September 25th, 2008

Fritz Finance Minister: Uncle Sam no Longer Superman

From Marketwatch.com:

U.S. losing financial superpower status: Steinbrueck

By William L. Watts, MarketWatch
Sept. 25, 2008

LONDON (MarketWatch) — Germany’s finance minister on Thursday laid the blame for the global banking crisis on the Anglo-American free-market model’s quest for ever-higher near-term profits, predicting the United States would soon lose its role as the world’s dominant financial power.

“The U.S. will lose its status as the superpower of the global financial system, not abruptly but it will erode,” Finance Minister Peer Steinbrueck told the lower house of Germany’s parliament in Berlin, according to published reports.

“The global financial system will become more multi-polar.”

Steinbrueck criticized the United States for failing to adequately regulate investment banks and said free-market policies embraced by the United States and Great Britain that emphasized a short-term “insane drive for higher and higher profits” were partly to blame for the crisis.

“Wall Street will never be what it was,” he said.

The finance minister said he would push for a global ban on speculative short selling and would use next month’s meeting of the Group of Seven finance ministers and central bankers in Washington to press for new rules that would prevent banks from fully securitizing loans and selling them to third parties.

Steinbrueck said U.S. authorities were late in undertaking rescue efforts, but said he welcomed the decision to attempt to bail out only organizations whose collapse would threaten the world financial system.

He repeated that he felt there was no need for Germany or Europe to echo the U.S. Treasury’s proposal to spend around $700 billion to buy up toxic assets from distressed banks’ balance sheets, saying the financial crisis is largely an “American problem.”

The minister warned, however, that the fallout from the crisis would make for lower growth in the near future and eventually impact the labor market.

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Well. That blast follows the whipping Bush took in New York this week as the U.N. General Assembly convened. Lecturing re terrorism and reassuring re finance, he was greeted with open anger and derision.

(One had thought his people had learned he can’t be allowed to take the world stage.  That ended at the G7 in 2006 (?) when he groped Merkel on the way to the podium.)

It’s breathtaking, to grasp in one thought the extent of the damage Bush-Cheney have wrought. Starting with Enron right out of the gate, then into 9/11, the wars, Katrina, the consistent assault on constitutional protections (again from day one), and now, in the end, this consuming financial disaster.

So what’s happening, man?

Not merely the end of a cycle of American history, but, as wondered aloud again last week, of the American hegemony that has pertained throughout the postwar period (1945)?

I’ve often thought — most of my adult life — that such a come-down would be a good thing.  “The business of America is business!“  has always been vile propaganda.  The fall the German minister foresees  may land us in a better place.

Meanwhile, in any case, the Chinese today launched three men into orbit, hoping for the first time to execute a Space Walk.

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2 comments

  1. ed says:

    And here’s a Times piece on the theme:  The end of free-wheeling independent investment banking in New York.

    Whither goest that spirit?

    West unto the East: Charlotte. Houston. Tokyo. Shanghai. Hong Kong. Singapore. Dubai. Riyadh. Frankurt. London.

    September 28th, 2008 at 2:06 am

  2. ed says:

    Ooops. A week or so after the German Finance minister (above) was gloating, fears are expressed in London’s Daily Telegraph that the European banks are in even worse shape — so much so that the EU might be torn apart.

    October 3rd, 2008 at 12:32 am

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