U.S. financial turmoil has been felt around the world. Photo: rednuht (flickr)

While the details of the government bail out are still to be agreed upon, what is clear is that business as usual on Wall Street has been transformed. This hasn't happened to our financial system in a long time — nearly all experts agree that change of this magnitude hasn't occurred since the Great Depression, or maybe ever.

And it's not just about the estimated $700 billion that is needed to provide some sort of stability for failing financial institutions, or the significant changes to the regulatory system that will surely result. The proposed deal also transfers an incredible amount of power to the Treasury Secretary, without the allowance of judicial review — this is unheard of in financial legislation.

This morning's report from NPR explains why it's so significant.

It’s too soon to tell exactly how the U.S. financial crisis will impact the rest of the world, but, according to a report in The New York Times, the U.S. has just lost some free-market street cred.

In extending a last-minute $85 billion lifeline to American International Group (AIG), the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.”

The shock waves from the U.S.'s financial woes are already being felt around the globe, with Russia suffering from “one of the worst market falls” since 1998 and Asian stocks hitting a three-year low.

The world's poorest countries will especially feel the pain of the crisis. This week, United Nations Secretary-General Ban Ki-moon said he feared that the crisis could seriously hurt poverty-fighting efforts in developing countries. These efforts depend heavily on rich donor countries and if these countries’ capacity for funding development efforts shrinks, many will suffer. Resuming the collapsed world trade talks, Ban said, is even more important in the wake of the financial turmoil.

As of Friday, the U.S. government's nearly unprecedented bailout has stabilized the market, prompting worldwide stock rebounds, but causing skepticism that the action is only a temporary fix.

If worldwide confidence in the free market drops as The New York Times article suggests, could it hinder future world trade talks — and development efforts — to an even greater extent?