Reuters has a very disturbing article about the wish list that Europeans have put together for the April G20 Summit in London. Rather than focus on the source of the financial crisis by calling for sound money and elimination of housing subsidies, the Europeans want to dramatically increase the size and power of international bureaucracies such as the International Monetary Fund. But if the IMF completely failed to predict the financial crisis, why would anyone think the bureaucrats should get more power and more tax dollars? Not surprisingly, the Europeans also want regulatory harmonization, with every jurisdiction required to impose onerous levels of red tape. Apparently, the private sector needs to be punished to atone for the mistakes of governments. Not surprisingly, the Europeans also want to regulate private-sector pay. But the most dangerous plank in their platform is the call for sanctions against jurisdictions that reject the regulatory cartel and instead maintain market-based financial systems. This panoply of bad ideas is a direct threat to American interests, so it will be interesting to see whether the U.S. delegation acquiesces to these bad ideas:
European leaders met in Berlin on Sunday to prepare a common stance on overhauling global financial rules ahead of a broader summit of G20 nations in London on April 2. Below are highlights from a "chair's summary" of conclusions from the meeting that was seen by Reuters: ...We propose that the International Monetary Fund (IMF) and the Financial Stability Forum (FSF) be charged with monitoring and promoting the implementation of the international recommendations on putting the Action Plan into practice. We have today underscored once again our conviction that all financial markets, products and participants must be subject to appropriate oversight or regulation, without exception and regardless of their country of domicile. This is especially true for those private pools of capital, including hedge funds... We also agreed that credit rating agencies should be subject to mandatory registration and oversight. ...A list of uncooperative jurisdictions and a toolbox of sanctions must be devised as soon as possible. ...We will strongly advocate (at the London summit)...the development of an effective early warning system by the IMF and FSF, working in close cooperation. We will strongly advocate (at the London summit)...the adoption of principles on compensation practices to prevent bonus payments that contribute to excessive risk-taking. ...We have agreed today to support doubling the funds available to the IMF.