaks I call the economists and accounting scientists. Who are they ? They are the credible academics who do not have vested interests in the system. They lend their specialist knowledge. The outcome of a financial revamp : more checks and balances like Sarbarnes Oxley. When is the turnaround ? When there is drastic deflation and living becomes easier for uneducated who hold down minimum wage jobs. Those in the accounting fields will gain because accounting knowledge workers will have more jobs since they will have to police financial systems.

Posted by Barthol | Report as abusive

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