A global 'sheriff' to tackle the crisis?

He seems to have struck a chord. One theme at the World Economic Forum meeting in Davos this week is that perhaps we need a global sheriff. The new players on the financial block are the hedge funds and the sovereign wealth funds, none of which touch their forelocks when a central bank comes into view. The world has moved on, and the central banks don't have the right tools for the job. As a result, while the world has looked to them to do something, their performance has been mixed.

But setting that to one side, at least part of the problem is that finance is global, and the powers of the central banks are rather less than that. Coordination only works up to a point. The problem with getting the FSF to fill the slot is that the Americans don't like it. They didn't invent it and they can't control it, so they are unwilling to cede it any authority.

After it was set up in a burst of activity, it produced three or four reports thatwere well thought of, but the word came down from Washington that no more were wanted. So it stopped.

This might get a bit messy. The whisper at Davos is that the Europeans will push hard for the FSF to be given the authority to co-ordinate the responses of all the other players with a stake in the game - not just the central banks, but also the International Organisation of Securities Commissions, the Basel committee, even the IMF and the World Bank.

All are firing off some initiative or other, with a lot of effort duplicated and a lot more dissipated because it is coming from the wrong place. But the Americans' attitude to ceding power or authority is unlikely to have changed despite the mess they are in.

On the other hand, perhaps the mood is softening. Robert Kimmitt, US Deputy Treasury Secretarywho was standing in for Hank Paulson, said that America had asked the FSF to take a look at some current areas of concern - how banks assess credit risk, the accounting and valuation of complex derivatives, ways to supervise off-balance-sheet vehicles such as SIVs and conduits, and, inevitably, the role of the debt rating agencies.

This could be a ploy to turn the FIF into a back-office organisation whose reports can be quietly ignored. Or it could be a recognition even by Washington that the world does need something more to deliver a global response to a global crisis.

Confidence downgraded

It was good to know that soon after Société Générale announced losses of €7 billion (£5.2 billion), including €5 billion allegedly lost by a rogue trader, rating agency Moody's decided to cut its credit status.

It is reminiscent of a few years ago when British Energy said it faced financial collapse, and the agencies downgraded its bonds. It's good to know they are keeping up with events.

Interestingly, Wes Edens, chairman and chief executive of US hedge fund group Fortress, said one thing different in the current turmoil is that so many institutions faced massive losses on investments which they thought were triple A - and which were when they bought them. Said Edens: "The belief system of what is infallible in the financial markets starts with triple A."

The fact that many of these investments are now worth just 15 cents in the dollar is a major reason for the collapse in confidence in the financial system. No one knows who to trust any more.

The sovereign slice is a big deal

Prudential chief executive Mark Tucker resolutely refuses to comment on market rumours, but one section of the market certainly seems convinced a major Chinese insurance company wants to buy a significant slice of his equity.

What no one seems able to explain is what there might be in such a deal for the Pru. It already has a huge (by Western standards) business in China.

But it may be inevitable - and not just for the Pru. Back-of-envelope calculations suggest that in seven years' time sovereign wealth funds could total $12 trillion (£6.1 trillion) - equivalent to the entire current capitalisation of the S&P 500. On that basis, they will probably have at least 10% of every major financial institution in London.