United in their concern about developments in Europe’s economical situation, a seemingly random group of European politicians gathered in Berlin today for a discussion about how to turn the tide. They pathetically failed to come to any significant conclusion, and got nowhere further than an agreement to take a closer look at the regulation of financial markets.
Uncovered hedge funds and share derivatives may have been at the start of this crisis – we have now moved a couple of chapters further than that. Which allows the discussions of today to be qualified as backward reasoning.
It’s true that financial institutions led us into this situation. But they are not the ones who are going to get us out of it. Rather than apologising for all harm already done so far, they gracefully continue to blame others for their misfortune. Next to be blamed are the list of Eastern European countries, whose capsised economies are blamed for wrecking the ‘liquidity position’ of Western European banks. But wasn’t it Western European banks who familiarised those former communist states with the principle of borrowing and lending in the first place? For years in a row, Eastern Europe was booming business with endless growth opportunities. But someone has to pay the bill for that now, and it’s not going to be those ‘unfortunate’ banks.
True, European citizens have also taken unacceptable risks in recent years. They too have been spending more money than they could earn. But they are just individuals who should have been warned by the people who were supposed to professionally represent them – politicians – or to whom they paid to buy themselves into security: again the insurance companies, pension funds and bankers.
Construction site in Dubai, December 2005
Security doesn’t exist, and it definitely can’t be bought. Instead of telling us that we need new regulations for bankers, European politicians should have used today’s meeting to come up with a statement about how the past few years have been extraordinary in economic progress, but that most of that was inflated air. They could have told us that we are now returning to a normal situation, where you need to work for money rather than send an SMS to the bank, buy property in Dubai or win Pop Idols. That the crisis will be used to bring back a bit of common sense into our daily lives. That risk also has a potential downside. That the current crisis will also make victims among those who never chose to be part of all this. And that we should be extending a helping hand to those people.
Instead, we get told that we should expect incurring some harsh measures, that mass unemployment is on the way, that things will get worse as we go, that we have not seen the bottom of it yet, and that we need new regulations for hedge funds. Now think about it. Is that really the kind of inspirational visions we would like to hear from those who get paid and respected as our leaders?
(16 votes, average: 3.25 out of 5)
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Hey Bruno - great post. Check the code at the bottom of it because I think your HTML has a crack in it somewhere.
Great post. I haven’t read up on that meeting elsewhere so assume your reporting is accurate. I also agree with your conclusions - we do need a more inspirational vision put before us. However it seems to me it isn’t a case of either/or, but both/and. We need better regulation of hedge funds and financial markets as well a European wide “Stimulus Plan” to get the European economy moving again.
I’m not sure what mandate the “random group og politicians” who attended the meeting had to come up with such an over arching vision. Ideally it would come from our European Leaders - Klaus, Barrosso, Merkel, Sarkozy, Brown, Zapatero and Berlusconi…
Are these the inspirational leaders who will help Europe to recover and lead the world together with the USA and Obama?
Great entry, Bruno!
I didn’t know Eastern Europe is blamed in Western European circles for the crash. The discourse is totally opposite in Central-Eastern Europe
And it’a also believed we were most severely affected by the crisis, and that Western Europe would better help us out, as we still remain the engine growth of Europe. Speak about European identities and perspectives 
As a guy who kind of knows this business, do you believe a collective European bailout would help?
Hej Corina, thanks for the comment.
1) No, Central/Eastern Europe is no longer seen as the growth engine of Europe, especially not by banks. I expect them to drop those countries like a brick when there’s no more direct, riskless and ruthless money to be earned. They’ll move back to the 1980s situation, where investing in C/E Europe was considered development aid rather than sensible business.
2) A collective bailout? Probably not. Collective measures, definitely, but the conflicting interests of the various economies would make it almost impossible to get anywhere on that.
Smart coordination of different national rescue plans would probably work best. But that would again require collaboration, vision, inspiration and patience - all of which are clearly lacking today.
Ruth: checked and corrected it, thanks!
Frank: this is a link to an article about the meeting I referred to
http://www.dw-world.de/dw/article/0,,4051327,00.html
And you’re obviously right: it’s a matter of AND/AND. But we both agree that at least 50% of that equation is missing.
This sounds more like it:
http://news.bbc.co.uk/1/hi/world/americas/7909276.stm
(Obama about the crisis, 25 Feb)
Many thanks, Bruno. As a general rule its best not to call high profile meetings unless your officials have been able to do a lot of the groundwork towards getting agreement to some concrete proposal. It’s unclear to me what agreement this meeting was hoping to achieve, and the absence of a concrete positive outcome damages the credibility of all concerned - especially as they excluded many EU leaders- presumably to make it easier to get agreement in the first place.
It’s really sad to see how divided and leaderless the EU now is.