A new game for The European Family, in which ladders going up are replaced by a choice of snakes going down.
US Treasury Secretary Timothy Geithner has written a letter to French Economy Minister Christine Lagarde, warning that “a proposal that limits or delays the access of third country firms to a passport – while granting EU domiciled managers and funds access to the European market – would be discriminatory and contrary to G20 commitments. We would consider adoption of such a proposal as unfair and damaging to our shared interest in maintaining an open, global financial system”. Americans are very insular, and so it probably hasn’t dawned on Geithner that the French instinct is to take advantage of free markets, but be protectionist about its own. They’re quite similar to the Chinese in this regard. But it is good to see somebody just as hard-nosed telling the incompetent Ms. Largarde where to get off.
Meanwhile, the Swedish Riksdag, and the German Bundesrat have objected to the Commission’s proposed amendments to the Deposit Guarantee Schemes Directive. Under the amended Directive, deposit guarantee schemes must offer depositors up to €100,000, if their bank collapses. The schemes are to be 75% pre-funded from bank contributions, with the remainder coming from other sources. However, the Riksdag is opposed to a provision in the Commission’s proposal which could see an EU country being forced to lend money to other member states’ funds, if these funds face a shortfall. The Riksdag, going against the Swedish government, said that such mandatory lending could lead to some member states under-funding their deposit schemes, knowing that someone else would act as the lender of last resort.
The Bundesrat and the Riksdag also argued that the provision represents a violation of the EU’s subsidiarity principle. The Swedo-German alliance is absolutely right about this; but then, they are the only two nations in the EU who know what they’re doing. One country which no longer does is ours, and this morning Open Europe’s Stephen Booth warned (about Hague’s next Maginot Line) “These safeguards are not enough in order to inspire public trust on their own. There are still areas under the Lisbon Treaty, such as justice and home affairs, where there is a day-to-day risk of powers being ceded to Brussels and EU judges in particular.” There is also the minor point that the horse bolted some time ago.
The Slog understands that the credit markets are pricing in an Irish bailout. No default scenario is being priced in yet, as otherwise the yields would be a lot higher. Observers think that right now, Brussels daren’t do anything other than bail them out – because the system is so fragile, if one country fails the knock-on impact could lead to a complete meltdown. And the other pov is that Bankfurt daren’t offer a bailout because that would stop Spain and Portugal from bothering to try any further austerity. The Slog’s view remains that the latter situation is in play, but for the ECB and the EU, this isn’t so much a rock and a hard place as a flock on a cliff-face.
There might be a queue in Mullahland to join the EU, but the Danes continue to know a bad thing at all levels: chief executives at Denmark’s top three financial companies have advised that the country may stay out of the euro for at least five more years. Public support generally for the euro is dwindling, the last poll showing that 51% of Danes want to keep the national currency. The situation is marginally different in the UK, in that 47% of ordinary people want to leave the EU altogether, but in the upper levels 100% of people are not thinking about the issue at all. Thus we are similar to Mullahland, except that our ‘leaders’ live in Lalaland.
John Monks (head of the European Trade Union Confederation – ETUC) told the media yesterday that the current Europe-wide strikes are “just for starters”. The main course will be Neoliberal flambe of Brussels Sprouts, with Big Cheeses on toast to follow. At least, that’s what the ETUC thinks. Only time will tell.
The Slog is devoting a long weekend to food and drink. In my absence, the site is being assessed for street repairs. Further posts before Monday are unlikely. Have a good one.