Can a Global Economy Be Managed One Nation at a Time?

by: Fred Wilson November 17, 2008 | about stocks: DGT / IOO    
Fred Wilson

Fred Wilson

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I started this discussion Saturday with my observation that Obama ended his weekly address with the point that "in this nation we rise and fall as one nation, one people." But that doesn't ring true to me. I think we are well past that point. I think we are so intertwined with the rest of the world, that we rise and fall as one world, one people. This picture I posted a month or so ago (click to enlarge) on this blog tells the story. It's a chart of the Dow, FTSE, Hang Seng, and Nikkei in Sept. and Oct.

World_market_indices

Tom Friedman made the same point yesterday in his opinion piece in the Times:

a world economy that is so much more intertwined than people realized, which is exemplified by British police departments that are financially strapped today because they put their savings in online Icelandic banks — to get a little better yield — that have gone bust

And yet, our government is fighting the idea of cross border regulatory authority. Yesterday's NY Times had a story about the G20 meeting that took place this weekend in DC. Here's a quote from that article:

There is also a more basic philosophical divide across the Atlantic: Europeans in general favor more state control over markets, even to the point of granting regulators cross-border authority, while the United States stresses the primacy of national regulators.

That's understandable. This country has a long history of not wanting anyone to tell us what to do or how to do it. But I wonder if this position is tenable when it comes to the global economy.

I do not believe we can regulate markets on a nation by nation basis. They are simply too intertwined these days. If we want to figure out how to stabilize the financial markets this time, I think it's going to take a global approach, global coordination, and yes, global regulation.

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This article has 5 comments:

  •  
    Nov 17 07:14 AM
    A world government!
    Reply | Link to Comment
  •  
    Nov 17 08:06 AM
    You folks actually scare me. So, lets go back to the same old fiasco, only lets make it a more regulated fiasco. Because poorly thought up globalization is what got into this mess. And you want more of it ? And to be sure we nail the coffin good, lets throw in some global regulation.

    Unless you are an ostrich living with your head in the sand, or a theoretician in some ivory tower, it is pretty clear by now that an inequitable, mismanaged globalization is the culprit that bestowed the the 2008 crash upon us. How do you figure that a service economy can provide the kind of consumption that the US economy relies upon ?
    The crisis at hand, is the consequence of the decades long deterioration of the US consumer's purchasing power.
    Reply | Link to Comment
  •  
    Nov 17 08:15 AM
    What a dumb article. So this is the level of naive thinking that a Wharton MBA gets you! We have a problem so let's regulate. Come on Fred, there is a living breathing example of the incompetence of 'global' organizations just down the road from you called the UN.

    Following on from the Libyan representative being the head of the Human Rights Commission at the UN perhaps the finance minister from Zimbabwe can be in charge of the global financial situation.
    Reply | Link to Comment
  •  
    Nov 17 08:24 AM
    Don't be too hard on the fellow, imagine what Al Gore would write on the subject !


    On Nov 17 08:15 AM Mafeking wrote:

    > What a dumb article. So this is the level of naive thinking that
    > a Wharton MBA gets you! We have a problem so let's regulate. Come
    > on Fred, there is a living breathing example of the incompetence
    > of 'global' organizations just down the road from you called the
    > UN.
    >
    > Following on from the Libyan representative being the head of the
    > Human Rights Commission at the UN perhaps the finance minister from
    > Zimbabwe can be in charge of the global financial situation.
    Reply | Link to Comment
  •  
    Nov 17 01:31 PM
    easy on Fred, folks. this is the editor's pick! "no problem is solved by not talking," and while I definitely don't agree with the idea that "talking to Iran" is the way forward, if you're not talking at the G-20, you're not doing your job as a public official, just like not having a blog site is not the answer, too! The people speaking here would do well to ask--what have you ever demanded of your elected representative? Anything? Powerful people are asking...AND GETTING...right now. Does that bother you? Have you spoke to your Rep about it? Or are you afraid? You should be afraid if you are not, by the way. As the saying goes, just 'cause your paranoid doesn't mean they're not out to get you! There are simple reasons---"we just gave these companies billions of dollars and we're all getting pink slips and higher interest rates." Angry? YOU SHOULD BE! But you do have a literal voice--YOU CAN SPEAK YOUR MIND. So even though your vote for all intents and purposes is meaningless, your Constitution and the history behind it is not. Hate your government, despise it and aim for its destruction if you wish--there are good people working in there, though, and some of them have a job involving taking innocent human life without mercy. Over the last few years of few of them have even been arrested by our own government while in its service! Remember... though your leaders lie, "history" as in the study of the past does not. If you feel you are somehow standing for that, well, then you are a soldier indeed.
    Reply | Link to Comment
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