Wednesday, October 08, 2008

A New World Order: Thoughts on Yom Kippur

It's clear that we are in the midst of unprecedented social and economic change on a global scale. We are witnessing the birth of a new world order.

Dominique Strauss Kahn writes in today's FT of a "comprehensive and global solution to problems in the financial sector" and makes several suggestions. The first is that "the fragility of public confidence has now reached a point that some explicit public guarantee of financial system liabilities is unavoidable." The fourth is that a "high degree of international co-operation has become urgent" since "Financial institutions now span many countries and credible rescue plans must be consistent across many jurisdictions. More fundamentally, and looking beyond the immediate crisis, it is clear that the international community needs to work to close the many loopholes in the global regulatory architecture that allowed financial institutions to minimise capital even as they concentrated risk." She concludes that the way out is to get policymakers to pull in the same direction.

Roger Steare in the Times (UK) wants us all to think carefully about our collective responsibility. This credit crunch is not just about a bunch of greedy, short-selling hedge fund managers; it is a collective responsibility. Either we have been happy to take the cheap credit when it is there, or we did not do enough, or we did not care.

“This economic meltdown and demographic growth are symptoms of a greater fundamental problem - in that we want more than we need. What is wrong with just saying: ‘I have enough, thank you?’ I’m not saying that I’ve got the answers, I’m trying to find the answers for my life, but I think that we need to stop listening to people who tell us how to fix this, think about our own personal values and learn to fix it for ourselves.”

These articles and others like them invite us to reflect long and hard about the shape of a new world order in which new alliances are being formed. Today of all days, it behooves us to admit our mistakes individually and collectively as the basis for renewed commitment to the common good and other shared values. In this new world order, conflict management will surely play an important role. I'm no expert on any of this but it surely deserves our best collective efforts.

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