Special Report:Global Financial Crisis
By Lucy-Claire Saunders
NEW YORK, April 17 (Xinhua) -- "Capitalism without bankruptcy is like Christianity without Hell," U.S. astronaut and business executive Frank Borman once quipped, and indeed, reeling from the financial crisis, countries that subscribe to capitalism have been grappling with that duality.
Governments around the world have been forced to invest billions of taxpayer money in global and national financial institutions or suffer the consequences and watch them go belly-up.
Discussing in part this capitalistic conundrum, global leaders and U.S. financial players gathered on Friday at the second annual Georgetown Global Conference to discuss the rocky road to economic recovery in the Hyatt Hotel of Manhattan, where flags still flutter in the wind bragging, "Financial capital of the world."
After years of intense deregulation of the U.S. financial market, the White House is likely to unveil a series of new regulatory measures in order to stabilize its own economy and, in turn, the world's, Representative of New York's Seventh Congressional District, Joseph Crowley, told an audience of 200 under the crystal chandeliers of the Empire Ballroom.
With the collapse of Lehman Brothers and the failure of Wall Street, the U.S. set off a chain reaction of recessions around the world. From America to Asia, globalization has eased the transmission of the economic crisis, experts say, creating a greater role for transnational governance.
At the day-long Georgetown forum, Mary Callahan Erdoes, chairman and chief executive officer of Global Wealth Management for J.P. Morgan, said she saw the beginning of a recovery, although "the way people manage their money has fundamentally changed."
Erdoes cautioned using the word "forever" because "everyone has a lapse of memory and we will forget about (the financial crisis) in 10 years. Remember that," she said, as the audience giggled nervously.
Just that morning, J.P. Morgan announced a first-quarter profit of 2.1 billion U.S. dollars -- after an injection of 25 billion dollars in taxpayer money.
But just a few blocks away from the Hyatt Hotel, the United Nations has been busy trying to make sure that no one ever does forget the anxiety caused by the shadowy world of finance.
Positioning itself at the center of a new global economic architecture, the UN General Assembly (GA) is preparing for a summit meeting to address the economic crisis and its impact on development, slated for June 1-3 at the UN Headquarters in New York.
President Miguel d'Escoto Brockmann of the GA told reporters earlier this week that the United Nations will float a number of ideas including replacing the U.S. dollar as the global reserve currency with some form of Special Drawing Rights -- an idea also proposed by the head of China's central bank, Zhou Xiaochuan.
Heavily influenced by former World Bank president, Joseph Stiglitz, the GA has also suggested replacing the G20 with a United Nations Global Economic Coordination Council, an elected and representative platform for leadership on social, environmental and economic problems.
One underlying question seems to haunt the global debate on economic reform: Is the world-wide financial crisis a signal that stronger regulations are needed to guide institutions from the 1940s into the new millennium or should those institutions be altogether replaced?
Simply recycling old institutions and promoting the economic hierarchy that has plagued the last century won't suffice in the new global financial architecture, GA President Brockmann has said.
Nevertheless, in London, the G20 announced it would "substantially increase" funding to the International Monetary Fund(IMF), supporting a central financing institution where the European Union has 32 percent of the voting power and the U.S. has approximately 17 percent of the voting power, giving it much sought-after veto power.
China, on the other hand, with the third largest economy in the world, has 3.7 percent of the voting power, which is less voting clout than Belgium. Without greater influence in the IMF, China has been relying on more of a bilateral role with developing countries, and has positioned itself to become "the dominant power in Africa," Mathew Bishop, chief business writer and American business editor for The Economist, said at the Georgetown forum.
The danger for the United States, Bishop added, was to turn inward and forget its role as a leader in development and in emerging markets. "We see what China is doing in Africa and all over the world," Rep. Crowley also stressed. "We are falling behind and we need to do more to reengage. We'll do it but I'm not sure how."
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