Half baked Europe
The words 'half baked' were used about Europe's response to the crisis today by Joschka Fischer, Germany's ex-foreign minister until 2005. He was speaking on the BBC's HARDtalk programme about the sprawling response from Europe so far. Our insipid leaders had a big pow wow in Berlin last weekend to discuss what to do.
So what did they come up with?
Well, er... not a lot really. The president of the European Central Bank said that "regulation and oversight need to be extended to all systematically important financial institutions and markets". (I judge people's decisions by how many long words they use!). Hardly a clear statement of action! In fact, they are stuck about what to do in the long run to stop this chaos occurring again. They aren't very good at team work. When they tried to sort out Belgium's Fortis bank, it involved three finance regulators, each with different systems. This, from a Common Market that has been growing since since the 1950s. It is supposed to be an integrated market: already!Surely this was something they could have worked on earlier. If not in the last fifty years, at least over the last few months when they saw things clearly getting out of hand.
One of the problems is they can't agree on one system. But every week, huge and highly complex companies agree to merge their systems into jumbo corporations. They seem to manage that, with the odd hickup here and there. Surely, there are experts around Europe who know a thing or two about merging such systems. It's no longer rocket science, after all. Think of all the new 'financial vehicles' banks have created over the last few years, allowing them to profit out of risky loans. All the ECB president would say is "the ECB and the Eurosystem have the capacity to assume a stronger role in macro prudential supervision": just big words again. Personally I feel disgusted by their slovenly response.
We should all be proud of the enormous prosperity the EU has achieved during the last eighteen years. (And we no longer fight each other). Gordon Brown kept revelling in his so called achievements - "stopping boom and bust". Rather stupid of him, given the size of today's bust. While this prosperity reigned, no one seemed to get on with the real work of designing a system to fit all, and smoothly enough to withstand any forseen 'turbulence'. Indeed, now that chaos is here, some leaders are retreating into selfish nationalism.
Gordon Brown last year proclaimed: "British Jobs for British workers" and seemed surprised last month when British workers went on strike because other European took these "British" jobs (as they are entitled to do). This weekend, President Sarkozy complained about a Renault factory being built in the Czech Republic to sell cars back to the French (Both EU members), and others complain 'it isn't fair' when countries get support.At the Berlin pow wow, France wanted to regulate hedge funds, Britain said NO; it wants to crack down on tax havens. And Germany's Angela Merkel wanted to talk about the long term. Well, she would, wouldn't she: there's an election there soon. But Maynard Keynes once said: 'in the long run, we are all dead'.
While countries burn:
The FT reckons Angela Merkel's view is like reorganising the fire brigade while the blaze is still out of control! And some eastern EU countries are being badly burnt, as well as Spain and Ireland. Their systems are about to collapse. Joschka Fischer today thought the whole Euro-zone could well fall apart: it's that serious.There was talk of creating a Euro-bond that would enable the stronger economies to shore up the weaker ones. But Germany was against it
We need a strategy and an action plan for Europe. Detailed stuff; specific dates. Money on the table; cash transfers agreed. As simple as that. As Fischer says: "we cannot allow the European project to fail". Our so called leaders know clearly what is at stake. Let's hope they heard him.
The British government has just discovered that the Chief Executive of the Royal Bank of Scotland (the bank it bailed out the most) is due to receive a pension when he retires of 650,000 pounds each year, from a pension pot of 60 million pounds. Not bad when you consider that we taxpayers will be contributing to that!
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