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This crisis is a failure of poorly or unregulated markets, and shows that the financial market is not capable of self-regulation, a group of former premiers and finance ministers state in a letter to Commission President Manuel Barroso, as published in the 'Daily Telegraph'. “The problem is a model of economic and business governance based on underregulation, inadequate supervision and an undersupply of public goods.”
“There is a huge ethical issue here”, the signers underline. “Free markets cannot ignore social morals. Profit seeking is the essence of a market economy. But when everything is for sale, social cohesion melts and the system breaks down.”
The current financial crisis is no accident and was not impossible to predict, the group including Jacques Delors, Helmut Schmidt, Otto Graf Lambsdorff and Lionel Jospin says referring to several warnings issued during the last years.
All financial institutions should be required, like banks, to hold minimum reserves, and the level of leverage should not be unconstrained, they claim. Also, incentive schemes have to be corrected so that reckless risk-taking be not stimulated at the expense of prudence.
The signers call for a “European Crisis Committee” which should have the following tasks:
- To make an in-depth analysis of the financial crisis, in the wider context we have tried to outline above.
- To describe and assess the economic and social risks entailed by the financial crisis to the real economy, particularly in
- To suggest a series of measures to the Council of the European Union in order to avoid or limit these risks
- To present to the Council of Ministers, the Member States of the UN
The letter was signed by:
Jacques Delors; Jacques Santer; Helmut Schmidt; Otto Graf Lambsdorff; Lionel Jospin; Pär Nuder; Michel Rocard; Hans Eichel; Göran Persson; Daniel Dăianu; Massimo d’Alema; Ruairi Quinn; Poul Nyrup Rasmussen; Paavo Lipponen