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British prime minister hailed as world financial hero

Having seen his bailout of the British banking system widely emulated, British Prime Minister Gordon Brown now would like to rebuild the entire world economic order.

Associated Press

Having seen his bailout of the British banking system widely emulated, British Prime Minister Gordon Brown now would like to rebuild the entire world economic order.

LONDON — Two weeks ago, the best thing that was said about British Prime Minister Gordon Brown was that he might be persuaded to resign before his tepid and inarticulate leadership brought the Labor Party to a decimating defeat at the hands of the Tories.

Now he is considered the most influential leader in the world, and possibly the most admired.

The French newspaper Le Monde called the normally morose Scot — who has suddenly taken up the habit of smiling — a "European superhero." Its conservative competitor Figaro called him the world's greatest financial mind, and Swedish media have taken to calling him "Flash Gordon."

His bailout of the British banking system through a taxpayer buyout of major banks has been imitated by a dozen other countries, including the United States, which invested $250-billion in banks last week. While taxpayers may be less happy when the full cost of these bailouts hits their tax bills, and it is not yet certain that the strategy has worked, most observers agree he has staved off a full-blown depression.

Brown, a man whose obsessive devotion to the minutiae of financial management has been a source of ridicule, is getting all the credit. He said he wants to take this triumph to a new stage by rebuilding the entire world economic order with the launch of new institutions to replace those that have regulated world finance since the Bretton Woods conference launched the modern financial system in 1944.

"We are in the first financial crisis of the new global age," he said. "We need to recognize that if risks are globalized, then responsibilities have to be globalized as well. … What we are asking is that we set up a new international financial architecture for the global age."

He proposed not only major reforms to the International Monetary Fund and the G7 group of industrialized nations so they can respond better to global capital flows and crises, but a new set of institutions and regulations designed to replace national finance-regulation bodies in dozens of countries with a fully international system.

Little more than a week ago, such an idea would have been laughable, especially from Gordon Brown, a left-wing leader in a world dominated by conservatives. But analysts feel that he has become so influential that he may well end up accomplishing at least part of his huge goal.

"I myself find it kind of jaw-dropping: Gordon Brown has become the man who saved the world banking system, and now he might become the man who redesigned the international financial system," said Will Hutton, an economist whose work has influenced Brown's Labor Party since 1997. "Who would have dreamed of it?"

Brown also won begrudging praise from David Cameron, the leader of the opposition Conservatives, who said he fully supported the bailout program, and from President Bush, whose officials have eagerly adopted it. And Paul Krugman, the academic and writer who was awarded the Nobel Prize in economics this week, has devoted himself to lavish praise of Brown's new ideas.

Brown has been proposing major reforms to the world's finance institutions for years. But now he appears to have the world's ear, starting with meetings this week in Brussels between leaders of European Union countries.

"It is not European but global measures that are needed," he said.

At home, there are signs that Brown's new status may be short-lived. While he has pulled his party to only 10 points behind the Tories in polls — the best figures in a year — there are looming signs of hard times in Britain. House prices in London are down 25 percent over last year, inflation rose to a 16-year high of 5.2 percent last month, and unemployment is growing fast.

For the moment, he appears happy to bask in this surprising reversal of fortunes. "I find it amazing that people are suddenly so interested in my personal fate," he said. "I think you should look at what they were saying about me four weeks ago."

British prime minister hailed as world financial hero 10/18/08 [Last modified: Wednesday, November 3, 2010 4:11pm]
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