Press reports indicate that French President Nicholas Sarkozy has publicly expressed his displeasure at his British and American counterparts for stalling on a G20 joint accord to respond to the global recession. Sarkozy and Germany's Angela Merkel are pressing for more stringent measures to clean up the financial and banking worlds in advanced economies particularly the push for regulation of the industry and a rethink to the financial stimulus measures that have gained currency especially under the Obama administration.
In one sense the rift is ideological. The US and Britain want to bail out the financial and Banking worlds without requiring a radical surgery or a more stringent approach such as statutory regulation and other checks and balances in the industry, what in the US would be the republican standpoint.
France and Germany prefer a more regulated industry, that is cautious and see the US and UK as preserving a system that smacks of reckless capitalism that has brought the world to the brink of financial catastrophe. Clearly the execesses in the US and British markets impact the rest of the world which is why Europe see these reforms in the financial and banking industry as critical to the health of the rest of the world economy. Thomas Friedman was more right that he imagined. The world truly is flat.
The US and British governments need to step up to the plate and make bold decisions( inspite of the political costs that come with it) if another financial down turn is to be avoided and industry regulation is clearly at the heart of any such measures.
The era of banking and financial industry execesses such as off- shore banking,tax havens, cooking books of account, lending carte-blanches is over.
The evidence suggests that more prudent banking and regulation of the financial services industry is the way foward and indeed the Franco-German approach saved the duo from more severe effects of thedownturn as compared to the US and the UK.
The UK and US owe to the rest of the world to 'get it right' this time and save the world from another recession years from now.