European Central Bank President Jean-Claude Trichet Wants Global Counterfeiting Monopoly

[Saffire]

...because controlling interest rates in the EU nations just isn't enough.

 

http://blogs.forbes.com/face-to-face/2010/04/29/ecb-president-favors-global-governance/

 

The President of the European Central Bank, Jean-Claude Trichet, told Forbes that global governance is extremely necessary if we want to prevent another financial crisis. In his prepared printed and spoken remarks to the Council on Foreign Relations, Trichet emphasized that politicians, economists, and financiers must work across the Atlantic and collaborate on methods to create an international set of standards. It is his belief that through global governance, the resiliency of the global financial system can be assured, noting that ultimately it was governments’ use of taxpayer’s money, equivalent to around 25% of GDP on both sides of the Atlantic, that prevented another catastrophic great depression from occurring. With the backdrop of a U.S. financial regulation bill being stuck in the Senate, he argued three main points in support of creating internationally agreed rules.

 

1) First, the principle of subsidiary is essential. No rule should be imposed at a global level or supranational level that cannot be more or equally effectively set at the national or local level.

 

2) Second, it’s not easy to create a complex set of rules in a complicated and often obscure field like finance, but that it is absolutely critical if we want to create stable financial markets.

 

3) Finally, global rules can be limiting from country-to-country, but that it is imperative now more than ever, because financial innovation has spiraled out of control in a negative way.

 

Additionally, he stressed that the financial emergencies created by investment banks and governments creates some contradictory issues.

 

“On the one hand it has unleashed a tendency to reengage in financial nationalism if not mercantilism; on the other hand it had contributed to the recognition that a very high degree of interdependencies between economies called for a much higher level of cooperation.”

 

In the end, Trichet believes it’s the financial sector’s responsibility to respond to economic challenges.

 

“While financial liberalization, deregulation, and innovation all have the potential to make our economies more productive and more resilient, the financial sector must not forget that its purpose is to serve the real economy, not the other way around.”

 

Look at that statement I bolded. This guy sounds just like Alan Greenspan. Talking about contradictions wrapped in enigmas, nestled in a sesame-seed bun of bullshit. And then he inevitably concludes more power must be given to politicians and bureaucrats, and everyone swoons at how intelligent he is, and what a difficult decision that must have been for him to make.

 

In response to his three points:

 

1. What he's actually saying here is that there must be a way to employ as many bureaucrats as possible at the local level, so each individual government has an incentive to go along with the rules. Sort of like the EU, it's just a make-work project for children of politicians and bankers who don't know any useful skills, like how to fix a car or build a house.

 

2. Finance isn't an obscure field. Maybe it is to you, Mr. Trichet, because you want to come off as very learned and intelligent, but the average Joe understands finance as such: there's debtors, and then there's creditors. There are owners, and there are renters. EVERYTHING in finance is some variation of these simple maxims. Financial markets are self-regulating when the government doesn't get involved, because when the "I'm smarter than you" traders at a hedge fund or Goldman Sachs screw up, 100% of the losses fall on their shoulders - not taxpayers'. So they have an incentive to behave themselves, and take on less risk. Also having interest rates slightly higher than 0% helps reduce risk-taking, too. :rolleyes:

 

3. Again, there is no such thing as "financial innovation". When it comes to shuffling money around, everything under the sun is old. If you can't understand an investment, don't put your money there. Similarly, don't stick your hand in hollowed-out logs in the forest.