New York Times columnist Floyd Norris says that the era of globalization may be ending, as each country turns inward to deal with the financial crisis.
“Virtually universal revulsion at the errors and excesses of the financial giants, and the global recession that resulted, has not led to any real consensus what to do about it, at either national or international levels,” he writes.
“Instead, countries are looking out for themselves, or simply quarreling,” Norris points out.
“Recriminations are in fashion, whether against regulators who allowed bailed-out bankers to get big pay packages or against financial institutions that were unpopular in some countries long before the financial crisis.”
The Institute of International Finance recently issued a report pointing out the need for international cooperation.
The institute’s chairman Josef Ackermann, who heads Deutsche Bank, says, “We are operating in a globally interconnected world where we need to strengthen the system’s capacity to minimize the risks and to maximize the benefits of the interconnected global marketplace,” Norris writes.
He says that, “Charles Dallara, the managing director of the institute, quoted a central banker as saying, sadly and privately, ‘We are going back to a world of national banking.’ Dallara thinks that would be disastrous for global efficiency and global growth.”
Others are worried too. Stephen Cecchetti, chief economist at the Bank for International Settlements told The Wall Street Journal, “The risk is that national authorities will require banks to operate only inside national boundaries.”
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