Last week it became apparent that only a unified international response can stop the global credit crisis. This weekend, a coordinated approach was finally crafted after meetings of the G7, IMF, World Bank, European Union and other international organizations. The international infrastructure of alliances and institutions that was set up after World War II played a crucial role in helping forge a strategy which, by infusing capital into the banking system and guaranteeing interbank loans, has at least for the moment buoyed the markets.
Today, as global stock markets continue to fall and fears of a global recession deepen, finance ministers from the Group of Seven (G7) are meeting in Washington in advance of IMF and World Bank meetings tomorrow. These ministers from the United States, Canada, Britain, France, Germany, Italy and Japan are expected to address the current global financial crisis.
America’s economy underpins its position as the world’s most powerful nation. Today’s collapses in our strategic and economic strength are linked – and mutually reinforcing. Unchecked military spending and faulty strategic thinking have left us in an unsustainable global position, and as the financial crisis has spread across the globe, world leaders are seriously questioning the United States capability for continued economic and strategic leadership.
This weekend’s financial turmoil spotlights how, like America’s diplomatic and military power, American economic power has eroded over the last eight years. The U.S. financial system has again been pushed to the brink, as Lehman Brothers moved toward bankruptcy and Merrill Lynch was sold late last night to Bank of America. Fears of a worldwide sell-off appeared to be realized, as markets in Europe and Asia dropped sharply today. This financial crisis will have powerful consequences not just for Americans’ personal circumstances but also for our power and security as a nation.