Comment: What are the Chances of a New International Architecture for Economic Coordination in Response to the Financial Crisis and the Great Recession?

Abstract

Before boarding a plane on Saturday the 18th of October 2008 to meet President George W. Bush, French President Nicolas Sarkozy proclaimed, wants Europe demands Europe will get it. The here is global financial regulation reform, which was seen to be necessary to stave off the spread of the US financial crisis. Just hours after their closed-door meeting had finished, Bush and Sarkozy, along with European Commission President Jose Manuel Barroso, issued a joint statement announcing that a summit would be held the following month to devise what Barroso called a global financial order. Almost four years later, we have no new global financial order, the crisis is still raging in Europe and it threatens the global economy once again. Why hasn’t reform been forthcoming? The spectacular growth and spread of financialization is now well understood to be a cause of the instability of national economies and the global economy as a whole. Financialization is associated with boom and bust cycles, as we have recently seen most starkly in Greece, Spain and other countries in the European Union. Citizens of the economic North have finally felt the fragility of this economic system their bones. The fragility of the system is likely to remain startlingly present in the foreseeable future unless changes occur at national, international and global levels in the governance of financial flows and capital market operation.