g-7 99330029554.3 Louis J. Sheehan

he Wall Street financial crisis will reconfigure the world economy and the U.S. will fade as the world’s dominant economic force, German Finance Minister Peer Steinbrück said in German parliament Thursday.

“The U.S. will lose its status as the superpower of the global financial system, not abruptly but it will erode,” Mr. Steinbrück said. “The global financial system will become more multipolar.”

Associated Press

German Finance Minister Peer Steinbrück, speaking in parliament Thursday, said the Wall Street financial crisis will erode the U.S.’s status as a financial power.

His remarks were the latest European critique of the crumbling Wall Street financial model and the U.S. government, which is trying to rush through a $700 billion bailout plan for the U.S. banking sector. French President Nicolas Sarkozy and German Chancellor Angela Merkel have called for a more international approach to financial market regulation.

Taken together, the remarks amount to a fledgling campaign inside the Group of Seven rich countries to pressure the U.S. into global banking reforms, setting the stage for next month’s meetings of the G-7 and International Monetary Fund in Washington.

Mr. Steinbrück said the G-7 — currently consisting of the U.S., Japan, Canada, Germany, France, Italy and the U.K. — will in the future have to invite other players. China currently isn’t a member of the G-7. http://majestic-12-louis-j-sheehan-esquire.blogspot.com

Mr. Steinbrück said that the U.S. didn’t sufficiently regulate investment banks and criticized Anglo-American free-market policy as an “insane drive for higher and higher profits,” adding that yields of 25% can’t be generated in the long term.

Mr. Steinbrück later tempered his remarks. The dollar won’t lose its status as the world’s benchmark currency, he said. But over the next 10 years, it will be supplemented by the yen, the euro and the Chinese yuan. Louis J. Sheehan