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Rebuild the world financial markets

President Sarkozy attacks capitalist system in long-awaited reaction to financial crisis as cabinet discuss 2009 budget

President Nicolas Sarkozy said the world's financial system was in need of complete overhaul and promised to protect the French in a speech on Thursday.

Speaking to 4,000 in Toulon, Sarkozy said he wanted to “speak the truth to the French” and said the crisis would weigh on economic growth, unemployment and spending power for months to come.

He added that “whatever happens the state will guarantee the security of the banking system and French finances”.

"I am convinced that the problem is a deep-seated one and we need to rebuild the whole world financial and monetary system from scratch," he said.

"The idea of the absolute power of the markets that should not be constrained by any rule, by any political intervention, was a mad idea. The idea that markets are always right was a mad idea," he added.

He also warned bankers and business leaders to curb their salary levels, saying the government would introduce legislation by the end of the year if they failed to reform themselves.

"We cannot continue to manage the economy of the 21st century with the instruments of the economy of the 20th century," he said.

Today ministers meet to discuss the 2009 budget, which will try to limit France’s growing level of debt which will reach a near-record of 66% of GDP in 2009

EU limits are set at 60% and France has pledged to obey these by 2012, however analysts believe the under performing economy and likelihood of recession will make this impossible.

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