Make way for 'moral' capitalism

In a damning joint statement today the heads of France and Germany said that the current world financial system is a mess and that it would be up to Europe to bring in a new age of 'moral' capitalism.

French President Nicolas Sarkozy and German Chancellor Angela Merkel took aim at the United States, with Sarkozy saying that "in the 21st century it is no longer a single nation who can say what we must do, what we must think," in regard to America's position as the global leader of Capitalism. The two said the current global financial system "had been 'perverted' by an 'amoral' form of unbridled finance capitalism," and that it was up to Europe to lead discussions for a new global financial system at this coming April's meeting of the G20 (a group representing the world's 20 largest economies).

Since the Wall Street market meltdown last September, the United States has been on the receiving end of a lot of criticism for its laissez-faire approach to regulating markets - that the sub-prime loan market caused banks around the world to engage in bad investments that in turn led to a global financial crisis (for an example of how bad it is in some places, check out Iceland where the entire country has basically gone bankrupt because of over-exposure in the sub-prime market). But it's one thing to hear leaders like Hugo Chavez and Dmitry Medvedev call for the United States to be replaced as the world's financial leader, it's something different to hear those calls come from Sarkozy and Merkel.

The two have called for a ‘UN-like’ world charter to govern financial markets and stressed the need for continuing regulation of the markets, especially once the immediate global financial crisis passes, when regulation in the past tends to get lax. The call for reform extends to the World Bank and International Monetary Fund, two powerful economic organizations that now are basically run by the United States.

It will all make for a very interesting meeting of the G20 in April, since unlike the similarly-named G8 (Group of Eight), the G20 includes as members developing nations like Brazil and India, meaning development-related issues will likely have a prominent role in any proposed new world financial charter. It will also make for an early foreign policy challenge for President Obama as he tries to keep the United States (I would assume) in the role of the global leader of Capitalism.