Davos begins with Sarkozy call for global reform - Summary

Wed, 27 Jan 2010

Davos, Switzerland - The World Economic Forum began Wednesday evening, with French President Nicolas Sarkozy lashing out against greedy capitalism, pushing for a more moderate version of the market economy and issuing a call for a revamping of the global monetary system. "Today, we need a new Bretton Woods," said Sarkozy, referring to the international financial institutions established in the wake of World War II.

France, the president said, would encourage such reforms when taking the helm of the G8 and G20 forums of rich nations and emerging economies in 2011.

His speech against the excesses of the boom era and the systemic risks taken by financiers, was expected at this year's forum, running under the slogan "Rethink, Redesign, Rebuild."

"This means concretely rethinking our values, redesigning our systems and rebuilding our institutions," WEF founder Klaus Schwab said before introducing his visitor from Paris.

Addressing some 2,500 participants, Sarkozy said there was a need for further regulation of the financial sector, in part to end dangerous speculation, adding that he was in agreement with the recent calls for reform from US President Barack Obama.

But France's head of state warned that the changes should not hurt the competitiveness of one country at the expense of another.

"How can we conceive that in a competitive world, we can insist that European banks have four times more capital to cover the risks of their market activities, without demanding the same of American or Asian banks," Sarkozy told an elite crowd of business and political leaders that erupted from time to time in applause.

A global system of rules was needed for markets and financial institutions, he said, while also supporting an international rules- based system for labor, the environment and health issues.

Jaime Caruana from the Bank of International Settlements - the central bank of central banks - had earlier said that while a global framework was needed for economic and capital flows, each country would likely have to design its own rules.

Nations with trade surpluses should boost consumption and a single currency could not dominate the globe, Sarkozy said in his opening address, calling for a balanced world to prevent future crises.

The annual meet high up in the Swiss Alps, was taking place amid concerns economic recovery in some developed countries was still shaky and unemployment in the richest nations was creeping up, even if gross domestic product results show positive signs.

Debates in preliminary sessions focused on how much regulation of the banking sector was needed and how the developing world should learn from the mistakes of the rich countries, while trying to avoid a deeper economic crisis.

"There is a risk of a double-dip recession. Emerging market economies will do better than advanced economies," said Nouriel Roubini, an economist considered one of the few to have predicted the crisis.

China's emergence as an economic superpower was also being talked about, along with the ramifications for the economies it will surpass, and the United States, expected to remain number one for some years to come.

In general, the growing importance of the emerging economies was firmly on the WEF's agenda.

A recent index released by Standard and Poor's rating agency showed that Brazil, Russia China and India have risen from 1.4 per cent to 15 per cent of world market value over the last decade.

Also on the agenda was a heated debate scheduled Thursday on the eurozones, to be attended by European leaders and Jean Claude Trichet, the head of the European bank in Frankfurt.

In the background, the earthquake devastation in Haiti was featured, with a plan by former US president Bill Clinton for a new economic initiative for the Caribbean country.

Source: Earth Times.
Link: http://www.earthtimes.org/articles/show/306183,davos-begins-with-sarkozy-call-for-global-reform--summary.html.