German Minister of Finance: 'The USA will lose its superpower status in the global financial system'

[PalJoey]

Posted: 10/9/08 at 10:01pm

Bush's legacy: the emasculation of America at a G7 meeting.

The Founding Fathers are weeping in their graves.

===

World finance chiefs heading for Washington for crunch talks

AFP Oct 9 02:01 AM US/Eastern

Finance chiefs from the world's richest nations are set to meet in Washington for a crucial but uncertain meeting at a time of unprecedented fear about the global financial system.

The Group of Seven meeting will bring together finance ministers and central bankers on Friday from the United States, Germany, Japan, France, Britain, Italy and Canada for some collective-thinking on the credit crunch and crashing stocks.

They are to be joined by counterparts from emerging markets including Brazil, Russia, India and China for an impromptu gathering of the expanded so-called G20 group.

The United States finds itself in a rare position of weakness, facing many allies that have been highly critical of its economic policy and regulatory system blamed for the problems.

The gathering will be closely watched by investors, who are eager to see solutions and cross-border action by the world's leading powers to help a return to normal lending practices and calm stock markets.

US Treasury Secretary Henry Paulson said Wednesday the meeting would be a forum "to discuss the steps that each of us are taking to confront this crisis and ways to further enhance our collective efforts."

Treasury Under Secretary David McCormick said the meeting would be "heavily focused on current economic conditions, financial market developments and our collective and individual policy responses to recent financial market turmoil."

A final statement from the group is expected late on Saturday.

Paulson played down the possibility of a one-size-fits-all response to the crisis, however, stressing the different challenges by each country.

The four European members of the G7 have themselves been unable to find a common response and other countries have declined to follow the example set by the United States despite pleas from Paulson.

The US approved a 700-billion-dollar rescue package for financial firms last week that will see the Treasury buy up toxic debt from banks in a bid to encourage them to continue lending.

A European source told AFP at the beginning of the week that it was difficult to predict what would be in the final communique given the rapid developments in the crisis .

On Wednesday, leading central banks unleashed coordinated interest rate cuts on Wednesday in their latest attempt to counter the financial problems, caused by bad debts linked to declining house prices in the United States.

Japanese Prime Minister Taro Aso on Tuesday urged the G7 to send a "strong message" on the market turmoil.

"If the G7 fails to send a strong message, it will have a big impact which I am concerned could spread to Japan," Aso told reporters.

"I would like them to make an effort to reach an agreement that everybody can support," he said.

Tension is expected at the meeting given recent comments by countries affected by the crisis.

German officials in particular have been openly critical in the past weeks, saying the United States and Britain had delayed for years efforts to regulate financial markets that were out of control.

"The United States lacked laws, a regulatory framework that would have prevented" what Social-Democrat Finance Minister Peer Steinbrueck called "uncontrolled speculation" in an interview on September 28.

"The USA will lose its superpower status in the global financial system. The world financial system is becoming multi-polar," Steinbrueck said on September 25 in a speech to parliament.
World finance chiefs heading for Washington for crunch talks

[best12bars]

Posted: 10/9/08 at 10:35pm

Our big problem as a country is that we stopped making "things" and just concentrated on making money.

We decided our homes were worth a lot of money, so we were rich just because we owned them. We invested obsessively in the stock market, playing it like Vegas, to make money. We set up factories or farmed-out our own work to cheap labor overseas to make money.

So, right now, we're watching all our own "money" evaporate.

And until we (as a nation) concentrate on making "things" here again, like cars, fuel, electronics, clothing and toys... we're all going to wallow in our own empty backyard. We are a nation of consumers now, not of builders, manufacturers, creators and craftsman. That was okay for a few years recently, as long as we kept making money doing nothing except living in our "rich" houses... but now, those days are over. We can't buy those overseas "American goods" anymore. We're going to have to cut back and tighten our belts.

We're going to have to stop consuming and save money. And if we do that, there will be nothing left of America, because that's all we've been doing lately. Consuming.

We have to return to making "things" again. For ourselves, and for the rest of the world. Otherwise, you'll watch a few owners of these big companies profiting (temporarily), while their "American goods" are still being made overseas. And the rest of us will get poorer watching them do it. And soon, they will get poorer, when none of us can buy those goods anymore.

Ain't life grand?

(My mini-non-professional state of the American economic union.)

