French President Nicolas Sarkozy has told a gathering of the world's business and political elite that the global financial crisis demands a fundamental rethink of the capitalist system.
Sarkozy delivered the opening speech today at the World Economic Forum, which is holding its annual meeting in the Swiss Alpine town of Davos.
The French leader argued that capitalism needs a moral dimension. He spoke out against the excesses of financial speculation, deregulation, and accounting tricks which he said drove the world economy to the edge of catastrophe last year. He told the bankers, business leaders, and politicians gathered that failure to make "deep profound changes" would be "tremendously irresponsible."
"Finance, free trade, and competition are only means, not ends," Sarkozy said. "From the moment we accepted the idea that the market was always right and that no other opposing factors need to be taken into account, globalization skidded out of control."
Free trade, he added, has "weakened democracy" because it has been prioritized above all else.
France, Great Britain, and the United States have all begun imposing tighter regulation and greater oversight on the financial industry in an effort to curb the free-wheeling practices that triggered the crisis. But those efforts are opposed by the world's leading bankers, who this year are back at Davos after skipping last year's gathering in an effort to avoid public anger over their role in the global economic meltdown.
Sarkozy said concerted government action had saved the world from financial meltdown and the first glimmers of recovery should not be a signal to let up on regulatory reforms
But business leaders are warning that the flood of new regulations could halt the global economic recovery.
'Better...But Not More'
At an opening session today, Barclays President Bob Diamond challenged U.S. President Barack Obama's proposal to limit the size of big banks and reduce their risk-taking. Diamond said he had "seen no evidence that suggests that shrinking banks and making all banks smaller or more narrow is the answer" and predicted that shrinking banks' activities would have a negative impact on global trade and the world economy.
Peter Levene, chairman of the British bank Lloyd's, said he favored "better...but not more regulation."
Billionaire financier George Soros said Obama's plan to impose a tax on large banks was premature and his wider proposals to rein in banks' activities may not go far enough.
A new study by the accounting house PricewaterhouseCoopers, timed to coincide with the gathering at Davos, shows business confidence rebounding after the sharpest drop in economic activity since World War II. The survey of 1,200 chief executives in 52 countries found 39 percent of industry chiefs planned to hire extra staff in 2010. Just 25 percent said they would be cutting jobs, down from 50 percent who said so last year.
But new hires will be on a modest scale and come mostly in fast-growing, emerging economies like China and India, rather than in the developed world, the report said.
compiled from agency reports