Global Bailout?

Whether or not the American bailout of the financial sector includes significant regulatory provisions, there’s already an emerging European consensus that the current crisis demonstrates the need for a regulatory body on a global level. From the EU Observer:

Peter Steinbrueck, Germany’s Social-Democrat finance minister, raisedon Sunday (21 September) the idea of “an international authority thatwill make the traffic rules for financial markets,” while speaking toGerman radio, Reuters reports.

Meanwhile, UK Prime Minister Gordon Brown is to outline proposals forjust such a body, run under the authority of the International Monetaryfund, in a speech to the Labour Party conference on Monday. . .

In an op-ed in Le Monde this morning, IMF director Dominique Strauss-Kahn didn’t go so far as to call for a global regulatory agency, but he did underline the importance of regulatory reforms:

To speak bluntly, this crisis is a crisis of the regulatory system and its failure to prevent the excessive risk assumed by the financial system, particularly in the United States.

He also argued that with the world’s financial markets so elaborately interconnected, any bailout has to be coordinated on a global scale for it to be effective.

Meanwhile, the fact that this crisis is perceived around the planet as “Made in America” is doing nothing to improve our currently not-so-rosy global image.

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