US no more financial superpower says Germany
Berlin, September 25, 2008
Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.
In some of the toughest language since the crisis threw Wall Street banks into financial disarray earlier this month, German Finance Minister Peer Steinbrueck told parliament the turmoil would leave "deep marks" on both sides of the Atlantic, but called it primarily an American problem.
"The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the centre-left Social Democrats (SPD), told the Bundestag lower house.
"The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar," he said.
Chancellor Angela Merkel, whose conservatives rule in coalition with the SPD, and Steinbrueck both pushed the Group of Eight (G8) to agree measures to boost financial market transparency during Germany's presidency of the G8 last year.
But their drive collapsed amid opposition from Washington and London. Merkel criticised their stance at the weekend, saying the days of laissez-faire capitalism were over.
Both Merkel's conservatives and SPD leaders are keen to claim credit for Germany's push for more transparency and show leadership on the crisis ahead of a federal election in 2009.
The German views were echoed by leaders of governments from around the world meeting this week at the United Nations in New York. Many sharply criticised the George W Bush administration's financial record and warned that US financial mistakes now threatened the global economy.
The crisis has put the Bush White House, which has long advocated a hands-off approach to markets, on the defensive, forcing it to rethink its financial policy.
At the same time it has emboldened voices in Europe, Latin America and elsewhere, of those who are uncomfortable with American-style capitalism and who want tighter regulation of markets.
French President Nicolas Sarkozy, whose country holds the rotating EU presidency, has called for a global summit to overhaul a "crazy" financial system.
The collapse of US investment bank Lehman Brothers and financial woes at other financial institutions like insurer AIG have prompted the US government to propose a $700 billion rescue package for the country's financial sector.
The US Congress appears close to approving the rescue, whose fate has kept international markets on tenterhooks.
Steinbrueck, in one of the harshest attacks on US policies from a G8 ally, denounced what he called an Anglo-Saxon drive for double-digit profits and massive bonuses for bankers and company executives.
"Investment bankers and politicians in New York, Washington and London were not willing to give these up," he said.
He proposed eight steps to prevent a recurrence of the turmoil, including an international ban on "purely speculative" short-selling, new rules to hold individuals accountable for financial missteps and an increase in capital requirements for banks in order to offset credit risks.
While Steinbrueck welcomed US efforts to stem the crisis he said it was neither necessary nor wise for Berlin to launch its own rescue plan for German banks, which are under pressure but face smaller risks than their US counterparts.
The German Bundesbank has said the financial turbulence will hit the earnings of Germany's big commercial lenders, its publicly-owned Landesbanks and its cooperative banks.
Tighter credit in the wake of the crisis could also constrain household consumption and corporate investment, increasing the chance of recession in Europe's largest economy.
But Steinbrueck said banks here would be able to cope with the losses and ensure the safety of pri