Financial Crisis, Cooperation and a Global New Deal?

A couple of days ago I asked if the current financial crisis was an opportunity for international law or at least international cooperation. See

The IMF has just backed a G-7 plan to stabilize markets. This plan apparently has the support of G-20 developing countries who are also feeling the effects of the market slump. Individual G-7 countries are preparing bailout packages similar to the same in US and UK.


See:-; and


It may be easier to be more cynical than optimistic of this nascent cooperation. As noted, “(t)he G7 rich nations vowed on Friday to take all necessary steps to unfreeze credit markets and ensure banks can raise money but they offered no specifics on collective action.”


However, there may be a more fundamental obstacle than vagueness at hand. As we witnessed this week, bailout does not directly equate to market confidence. However, it appears to be the fundamental tool in cleaning this mess. There is a limited amount of money available in US, UK and German, etc, etc treasuries. If this round of bailouts fail, what next?


Do they start another round of bailouts? And with whose money? At present, we may be able to identify where pools of money are being stashed globally. China and Singapore and their foreign exchange reserves, petro-dollars in petrochemical countries, perhaps? 


God forbid, will we come to a point where international bailouts are necessary? If so, what are the prospects for cooperation then? I bet on bleak but who am I to say? More interestingly, if cooperation, to that extent, is possible, what terms will it be on? Will there be a new global financial deal of the magnitude of Bretton Woods (or bigger)?


Of course, this remains merely speculation; a flight of fantasy. But do we want to take it?



3 Responses to “Financial Crisis, Cooperation and a Global New Deal?”

  1. Your moderate views will be your downfall.

    What we need now are extreme amounts of hyperbole and factually incorrect articles, like this


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