[Mamie]

Posted: 10/9/08 at 10:45pm

Perhaps this is what it needs - a coming together of the world's experts, with no one player in control. The problem with the German statement is that it's a criticism of what has been - and not a recommendation for fixing the problem.

[NYadgal]

Posted: 10/9/08 at 10:49pm

b12b, that's exactly right!

And the entire idea of investing in the stockmarket - becoming a shareholder in companies that manufactured goods or provided services - was tossed out the window as the stockmarket became another Vegas casino.

We have to get back to the idea of investing in the companies that produce goods and services, being paid a dividend when the companies are profitable and participating in the growth of value that is the result of that profit.

I find myself in the interesting position of agreeing with the following statement by Ralph Nader, on the bailout:

"Americans are crying out -- ENOUGH IS ENOUGH! For themselves and their children. Summon your senators and representatives to a school auditorium before November 4, 2008 and instruct them in no uncertain terms. After all, your senators and representatives are supposed to work for you, not against you and for the corporate greedhounds and gamblers with your pension, mutual funds and small investor's money.

Ask why they didn't require speculators to fund their own bailout while you, the taxpayer, pay 5-10 percent sales tax for necessities. Speculators buy $500 trillion of securities derivatives each year and don't pay one penny. A mere 1/10 of 1 percent sales tax on purchases of these derivatives would raise $500 billion per year to pay for their bailout. Let the speculators fund their own bailout!"

Updated On: 10/9/08 at 10:49 PM

[LePetiteFromage]

Posted: 10/9/08 at 10:53pm

Updated On: 1/12/09 at 10:53 PM

[PalJoey]

Posted: 10/9/08 at 11:05pm

I will always loathe that Ralph Nader because a tool of Karl Rove and accepted Republican funding to help defeat Al Gore, but this financial crisis make bring him back to the side of the angels.

[KrissySim]

Posted: 10/9/08 at 11:11pm

I really do think America is losing it's standing in the world. This may not be a bad thing ultimately. The world is not a pyramid with America on top and everyone else underneath wishing they were "up there". America consumes more than its share of resources. It's time for America to scale down. This is not a bad thing, for Americans or others.

[PalJoey]

Posted: 10/9/08 at 11:16pm

It was a nice thing to be respected. It was a nice thing to be looked up to. It was a nice to seen has having moral integrity rather than moral turpitude.

But the American media and most of the country got snookered into thinking a blowjob invalidated all that, and went elected a dangerous fool and his warlike minions and deregulating degenerates--twice.

America is being punished by God for impeaching Bill Clinton.

[best12bars]

Posted: 10/9/08 at 11:35pm

LOL. What's in that glass you're drinkin', PJ?

[JohnBoy2]

Posted: 10/9/08 at 11:46pm

Apparently, Bill Clinton's semen.

[nygrl232]

Posted: 10/10/08 at 1:51am

Best12bars, we're gonna have to reign in our consumption, and maybe that will mean that we'll actually be human beings/citizens again.

It wouldn't be bad at all for people to scale back. Maybe a lesson or two learned (yeah, I know, HAW). Politicians work for us, we pay their salaries, and Americans haven't been a very good boss. Politics is such a dirty game that nice people don't want to play. Looks like we're gonna have to get up that ladder and clean the muck out of the roof gutters.

Vote. And if the election gets stolen again, we're gonna need to hone long-dormant bastille-stormin' skills. Not literally, of course. Or, maybe yeah, literally.
Updated On: 10/10/08 at 01:51 AM

[lildogs]

Posted: 10/10/08 at 2:18pm

Well said, Krissy!

America is like the rich drunk guy at the party who feels up the ladies and brags about how much his car cost before he neglects to tip the valet.

We're about due for an a$$-kicking.

[JohnBoy2]

Posted: 10/10/08 at 2:29pm

The Germans, French and everyone else need to keep their mitts off our economy. It's our problem and we need to fix it. ALONE! We are on a very slippery slope to socialism and fascism. Butt-out world!

[PalJoey]

Posted: 10/10/08 at 3:25pm

The Washington Post calls it The End Of American Capitalism.
The End Of American Capitalism?

[YouWantitWhen????]

Posted: 10/10/08 at 3:36pm

JB2 - that would be a novel idea, except for the fact that the world owns our debt.

We have not stood on our own in years.

