U.S. Losing Finance Superpower Status according German finance minister

September 25, 2008 by · Leave a Comment
Filed under: Economic News 

I would agree, you don’t keep your world currency reserve status by bailing out bad financial institutions, runs huge budget deficits, run expensive wars, run a economy that 70% of GDP is based on consumption and to top it off our biggest single export is U.S. dollars. We need to enact the “No Congressmen Left Behind” program to give them a “Money 101” course so we don’t have this panic on subjects that they are not familiar with. You don’t need P.H.D to understand the basics, you do however need one to do the day to day functions of a economy of any national size. We will continue to see this type of talk until it becomes a reality and at that point it is almost impossible to get that back without major monetary reform. There is a great book called “The Theory of Foreign Exchange” and they have a section about financial crisis and what makes one and what steps have to be taken to reform the currency and I believe it applies more than ever on our situation.

News Release:

German Finance Minister Peer Steinbrueck said the U.S. will lose its position as the world’s undisputed financial “superpower” and called for a ban on speculative short-selling to help restore the global economy.

Steinbrueck, in a speech on the financial-market crisis to lawmakers in Berlin today, set out an eight-point plan urging greater regulation and larger capital reserves for banks. He championed the German banking system over its U.S. counterpart, dismissing the `Anglo-Saxon” model as having “an exaggerated fixation on returns.”

“The long-term effects of the crisis are impossible to gauge,” Steinbrueck said. “One thing seems probable to me: The U.S. will lose its status as the superpower of the global financial system. The global financial system will become multipolar.”

Steinbrueck’s comments underline a deepening divide between European and U.S. attitudes to the financial system and how to resolve the rout triggered by the worst U.S. housing slump since the Great Depression. European members of the Group of Seven leading industrial nations refused to back a U.S. bank-rescue plan Sept. 22, with Steinbrueck saying that the U.S. situation “is not comparable” to that in Germany.

`Purely Speculative’

In his speech, Steinbrueck targeted short-selling, where traders borrow shares with the hope of buying them back later at a lower price. The global financial community “must together agree to a ban on purely speculative short-selling at the international level.”

He said in a later interview with Bloomberg Television that someone looking back from 2018 would regard the events of today as the beginning of a “slight erosion” in the status of the U.S. in financial terms.

“America will not be the only power to define which standards and which financial products will be traded all over the world,” he said. “The dollar will remain a very reliable and important currency, as well as the euro as well as the yuan and the yen, so I think it will perhaps be the starting point of some changes.”

Steinbrueck said that sovereign wealth funds and banks from Asia, the Middle East and Europe will play a bigger role in the new financial world. In the medium- and long-term, “new pledges of voluntary action or self-regulation by the financial sector” will not resolve the current crisis, he said.

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