[Marxism] "Sarkozy Calls for Revamping of Capitalist System"

[David Thorstad]

Sarko is considered on the "right" of the French political spectrum, 
but, in terms of the fucked-up state of U.S. politics, his views seem to 
the left of even people like Dennis Kucinich and Ralph Nader.
David
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^


News Press
October 15, 2008

Introduction by the President of french Republic to the European Council 
session on the financial crisis

Presidency of the French Republic

 

1. In the course of the past week, the initiatives taken in Europe have 
made it possible to produce an initial global response to the financial 
crisis. This is still not final, but for the first time the Europeans 
have shown that they are capable of coordinated action in an emergency.

2. For the first time in financial history, it is plans worked out in 
the European Union which have inspired the measures taken in other 
countries of the world, including the United States. Europe has shown 
leadership in dealing with the crisis and I welcome this.

3. We must demonstrate the same leadership in the consideration of the 
future on which we have embarked. This is not a crisis of European 
origin. But it is the Europeans who are - and have been for a long time 
- coming up with proposals for reform of our international financial 
system. I myself already urged the G8 to act accordingly in August 2007, 
and I have repeated that call for reform, before the United Nations.

Today we are facing a dual, historic, challenge. Firstly, to ensure this 
crisis is dealt with conclusively.

Secondly, to make sure that mistakes made in the earlier crises - that 
of the emerging countries in 1998, and the collapse of the internet 
bubble in 2001 - do not recur. We dealt, then, with the malady's 
symptoms but did not strike at its root causes.

4. This crisis is one too many. The system must be completely 
overhauled, an overhaul that must be global. A new form of capitalism is 
needed, based on values which put finance at the service of business and 
citizens, and not vice versa:

- The role of public players needs to be reconsidered: I would propose a 
simple principle, that no financial institution should escape regulation 
and supervision. I am thinking, for example, of the regulation that we 
must apply to the rating agencies, and of the necessary supervision of 
hedge funds. The rules must be revised and made consistent, and the 
emergence of further speculative bubbles has to be avoided. In this 
connection, there has to be a fresh look at the method of developing 
accounting standards and their consistency with prudential rules.

- Private players must be made accountable: I am thinking, for example, 
of the remuneration issue, on which we are already making progress in 
Europe.

5. This overhaul cannot stop at Europe. The economy is global, no 
country can protect itself alone. Yes, States are sovereign; yes, there 
are differences between the richest countries, the emerging countries 
and the other developing countries. But the theory of uncoupling has not 
withstood the test of reality. There is only one world; everyone is 
concerned. We must involve in our discussions those who are already 
economic and financial powers: the emerging countries. we must also work 
to eliminate the grey areas that undermine our efforts at coordination, 
in this case the off-shore centres.

Lastly, I want to say that we shall not let the poorest countries fall 
and thereby wreck the years of development efforts.

6. World economic governance is too fragmented. We must look for a new 
mode of coordination between all the players involved: international 
organisations, regulatory and supervisory authorities, and more 
generally all the fora that produce standards in the economic sphere. 
But I am also thinking of the need to ensure that the mandates given to 
each of these players are consistent.

I said this to the United Nations General Assembly in New York in 
September. We need a new Bretton Woods. The new system will have to have 
all the necessary political legitimacy and to show that it can deal with 
the new global challenges.

7. I propose that when we depart from the European Council, we all take 
this message with us.

That is the spirit in which I proposed an international Summit before 
the end of the year, preferably in New York where everything began. It 
is my wish that we Europeans should be fully united in this matter. This 
Summit is a starting point for the necessary adoption of the agenda, 
objectives and values of this great reform. I now call for your proposals.

Bruxelles - Wednesday October 15th, 2008

 

Washington Post
October 17, 2008
Sarkozy Calls for Revamping of Capitalist System; French Leader to Meet 
With Bush Tomorrow On Financial Summit

Edward Cody

 

European leaders on Thursday urged that a pending international summit 
carry out an urgent overhaul of the world's financial architecture and 
impose new controls on freewheeling bankers and traders. U.S. officials 
pledged that all good ideas would get an airing but hinted of opposition 
to giving new authority to international regulators.

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.

The current international financial system grew out of a U.S.-dominated 
meeting of 44 allied nations in 1944 at a genteel resort in Bretton 
Woods, N.H., as victory in World War II was coming into sight. In 
addition to establishing the World Bank and International Monetary Fund, 
the conference laid down a philosophy of lowering trade barriers and 
easing the movement of money across borders.

Launching a remake of this old model -- particularly in such a short 
time, with so many new participants -- would represent a daunting 
challenge at any time, but particularly during the twilight of the Bush 
presidency and the crisis that is still jolting banks and stock markets 
around the world.

Japan's Nikkei stock index fell by more than 11 percent Thursday, and 
European markets sank across the board on fears that the financial 
crisis was leading to a sharp economic slowdown despite efforts by 
government leaders to shore up the system with massive injections of 
funds. London's FTSE 100 was down 2.9 percent, Frankfurt's DAX dropped 
by 2.3 percent, and the CAC 40 in Paris was off by 3.6 percent.

Sarkozy said Thursday that continued nervousness in the markets showed 
all the more clearly that speed and audacity by the world's leaders are 
precisely what is required. "We do not have the right to let the luck 
and the opportunity to create the financial system of the 21st century 
get away from us," he told reporters after the conference.

The bloc's decision to advocate new financial rules and dispatch Sarkozy 
to carry the torch to Washington was seen here as an affirmation of 
European confidence and aspiration to leadership at a moment of reduced 
U.S. influence in world affairs. "Europe wants the summit before the end 
of the year," he declared. "Europe wants it. Europe demands it. Europe 
will get it."

