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EU prepares measures to contain crisis, but US-style rescue ruled out
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(BRUSSELS) - European leaders are preparing new measures to contain the US-born financial crisis now blasting Europe, although a vast US-style rescue plan has been ruled out.
With the financial storm now also whipping across Europe, pressure is mounting on European governments to draft a US-style bailout plan for the sector, despite assurances that such drastic action is unneeded.
"On account of the situation, reflections are still ongoing and are not exhausted," European Commission spokesman Johannes Laitenberger told journalists.
"There's work to be done on the guidelines (already) drafted, at the same time there is work to be done" over the medium term," he added.
Declining to give details, he said that plans would be firmed up at a high-level European economic meeting expected to be held soon in Paris.
European Commission chief Jose Manuel Barroso said on Monday that the initiatives in preparation focused on a "structural European response" but also gave no greater detail.
"That's the only way to be sure that stability and confidence can return," Barroso said.
So far EU leaders have declined an invitation from US Treasury Secretary Henry Paulson to follow Washington's lead with an ambitious and costly sector-wide bailout aimed at ridding banks of the sour debt at the root of the problem.
Instead they have focused their response to the crisis on calling for improved regulation of the sector and bailing out specific banks that get into trouble on a case-by-case basis.
The European Commission is due to publish proposals to toughen up capital requirements for banks on Wednesday and issue plans in October for tightening oversight on credit rating agencies.
Lawmakers at the European Parliament have also called for stronger regulation of hedge funds and private equity firms.
As the financial crisis gathers strength, a handful of governments have been forced into supporting banks that ran into liquidity problems amid the toughest conditions in years on credit markets.
Belgium, France and Luxembourg pumped 6.4 billion euros (9 billion dollars) into the Dexia group on Tuesday to prevent the financial crisis claiming another victim.
Despite efforts by European authorities to contain the crisis, some observers say that they should consider following in Washington's example.
"European policymakers should send a clear and loud signal that they stand ready to implement a European (rescue package) or a similar systemic intervention to guarantee greater transparency and adequate capitalization," said Unicredit economist Marco Annunziata.
"Financial markets need the equivalent of an electroshock to jolt them out of this self destructive mood," he added.
However, even if Europe wanted a sector-wide bailout package, agreeing on the details among 27 countries would be no easy task.
"Europe can not bring out a (US-style) plan because it does not have a federal budget to finance the rescue of banks or insurers that run into difficulty," said Italian economist Francesco Daveri.
Even in the United States, approving such an ambitous plan has proved to be highly controversial with the US House of Representatives rejecting the package by a narrow margin on Monday.
Eager to see the United States get its house in order, EU leaders have piled pressure on Washington to work out a solution fast after the package's rejection in the House.
Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.
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....US style rescue ruled out...
Glad to see that EU leaders are not falling for that hairbrained plan of rescuing the irresponsibly greedy and totally inept wall street banks and traders and insurance companies.
I like America and I like most Americans but I also know that they have a mindless lemming mentality that gets them into rushing out in herds and spending their hard earned dollars on what most sensible people would call lies, brainwashing and sheer crap.
Who else would line up to spend more than $400 Million in a week on a crappy Batman movie or spend the night in freezing cold and wet weather in order to buy one of the first Ipods??
All it is is a mobile phone with an option to download e-mail, songs and such crap. Would they be less effective if they waited and bought one a month later when the product is widely available in the market? Of course not but the brain washing TV ads and the underlining lemmings mentality overcome all common sense and logic where they are concerned.
This current financial crisis is another product of the horsethieves that are running the wall street with a cowboy mentality - irresponsible, opportunist and crooked as hell - while the present administration and the incumbents at the helm - totally inept and easily manipulated - watched it unfold and have the odacity to ask every man, woman and child Joe American to finance the screw ups of the opportunistic few Americans.
If you look beyond all the doom and gloom rhetoric - if case of no bail out - you can easily spot the manipulations at work at the hands of a few taking advantage of the lack of proper and effective controls in the US free market.
We have seen similar manipulations not too long ago.
Remember the Y2K scare a few years back??
Ships were going to run aground, aircraft were going to fall out of the sky, banks and corporations were going to implode or explode etc etc.
What happend in the end?
A lot of egghead Y2K consultants and software companies made a ton money out of the ignorant masses with their dooms day mongering and it fizzled out on January 1, 2000.
Y2K had some implications on the legacy mainframe applications and other than that it was mostly smoke and mirrors.
A major rip off of the uninitiated and the ignorant. Just like lemmings they fell for it by the thousands.
Remember the Dot.com boom and the bust in a similar fashion at about the same time??
Remember all that hype??
Every corporation suddenly had to have a Dot.com site or they would cease to exist overnight!!.
They had no choice but hire a bunch of eggheads at astronomically high rates and get them to write what was effectively very basic versions of IBM's old IMS interactive computer screen management with a very basic data base behind.
Hundreds of 30+ snotty nosed programmers who had no inclanation of business principles or did not even understand the 101 of business management advertised themselves as "the wealth makers" and the lemmings fell for it in drones again.
What a crap show it was but it hyped the uninitiated and the ignorant who did not want to fall behind the Jones but was willing to spend millions on a few lines of crappy computer code.
A year later, my 11 year old niece could create a web site and register it within 90 minutes or less for less than a few Euros.
A couple of years ago, the traders of wall street realized that they were operating in a free for all environment called the "American free enterprise" with little or no checks and bounds and more importantly extremely weak controls and an administration asleep on it's feet.
What a ripe environment it was for exploitation.
All they had to do to start the lemmings running was to create an artificail hype, be it on real estate, oil, food products etc etc.
It was a piece of cake.
The money managers and the hedge fund managers had billions at their disposal and starting a hype was a childs play if you knew what to do.
And they did.
And the Americans in their lemming mentality fell for every hype time and time again.
Which brings me to the latest fiasco.
"Bail out or the world will implode".
What crap???
Banks come and banks go.
If they are run properly they survive and succed and get very fat. If they are subjected to the cowboy mentality and manipulated by a few horsethieves, they go under and soon other banks replace them.
That is the way of the free enterprise system. Does it mean that the Joe average has to bail them out every time they screw up through their greed and corruption?
The answer must be "NO" in capital letters.
Financial crises happen from year to year in all parts of the globe and they take their toll on mismanaged corporations but life goes on and the system returns to sanity and recovers to succeedd once again.
That is if the law makers and the administrators have the intelligence to see it for what it is and act responsively and in a timely fashion to stop the corruption.
However, if they are asleep at the helm or too ignorant or even self serving to the point of corruption, it is high time they are held accountable for their actions - or their in-actions and at the very least kicked out of the office they occupy with due disgrace.
Wake up Joe American, try to stay out of your lemmings mentality for once and take charge of your future and protect your hard earned taxes from further blunders.
You will thank yourself and save your children from loan sharks.