According to the latest crisis measures, the US taxpayer will now own equity in nine major American banks in exchange for a $125 billion capital injection and debt guarantee. Another $125 is expected to be allocated to recapitalize other "healthy" firms across the country.
This decision follows British leadership on the matter, as well as similar European commitments totaling $1.8 trillion.
Gordon Brown has really hit his stride during this crisis. He has reiterated his call for a new Bretton Woods (taking his cue from Rory, of course) to create a new financial architecture for the years ahead. Such calls have been made since the collapse of the "old" Bretton Woods in the early 1970s, but the recent turn of events may very well have convinced enough of the powerful decision-makers that a new approach is required. A "new paradigm," if you will.
We're going to be paying very close attention to any developments of this kind, but one thing I can say with confidence: the G7 is not the venue for such discussions. As a collective decision-maker, the G7 has failed during this crisis - just as it failed to make significant progress in banking and capital market regulation following the Asian crisis in 1997-8. Even today's pledge for collective action amounted to little more than words; the real action was taken elsewhere. These meetings are geared towards discussion, not decisions. Even the expanded G20 fails to effectively include all the significant players in today's global markets.
If we want to see results, we need to leave this old boys club behind.