Germany: US slipping as financial superpower

Financial meltdown on Wall Street could reorder the world economy and cost the United States its status as the world's financial superpower, Germany's finance minister said Thursday.

Finance Minister Peer Steinbrueck told federal lawmakers that the collapse of storied U.S. banks and financial firms such as Lehman Brothers would leave "deep marks" on the world economy.

"The United States will lose its status as the superpower in the world financial system," Steinbrueck said. "The world financial system will become more multipolar."

Steinbrueck made his critique, among the harshest yet from an economic leader abroad, just hours after President Bush painted a portrait of dire U.S. economic prospects in a television address from Washington on Wednesday night.

Steinbrueck told members of Germany's lower house of parliament that the U.S. will cede financial credibility and clout in the wake of the current crisis, opening room for European banks as well as sovereign wealth funds and investment banks in Asia and the Middle East to exert more influence on the world economy.

Steinbrueck criticized what he called an "Anglo-Saxon" attitude in the U.S. and Britain that encouraged risky lending and investment practices because of "an exaggerated fixation on returns."

"The argument used by these "laissez-faire" purveyors was as simple as it was dangerous," Steinbrueck said.

Germany's economy remains "relatively robust," Steinbrueck said, despite the turmoil in the U.S. He said the German government would help institutions in trouble — as it has with several state-owned banks — but that a large scale bailout such as the $700 billion rescue package being promoted by the U.S. Federal Reserve and Treasury was not necessary in Germany.

"The financial market crisis is first and foremost and American problem," Steinbrueck said.

Steinbrueck said the German model of lower-risk lending had proved superior, and he called for tighter regulations on international trade and larger capital reserve requirements for banks.

In his criticism of the U.S. and call for broader international regulations the Social Democrat was reiterating calls made over the past week by conservative Chancellor Angela Merkel, who has repeatedly scolded the U.S. for avoiding efforts to impose greater transparency on financial markets in the run-up to the current crisis.