Europe Is Slow to Face Up to the Financial Crisis
A common market but not a common regulatory system
But since then, Germany, Austria, Greece, Sweden, Denmark, and Iceland have made similar pledges to depositors. On Tuesday, EU finance ministers meeting in an emergency session in Luxembourg agreed that banks throughout the European Union should guarantee customer deposits up to $68,250, an increase of $34,500.
That's the kind of go-slow reaction some economists say only proves how far behind events policymakers are and further unsettles stressed-out markets.
Ultimately, many economists believe that all European countries—either in lock step or individually—will soon offer 100 percent guarantees. That would be a good thing, Dale argues, though he warns that guarantees may have to cover wholesale, as well as retail, deposits to truly ease the credit logjam.
Many banks will end up "semi-nationalized," he admits, "but that's happening anyway through the back door."
The notion, Walker says, is that putting enough guarantees in place "stops the panic," and interbank lending will resume, followed by renewed lending to businesses and consumers.
But, Dale warns, for it to work, policymakers have to stop dithering. "They need to stop talking about it. They need to just do it."
Reader Comments
The G30 Is On The Job!!!
The G30 led by Paul Volcker (Former Fed Chairman and Inflation Buster before Greenspan) is on the job proposing new regulations to realign the financial sector with responsible lending practices. Their meetings are regularly broadcast on CSpan as they progress to tackle our broken system and reregulate the financial evildoers of the world. I have great expectations of this group since Volcker brings integrity and vast experience onto the scene knowing first hand how to handle stagflation and irresponsible fiscal policies. Perhaps the future is brightening somewhat....
Bank bailouts will not stop a prolonged and hard global economic collapse
The government’s rescue of the banks may stabilise the global financial crisis temporarily, but where the far bigger problem of economic stagnation and decline lies firmly upon the horizon now. The reason, with the US’s total debt when all is taken into account at the end of 2007 was $51.3 trillion (increasing to $53 trillion by the end of this year), sheer interest payments estimated at over $2 trillion a year, estimated toxic debts of financial institutions of over $4.1 trillion and total global debt exceeding $100 trillion, no amount of capital injection will save the global economic system from eventual collapse as it is being pursued today. I give it no more than 18 months to fail.
The only situation that could bring global stability to the economic system is the influence of China and its direct intervention. Unfortunately pride by Western politicians will not allow this to happen, but where eventually they may have no other option but to take this decision to save the world economy from decades of economic stagnation. That is what we risk now with uncoordinated political indecisiveness in the West. These are plain truths and no more.
Dr David Hill
World Innovation Foundation Charity (WIFC)
Bern, Switzerland
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