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Germany’s chancellor urged world leaders to push ahead with new rules to prevent more financial turmoil. |
Amid debt crisis, Merkel pressing global regulation
BERLIN — Chancellor Angela Merkel of Germany urged the world’s economic powers to send a “signal of strength’’ by agreeing to stronger global financial regulation, as markets sagged on doubts about whether European leaders have a handle on their continent’s debt crisis.
European stocks and the euro slipped, still unnerved by a unilateral German move to ban some speculative trading practices — a step Merkel’s finance minister defended against pointed remarks by other officials that Europe needed to regulate as one.
The trading practices ban was taken by some as a sign European leaders are not coordinating their efforts to shore up government finances in the 16-nation eurozone, despite agreeing on a $1 trillion loan backstop for governments in danger of defaulting on debt.
That package has given markets respite from fears of immediate collapse, but long-term worries about the European economy continue to depress sentiment.
Britain’s stock market slid 1.7 percent, Germany’s 2 percent, and France’s 2.3 percent. Worry hit Wall Street too as the Dow tumbled 376.36 points.
European leaders have admitted they need to strengthen the rules underlying the euro to limit governments’ ability to pile up debt, but many analysts are skeptical they have the political will to carry through on that.
Meanwhile, severe cutbacks to reduce debt in heavily indebted Greece, Portugal, Spain, and Ireland will weigh on growth there for years.
Merkel has stepped up calls for tighter regulation of the financial sector as Germany and its European Union partners push through the rescue package, which is unpopular in Germany.
Late yesterday, President Nicolas Sarkozy of France said that he and Merkel had agreed on the idea of imposing sanctions, including political ones, on eurozone countries that mismanage their economies. Sarkozy told reporters the sanctions should stretch beyond financial measures, and will be discussed with all 16 countries that share the euro currency next month.
He cited, for example, the possibility that, as one of the possible sanctions, eurozone states that violate common rules might temporarily lose their voting rights.
German voters dislike paying for other countries’ mistakes, and Merkel is now emphasizing world leaders’ promises to respond with new rules to prevent more financial turmoil — and arguing that market misbehavior has made the current trouble worse.
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