French President Nicolas Sarkozy says that the economic maelstrom that has captivated the world's attention for the last 17 months is "not a crisis of capitalism" but, in actuality, a breakdown of a system that has "drifted away from capitalism's most fundamental values."
Writing in The Washington Post as the G-20 summit began, Sarkozy noted that the world now expects that government leaders will reform the international financial system and rebuild, as he put it, "a better-regulated form of capitalism with a greater sense of morality and solidarity. This is a precondition for mobilizing the global economy and achieving sustainable growth."
Sarkozy noted that in the waning months of the Bush Administration, global leaders agreed upon four principles that would guide government response to the crisis: enhanced coordination and cooperation; the rejection of protectionist measures; the strengthening of regulatory systems in financial markets; and a new global governing system for finance.
"On the first two points, we have made a good deal of progress. We have managed to hold off the specter of protectionism, and many nations have injected massive support for their economies, undertaking ambitious stimulus programs," said Sarkozy.
"These measures are beginning to take effect and produce tangible benefits, but we must be ready to do even more if circumstances require it."
Now, Sarkozy said, leaders must instill the same sense of urgency to the regulation of financial markets. World growth will be stronger if it is sustained by a stable, efficient financial system and by renewed confidence in the markets.
This will "enable resources to be better allocated, encourage lending to pick up again and foster the return of private investment capital to developing countries," said the French president.
One approach that is not getting global approval in this financial crisis is the Obama administration's call for a global New Deal and with it increased deficit spending by governments the globe over.
The leaders of Spain and Germany this past weekend rejected the ethics of that approach.
Domestic criticism of that approach is growing as well in the U.S. President Obama's spending plan would drive up the annual cost of government in 10 years to $32,000 for every household in America, according to a report from the Heritage Foundation.
The government expansion would more than double America's national debt to $12.5 trillion, despite higher taxes, the report states.
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