White House deputy spokesman Tony Fratto said Thursday that "every good 
idea" would be considered at the still unscheduled meeting, which was 
called by the G-8 countries -- the United States, Canada, Britain, 
France, Germany, Italy, Russia and Japan. G-8 leaders have urged that 
leaders from nonmember countries be included as well.

Earlier, Fratto said that anything the gathering did must not restrict 
the flow of trade and investment. President Bush appeared to echo that 
concern Thursday when he said at a bill-signing ceremony that "in the 
long run, one of the best ways to restore confidence in the global 
economy is by keeping markets open to trade and investment."

Jose Manuel Barroso, head of the European Union's executive body here in 
Brussels, cautioned that the United States must be brought aboard for 
the conference to succeed: "There can't be a solution to the 
international financial crisis without the active participation of the 
United States."

Where the summit will take place is also unsettled. Sarkozy has proposed 
New York. Prime Minister Taro Aso of Japan, which chairs the G-8 this 
year, wants it to be in his country. He told parliament Thursday that he 
would prefer that no summit were necessary: "Holding such a meeting 
would mean we are just one step away from a worst-case scenario," Aso said.

After weeks of prodding, the Bush administration announced Wednesday 
that it was ready for an international financial conference. But it was 
unclear whether U.S. officials are as enthusiastic as their European 
counterparts about moving quickly in new directions.

Although the atmosphere has changed markedly in Washington in recent 
weeks, with government funds being freely poured into shaky banks, the 
United States traditionally has been a free-market champion, stripping 
away controls in its own banking system and demanding that other nations 
do the same. In contrast, since the financial disruption broke out on 
Wall Street last month, many European leaders have been calling for a 
return to more regulation.

British Prime Minister Gordon Brown called for increased supervision of 
international financial exchanges and suggested the Washington-based IMF 
should be reorganized to play this role.

"The IMF has got to be rebuilt as fit for purpose in the modern world," 
he told reporters here Wednesday. "We need an early warning system for 
the world economy that can involve the supervisors in different 
countries. Where international or multinational companies work in a 
whole series of different countries, they themselves are agreeing that 
instead of having 15 different supervisors meeting separately, that you 
have a college of supervisors to deal with this issues.

"And there is no doubt," Brown added, "that round the world there is 
insufficient transparency, too much opacity, too little information 
about what are the problems that if known about early on can be dealt with."

In an e-mail, U.S. Treasury spokesman Robert Saliterman said that "our 
top priority right now is restoring stability to our financial system so 
lending flows again to the consumers and businesses that are the engines 
of our economy, and we also need to take steps -- working with our 
colleagues abroad -- to prevent a future recurrence of the current turmoil."

". . . The international community has a very active agenda underway 
through the Financial Stability Forum and other international bodies," 
he noted in the e-mail. "We are working together to strengthen practices 
on -- valuation and disclosure; credit rating agencies, risk management 
and prudential oversight."

He declined to comment on most of the ideas being floated but did appear 
to respond directly to Brown's proposal for a college of supervisors, 
writing that "ultimately regulation is undertaken at a national level, 
though it must take the global context into account. In this respect, a 
global regulator is not a realistic approach."

Asked about the conference agenda, Sarkozy threw out a list of ideas 
similar to Brown's. He also said that some international supervisory 
body should be set up, associated with the IMF, and that tax havens 
should be ended. Highly speculative hedge funds should be more closely 
regulated, he suggested, rating agencies should be made more independent 
of the financial institutions they monitor, and traders' compensation 
schemes should no longer encourage risk-taking.

Albrecht Ritschl, an economic history professor at the London School of 
Economics and Political Science, said that despite talk of a new Bretton 
Woods, no one yet knows what a new financial exchange framework might 
look like. "One thing is clear," he added. "Everyone feels a need for 
regulation of the financial markets."

Sarkozy, Brown and German Chancellor Angela Merkel will be in close 
touch in coming days to push the conference to fruition, Sarkozy said. 
But it should also include some others in the 27-nation European Union 
and countries whose economies have recently grown to international 
proportions, such as China and India, he added.

"A new, acceptable architecture of the financial markets can only be 
drafted together," Merkel told reporters. She said China, India, Brazil, 
Mexico and South Africa should be included.

Mark Duckenfield, a lecturer at the London School of Economics, said 
China and rich Middle East countries in particular would have a natural 
place in such a gathering because the enormous amount of money they have 
in reserves makes them players in the international system. "They are 
the only ones with any money left," he added. "They certainly have the 
dollars, but what they want in exchange . . . could be the problem."

Christian Dreger, chief economist at the German Institute for Economic 
Research in Berlin, cautioned that there will be no quick changes. 
"Different countries will have different interests," he said. "Their 
banks are affected differently by this. It will be a long-run process."

The E.U. summit that ended Thursday also pledged to proceed with costly 
anti-global-warming programs despite the crisis, and to extend a bank 
bailout plan to all of the bloc's 27 member countries.

Staff writer Peter Whoriskey in Washington, correspondent Kevin Sullivan 
and special correspondent Karla Adam in London, correspondent Mary 
Jordan and special correspondent Shannon Smiley in Berlin, and 
correspondent Blaine Harden in Tokyo contributed to this report.

 


 

-------------- next part --------------
An embedded and charset-unspecified text was scrubbed...
Name: Attached Message Part
Url: http://lists.econ.utah.edu/pipermail/marxism/attachments/20081017/35d76a4b/attachment.txt