Jean-Claude Trichet, the president of Europe’s central bank, said to a recent meeting of the U.S.-based Council on Foreign Relations that in order to prevent another dramatic economic crisis, a new type of “global governance” must bring accounting practices on both sides of the Atlantic Ocean into sync with one another.
“It is his belief that through global governance, the resiliency of the global financial system can be assured, noting that ultimately it was governmentsÃ¢â‚¬â„¢ use of taxpayerÃ¢â‚¬â„¢s money, equivalent to around 25% of GDP on both sides of the Atlantic, that prevented another catastrophic great depression from occurring,” wrote Forbes reporter Mina Sanini, who captured the remarks.
“After mid-September the intensification of the crisis, it was really a question of half-days to measure the rapidity of the consummation,” he said, adding that it had spread “all over the world, [to] all of the different sectors.”
“This is something which I had not observed before,” Trichet explained.
“It is extremely important that we have really a level playing field, that we have really, at the global level, the same rules being applied by all,” he continued. “This is very, very important, in my understanding of course, for the good and appropriate functioning of global finance. It is extremely important that we, in this new ownership of global governance, have particularly on both sides of the Atlantic, the implementation of the same rules, in the same fashion.”
Forbes lays out his three principles for global economic reforms as:
1) First, the principle of subsidiary is essential. No rule should be imposed at a global level or supranational level that cannot be more or equally effectively set at the national or local level.
2) Second, itÃ¢â‚¬â„¢s not easy to create a complex set of rules in a complicated and often obscure field like finance, but that it is absolutely critical if we want to create stable financial markets.
3) Finally, global rules can be limiting from country-to-country, but that it is imperative now more than ever, because financial innovation has spiraled out of control in a negative way.
Trichet also spoke of “financial nationalism” as a negative trait that’s been on the rise since markets nearly collapsed in 2008.
Obama hails recovery, but fears remain
President Obama said Friday that despite persistently high unemployment numbers, the U.S. economy is “in a much better place” than it was one year ago.
“The economy that was losing jobs a year ago is creating jobs today,” Obama said, “we’re moving forward. Our economy is stronger.”
Earlier, the Commerce Department reported US gross domestic product (GDP) grew at a 3.2 percent pace in the first quarter, up from minus 6.4 percent at the same time last year.
The first estimate was a percentage point shy of market expectations, but marked the third consecutive quarter of economic expansion as Americans began spending more. That was seen as further evidence that the world’s largest economy is slowly recovering from the worst economic crisis since the 1930s.
“Our economy is stronger. The economic heart beat is growing stronger,” Obama said.
While positive, many fear the current rate of growth is not enough to recover the eight million US jobs lost since the crisis began.
“While today’s GDP report is an important milepost on our road to recovery, it doesn’t mean much to an American who has lost his or her job and can’t find another,” Obama acknowledged.
The rate of growth was well down from the final quarter of 2009, when GDP was estimated at 5.6 percent, the strongest growth in six years.
Analysts saw the figures as “further confirming the end of the recession and that the recovery is only moderate and disappointing,” according to Peter Morici of the University of Maryland.
“Looking ahead, data are not encouraging. After such a long and damaging recession, we should expect several quarters of five percent growth.”
Some predict that economic growth might falter later this year, or will not be enough to cut into near double-digit unemployment.
This video was published to the Web by Forbes on April 29, 2010.