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In the end, the political and economic systems can be harmonized in only one of two ways: by creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures, which is likely to lead to a new mercantilism, perhaps of regional units.
The financial and political crises are, in fact, closely related partly because, during the period of economic exuberance, a gap had opened up between the economic and the political organization of the world.
The economic world has been globalized. Its institutions have a global reach and have operated by maxims that assumed a self-regulating global market.
The financial collapse exposed the mirage. It made evident the absence of global institutions to cushion the shock and to reverse the trend. Inevitably, when the affected publics turned to their national political institutions, these were driven principally by domestic politics, not considerations of world order.
Every major country has attempted to solve its immediate problems essentially on its own and to defer common action to a later, less crisis-driven point. So-called rescue packages have emerged on a piecemeal national basis, generally by substituting seemingly unlimited governmental credit for the domestic credit that produced the debacle in the first place - so far without more than stemming incipient panic.
International order will not come about either in the political or economic field until there emerge general rules toward which countries can orient themselves.
"A clear lesson of the recent period is that the world is too interconnected for nations to go it alone in their economic, financial and regulatory policies," Bernanke said. "International cooperation is thus essential if we are to address the crisis successfully and provide the basis for a healthy, sustained recovery."
Even as the U.S. battles the current crisis, it must move to prevent future ones. To be effective, international cooperation is needed, Bernanke said