Yesterday Charlie Rose interviewed Steve Pearlstein of the Washington Post about this weekend's financial summit, and Pearlstein lays out that the agenda is to talk about architecting a new set of (or rearchitecting existing) international financial institutions. The key tradeoff that countries face is between, on the one hand, giving up sovereignty over financial and economic matters to an undemocratic, unaccountable, "global central bank" or else, on the other hand, facing more of these uncontrolled financial flows which periodically erupt into financial catastrophes.
The other key point that Pearlstein makes is that the key political inhibitor tothe building of such new institutions may not be the sovereign suspicions, but actually the concrete implications for the global balance of financial power. Currently, political authority over the key global financial institutions is basically divided between the Western Europeans and Americans, which reflects the actual allocation of global power at the time in the institutions were set up, in in mid-1940s. Any serious reform will have to include a recalibration of that power to reflect the new preponderance of power. In practice, this means giving China and Japan an equal seat at the table, maybe India and Brazil, too. It also means the relative decline of the Europeans, especially Italy and France. (That the French will be inevitably downgraded in any reconfiguration is part of what makes Sarkozy's championing of this process a little weird. Maybe he's figuring that by leading it the French can keep their seat at the table; any why not -- something similar worked for de Gaulle, after all.) The key question is whether there has been enough global suffering yet that the losers in the redistribution of power will be willing to go along with it. I don't think we're there yet.
The whole thing is worth watching:
Hat tip: MC.