The US subprime debacle, which broke out in August 2007, is considered the most serious financial disaster since the 1930s and has gained the distinction of a 21st-century financial crisis. It has exposed the loopholes in the US-led financial globalization and liberalization system. American financial companies that were among the leading entrants of the Fortune 500 list for many years have lost steam and some of them even dropped out this year.

The international financial system has long been called the backyard of world politics. The US has dominated the international monetary and financial system, milked profits throughout the world and seized control of the vitals of the global economy as well as political commanding power since the end of World War II, but the subprime crisis has directly caused the US financial gains to fall and undermined Washington's capacity to control the world.

The forces that are holding the US back financially are not the emerging economies but its traditional allies such as Japan and Western Europe, because the conflict between the US and emerging economies such as China is only seen in trade and investment imbalance; while the clashes between Japan, Europe and the US found in core interests like currency and finance.

In the Cold War era Japan and Western Europe, under protection of the US, built up enough financial strength to challenge America's dominant position in the world. Since the end of the Cold War, Japan and Western Europe have begun stepping out of the shadow of Washington and demanded a say in controlling the world. The expansion of the European Union (EU), birth of the euro and the internationalization of the Japanese currency, yen, are the clearest demonstration of this rivalry.

If the European Union has ended the US' absolute superpower status in terms of economic aggregate, the birth of the euro has become a substantial challenge to the US dollar as the dominant currency in the international monetary system; while Japan's strategy for the yen's internationalization is aimed at marginalizing the US dollar in the region by building up an Asian economic sphere and joining the euro in pushing for "currency regionalism", which could split the existing international monetary and financial system.

As a matter of fact, visible cracks have already appeared in relations between the US, Japan and the EU over policies designed to head off a financial crisis after the US subprime scourge flared up. The Group of Seven finance ministers' meeting, which was considered instrumental in policy coordination among the US, Japan and the EU as well as joint administration of the world financial order, has not performed its function of synchronizing steps.

So far the three parties have yet to formulate a set of financial policies acceptable to all of them as they all insist on protecting their own interests. Consequently, it has come as no surprise that American financial institutions have all fallen spectacularly from their previous places on the 2008 Fortune 500 list while their Japanese and EU counterparts edged upward.