[EverythingIsRENT]

Posted: 10/10/08 at 6:06pm

AMEN, JB2. Right on.

YWIW, Who care how much we owe, we're owed billions of dollars from how many other countries? Debt to other countries is the least of our worries.

[Mr Roxy]

Posted: 10/10/08 at 6:09pm

Gordon Gekko is now in mourning

Greed is the problem & it infects our country from top to bottom. Some can do more damage than others. Hopefully, we will learn a big lesson from this.If not, we are STUPID.

[YouWantitWhen????]

Posted: 10/10/08 at 6:10pm

To EIR:

Once again, you have proven your reputation to be well-deserved.
Updated On: 10/10/08 at 06:10 PM

[LePetiteFromage]

Posted: 10/10/08 at 6:24pm

Updated On: 1/12/09 at 06:24 PM

[orangeskittles]

Posted: 10/10/08 at 6:32pm

I saw his comment the other day and thought it was ironic someone from Germany made the comment. In the Great Depression, we bounced back to become #1 because of the war they started.

[nygrl232]

Posted: 10/10/08 at 7:20pm

Lildogs, I'm someone who's always lived within my means, shopped at discount stores, saved my money, worked several jobs, used credit very sparingly, paid bills and taxes on time, etc. I am SO not due for any arse-kicking, that's for sure.

[KrissySim]

Posted: 10/11/08 at 3:22am

nygrl232, I can't speak for Lildogs, but IMO you and the ones like you are not the ones who need an ass-kicking.

The ones who need to have their asses kicked are the ones who brought their corporations overseas to exploit cheap foreign labor, paying American employees a standard American wage or salary while paying foreign workers the minimum or near minimum. The ones who rape the resources of other countries because they have the capital to do so and are able to essentially bribe officials in those countries to do as they please. The ones who treat workers and the environment in ways that would be illegal in America. The ones who arrogantly order the foreigners around in their own countries, both at work and outside of the work environment, demanding that they speak English and not their own native language.

And the Evangelists, the organizations and organizers who convert people to Christianity by day, take their money, and at night are seen at the luxury hotels drinking and dining with prostitutes, comparing notes with other Evangelists on how business went that day. (A businessman with a prostitute doesn't bother me, it's the inherent hypocrisy of this particular situation that I find objectionable.)

I could go on and on and on, but I hope you can understand my point. Not all American companies overseas operate in this way. As with foreign companies in America, many operate in a relatively ethical manner, conforming to the customs and practices of the country in which they operate, or even rising above the standards of the host country. But in some countries "conforming to the customs and practices..." is just the problem.

Now that I've started on this, I realize how impossible it is to cover such a complex subject in so few words here.

[nygrl232]

Posted: 10/11/08 at 7:01am

Oh, indeed, Krissysim. I know what lildogs was getting at, and your post is quite right. i was speaking to the prejudice that people (not sure how signficant a population percentage it would be) in other countries might have against all Americans, thinking we're all wasteful and hedonistic jerks in need of some comeuppance. I was feeling too grumbly to clarify at the time.

[Scripps2]

Posted: 10/11/08 at 10:54am

At the University I attended, I remember seeing (in the toilets of the Mathematics building) a piece of graffiti above a toilet tissue dispenser that read “Economics degree – please take one.”

Why is everyone so surprised by recent economic activity? I can recall discussing its likelihood and timing with colleagues 3 years ago. Some of the solutions suggested on this thread are equivalent to shutting the stable door years after the horse has bolted - the most likely suggestion to sustain things for the western world in the long term is Mamie’s, but that will be a hard and bitter pill for several nations to swallow, and existing attempts are a long way from being even remotely successful.

It always amazes me, reading this board, at how much faith people place in politicians. I have none.

“It was a nice thing to be respected. It was a nice thing to be looked up to. It was a nice to seen has having moral integrity rather than moral turpitude.”

But that is the position the deluded UK believed itself to be in during the nineteenth century; and it certainly hurt when we had our eyes opened in the twentieth.

Having said that, this crisis is not the end of the US as a world superpower. Nor is it the end of international respect either. The sometimes affectionate, often grudging pragmatism of worldwide international relations will continue on in much the same way it has done for several decades, for some time yet. Particularly in the hands of the current over-promoted and under-talented politicians who make it happen.

Updated On: 10/11/08 at 10:54 AM