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While there's no consensus on what the new financial order should be and there are signs of deeply divergent views, these countries appear at least willing to talk about a new international order at a meeting the three European leaders are calling Bretton Woods II, after the 1944 meeting that started it all.

"Merkel became convinced at Colombey that Brown and Sarkozy were correct that the whole postwar system of finance does not work any more, and something new will have to take its place," said a European Union official involved with the talks.

Saturday morning, the Europeans will try to take Washington a step further. Leaving early from the Montreal summit with the Canadian government, Mr. Sarkozy and European Union Commission president José Manuel Barroso will fly to Camp David to sit down with President George W. Bush and try to persuade him to support Mr. Brown's proposals to create a new set of international institutions.

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Wanted - a new financial order

The US isn't exactly in a position now to do much more than stall. The real decisions will have to be made by the incoming President and Congress. They might just find themselves being presented with a worked-out proposal from the rest of the world. Interesting times!

[ 18 October 2008: Message edited by: Doug ]

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What they will be trying to sell is a seven-page document that Mr. Brown first made public on Wednesday morning. It proposes a set of organizations — a "new international financial architecture for the global age" — that will monitor risks in the financial system and provide an early-warning system; determine global standards of regulation; supervise international corporations in their cross-border activities, protect markets from excessive activities of speculators; stamp out major conflicts of interest and set standards for pay and bonuses; internationalize accounting standards, and provide transparency in complex financial transactions

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Will Gordon Brown play the role of Keynes? Sounds good to me. Always a slip between cup and lip though as Keynes found out.

[ 18 October 2008: Message edited by: Fidel ]

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They were there to address a burning problem raised by Mr. Keynes: If, when the war ended, European recovery and rebuilding was to happen in any meaningful way, there would have to be free flows of capital and investment between borders, and currencies would have to be able to be exchanged for one another. No longer could nations act on their own; they would have to be sending capital across borders, often large amounts of it.

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What this fails to mention is that Bretton Woods specifically identified a role for fixed exchange rates and exchange controls.

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The otherwise conservative Mr. Sarkozy declared in a grandiose speech that "we need to found a new capitalism, based on values that put finance at the service of companies and citizens, and not the reverse." Such lines play very well in France, but are not likely to win any high-fives from Mr. Bush this morning in Washington.

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This, however, is gold. I love it.

[ 18 October 2008: Message edited by: DrConway ]