Joined by Germany (gee, what a surprise), France is calling for more regulation of financial markets. But politicians are not hopelessly stupid. They understand that they will drive even more money offshore or underground if they increase the relative burden of government in France. So they want other nations to agree to the same misguided policies. The International Herald Tribune reports:
France said Wednesday that the recent turmoil in credit markets had strengthened its case for tougher regulation of global financial markets and that it would press ahead with proposals at a fall meeting of Group of 7 finance ministers. …Lagarde said during an interview that she had not yet discussed the initiative with the United States or Britain, members of the G-7 who have been reluctant to ponder any regulation of financial markets in the past. But she said that France and Germany, two countries she described as being “at the heart” of the initiative, were determined to use the current crisis as a catalyst for a stricter global rule book. …”There is a growing case for better state involvement on a coordinated basis in various areas, one of which is stock markets and financial markets,” Lagarde added. …Economists and investors expressed skepticism as to how governments could enforce more transparency in markets that trade in such a vast variety of financial products, arguing that the correction in markets was a more effective way of forcing banks and investors to reassess and reprice the risk in their portfolios. …Lagarde…has blamed the crisis on the “typical excesses” of American capitalism. She said that a gambling culture in the markets was simply more widespread on the other side of the Atlantic.