David R. Sands
October 12, 2008
As shell-shocked central bankers and finance ministers gather in Washington to confront the world’s financial meltdown this weekend, that grinding noise in the background is the sound of the global balance of power shifting.
- A d v e r t i s e m e n t
In sharp contrast to past crises — from the Latin American debt problems of the 1980s to the Asian and Russian currency collapses of the 1990s — the emerging markets of the developing world boast the strong balance sheets and deep financial pockets while the United States and Western Europe lurch from crisis to crisis.
Associated Press ‘INTERCONNECTED’: President Bush met with (from left) Jean-Claude Juncker of Eurogroup, Shoichi Nakagawa of Japan, Condoleezza Rice, Henry M. Paulson Jr., Christine Lagarde of France and James M. Flaherty of Canada.
“In a very bizarre way, roles have been reversed in the global economy,” said Alex Patelis, head of international economics at Merrill Lynch. “The typical troublemakers of the global economy, the emerging markets, are actually now the world’s creditors.
“We do need a new world financial order, and we will probably get one as a side effect of this crisis,” he said.
Treasury Secretary Henry M. Paulson Jr. gave a clear signal of the new pecking order last week on the sidelines of the annual Washington meetings of the World Bank and the International Monetary Fund (IMF).
With world financial markets reeling, Mr. Paulson said, he was following up an emergency meeting Friday of finance ministers from the traditional Group of Seven industrial powers — Britain, France, Canada, Germany, Japan, Italy and the United States — with a larger gathering Saturday of the so-called Group of 20, which includes China, India, Russia and Brazil.