[DEBATE] : U.S. financial dominance is over -- and it's Germany saying so, not just Ira
Riaz K Tayob
riaz.tayob at gmail.com
Fri Sep 26 10:10:38 BST 2008
U.S. financial dominance is over -- and it's Germany saying so, not just
Submitted by cpowell on 03:03PM ET Thursday, September 25, 2008.
Section: Daily Dispatches
By Noah Barkin
Thursday, September 25, 2008
BERLIN -- Germany blamed the United States on Thursday for spawning the
global financial crisis with a blind drive for higher profits and said
it would now have to accept greater market regulation and a loss of its
financial superpower status.
In some of the toughest language since the crisis worsened this month,
German Finance Minister Peer Steinbrueck told parliament the financial
turmoil would leave "deep marks" but was primarily an American problem.
"The world will never be as it was before the crisis," Steinbrueck, a
deputy leader of the center-left Social Democrats, told the Bundestag
"The United States will lose its superpower status in the world
financial system. The world financial system will become more multi-polar."
Steinbrueck, whose efforts to secure greater transparency on hedge funds
during Germany's G8 presidency last year collapsed amid objections from
Washington and London, attacked what he called an Anglo-Saxon drive for
double-digit profits and massive bonuses for bankers and company executives.
"Investment bankers and politicians in New York, Washington and London
were not willing to give these up," he said.
He proposed eight measures to address the crisis, including an
international ban on "purely speculative" short-selling and an increase
in capital requirements for banks in order to offset credit risks.
The collapse of U.S. investment bank Lehman Brothers and financial woes
of other financial institutions like insurer AIG have prompted the U.S.
government to propose a $700 billion rescue package for the country's
... American Problem
Steinbrueck welcomed U.S. efforts to stem the crisis but said it was
neither necessary nor wise for Germany to replicate the U.S. plan for
its own institutions, which are under pressure but do not face the same
risks as their U.S. counterparts.
The German Bundesbank said this week that the financial market
turbulence would hit the earnings of Germany's big commercial lenders,
its publicly-owned Landesbanks and its cooperative banks.
Tighter credit in the wake of the crisis could also constrain household
consumption and corporate investment, increasing the likelihood the
German economy will fall into recession this year.
But Steinbrueck said German regulator Bafin believed German banks could
cope with losses and ensure the safety of private savings, calling the
turmoil primarily an American problem.
"The financial crisis is above all an American problem. The other G7
financial ministers in continental Europe share this opinion," he said.
"This system, which is to a large degree insufficiently regulated, is
now collapsing -- with far-reaching consequences for the U.S. financial
market and considerable contagion effects for the rest of the world,"
He advocated stronger, internationally coordinated regulation, saying
the crisis showed that national action was not enough.
"The International Monetary Fund should become the controlling authority
for the application of worldwide financial market standards," he said.
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